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It is a type of paper currency and is worth ten regular dollars, much like a ten dollar bill in the real world America. No amount of doubloons can equal one sand dollar.
Role in series
Revenge of the Flying Dutchman
When the Krusty Krab was shut down for financial purposes, Mr. Krabs suggested that he and SpongeBob run a food delivery business along with the normal Krusty Krab. However, Squidward was still unemployed, so he set up a garage sale. SpongeBob, seeing a beehive (mistaking it for an acorn), wanted to purchase it and give it to Sandy as a gift. However, the buzzing nut was priced at 200 sand dollars.
So SpongeBob had to earn 200 sand dollars from his Krusty Krab food deliveries in Downtown Bikini Bottom. Later on, SpongeBob had to collect 300 sand dollars at Goo Lagoon in order to purchase a magic bottle from Rusty Scupper and gain access to the pier. Luckily, an abundant supply of reappearing sand dollars were present in the Goo Lagoon area.
"Sand Castles in the Sand"
They are a form of currency Patrick uses to pay a structural designer.