"Where does the money come from" - an explanation as simple as it gets

So, you are asked by your friends: "Where does the money come from", or "who's paying all that money"?

The answer is simple: "Steemit is not paying real money. It issues a virtual currency and that's what is distributed to the authors. They can then convert it to money using an online exchange."

At that point you might get a second question: And why would that virtual currency have any value?"

And the answer is: "For the same reason that other digital currencies like Bitcoin have value: Investors see something in them and they buy them."

An alternative -much- shorter version of the same Q&A could be worded as follows:

-"Where does the money come from?" or "Who pays?"

-"Investors"

This single-worded answer "investors" implies all the activity where a) investors buy steem and determine the price levels, b) steem acquires its "real life" value from the market, c) author is able to convert steem to "real life" money... Technically, this answer is a bit misleading (because there is no direct link between investor and author) but if you move back and see the larger picture, it's actually accurate.