If I am understanding correctly the Steem Dollars are not actually an investment on the site? So I would be better off powering them up to Steem?
Do Steem Dollars serve any other function other than collecting the 10% interest?
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At some point it's considered that we might use them as currency between us. Also, given the amount of people wanting to cash out of Steem Dollars today - you might be able to buy them at a significant discount. Then once the markets get deeper you could realize that gain.
I guess their purpose is to solidify the USD value of rewards. If the Steem price is illiquid and flip-flopping everywhere, the Steem Dollar is a way of keeping that value fairly solid.
That's the best answer I know. If @dan or @ned want to give a better answer, they're welcome
You can power them up that is a good use for them, but also you get paid interest just for holding them. Plus as @alexc points out you can use as currency between other Steemers. The advantage of this is that you can buy Steem at a better rate than an outside exchange. In time you'll have some serious leverage both on and off the site.
Oh and Blocktrades say that they'll have a way to convert SD to BTC in a few days, once a market is established, that will prove very useful.
CG
I like keeping some Steem around. Someone might really need it on the internal market. I could use it to help them out.