STEEMIT - The Economic System and Where the MONEY COMES FROM?!

in steem-help •  3 years ago  (edited)

How many times have we heard this question? Usually presented in an antagonistic way against Steemit… Well, I’m no cynic, but even I would agree that money doesn’t grow on trees…

In this post, I thought I would explain exactly where the money does comes from (and why the money comes), in a simple and easily digestible way.. I am however from a financial background, so if I have used terms that you don’t understand, let me know and I would be happy to talk you through it.

First, we need to go back to basic to understand the economic system of Steem, and how ‘money’/’cryptocurrency’ flows through it..

STEEM Economic System

The White Paper is the best place to start. Here are some extracts defining each of the 3 crypto-currencies based on the Steem Blockchain.. (feel free to skip this section if you are a well read user)

What is Steem:

"Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. Generally speaking STEEM should be held for short periods of time when liquidity is needed. Someone looking to enter or exit the Steem platform will have to buy or sell STEEM. Once STEEM has been purchased it should be converted into SP or SMD to mitigate the impact of dilution over the long-term."

Simply: Steem is the cryptocurrency that ‘fuel’s’ the Steem Blockchain. Most similar to Bitcoin out of the three.

What is Steem Power:

"‘1 SP’ can be viewed as a share in a pool of STEEM. The network automatically adds STEEM to the pool every block. At any time users can convert their STEEM into SP at the same ratio as STEEM in the vesting pool to total SP. Converting STEEM to SP does not dilute existing holders of SP. Likewise, every time SP is converted back to STEEM it is done at the current ratio. Individuals are guaranteed to have more STEEM in the future than they have when they first convert from STEEM to SP.
SP balances are non-transferrable and non-divisible except via the automatically recurring conversion requests. This means that SP cannot be easily traded on cryptocurrency exchanges.
SP is a requirement for voting for or against content. This means that SP is an access token that grants its holders exclusive powers within the Steem platform."

Simply: Steem Power are like ‘shares’ in the Steem network, these ‘shares’ have restricted liquidity and zero transferability. In exchange for making a long term commitment, you get rewarded.

What are Steem Dollars?:

"Without stability, individuals across the world could not have low cognitive costs while engaging in commerce and savings. Because stability is an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network. Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the current market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for token holders."

Simply: Steem Dollars are transferable/convertible debt, you can transfer to an exchange and sell to someone else, or covert to Steem (this process will be explained).

Simple System Diagram

This is a simple graphic of how I visualise the Steem economic system (as you can see, I have made this myself, and Graphic Design is not my forte). Here are some explanation on certain aspects of this system I see questioned often;

Power Down:
You will recieve 1/104 per week of Steem from your Steem Power Balance. This continues until your balance hits zero, and you continue to receive rewards (90% of the Contribution Rewards) throughout this phase.

Covert Steem Dollars to Steem:
You can covert Steem Dollars (SBD) to Steem through selecting this option in your wallet. This will be converted at the average ’median’ price of Steem over the following 7 days of trading. This is where the Steem Dollar peg comes into play, as you will receive however many Steem Dollars you own, in the form of $USD worth of Steem. Example: You have 100SBD you select to covert them. If the Daily Median Price in $USD of STEEM goes like this over the following 7 days…


(1+2+3+2+3+2+3)/7=$2.2857 = Day Average Median Daily Price

100SBD/$2.2857 = 43.75 STEEM

Why does STEEM have value?

I want you to consider that STEEM has a natural underlying value, in the same way that any traditional currency has;

Unit of Labour:

Steem represents a unit of labour in the same way as the US Dollar, and any other national currency. Steem is paid out as rewards in exchange for Content Creation and Content Curation. At it's simplest form, users essentially donate labour to Steemit in exchange for payment in Steem.

Steem is not free. As the old saying goes, TIME IS MONEY!

There are a numbers of ways to accumulate each currency involved in the Steem Economic Model

Buy (with Bitcoin)
Convert from Steem Dollars
Power Down

Steem Dollars:
Buy (with Bitcoin)
Create Content on Steemit

Steem Power
Buy (with Bitcoin)
Create Content on Steemit
Curate Content on Steemit
Be a Witness (Mining)

All of which involve a transfer of labour either directly or indirectly. That is, if you view Bitcoin as a currency/commodity you brought with traditional fiat currency, for which you worked to receive.


Steem has value in the POWER it gives the holders to reward content and writers they like, and incentivise them to continue to provide this content. Some users or commentators fail to see that each action on the Steem(it) platform is an exchange of labour, for which you may be rewarded (paid) for. Imagine how valuable Steem could be if Steemit had millions of users, and large corporations decide they would like to have some ‘Power’ too.

Now, the level of underlying value that any currency holds, and the purchasing power it exerts is all down to perception. This will change over time, especially in the early years of Steem(it).

Where does the MONEY COME FROM?

Now we come on to the point in this article when some people start to shout Ponzi. But, I’m going to refrain from going off on a tangent and keep with the matter in hand (See bottom link if you want to see my views on this). The money (in terms of $USD…) comes from investors and speculators buying Steem and Steem Dollars off users who have earned them.

Why are people Investing, when others are earning it for FREE?

I would like to answer this question by considering an individual panning for Gold. The likelihood is that, a Gold investor would not consider going out and trying to ‘mine’ Gold. They either consider their time too value, or leave that to experts who are far more efficient at finding the Gold. The one thing both the Gold Panner and the Investor have in common is that, they both see value in Gold.

You could switch out Gold for Bitcoin (and many other valuable ‘commodities’) and still come to the same conclusion…


Purchasers of Steem, Steem Power and Steem Dollars are ‘buying’ their way into an economic system, rather than earning their way in.

This is fine, in fact, it's more than fine, it's Great!! This makes the ‘money in the Steemit system real, and allows Content Creators and Content Curators to earn lucrative rewards for making Steemit what is is today, and what it could be in the future. It also opens up Steem as a viable currency (store of value) to investors who are some or all of the follow; Time Poor/Cash Rich/Non Social Media Types, who however see the value in a Blockchain based social media network.

The money on the Steemit platform comes from investors seeing value in the Steem(it) network.

As long as

-The User Base keeps increasing, and the network expanding
-The User Base continues to become ever more Engaged
-Content and Curation keep increasing in quality

Steem will have value, and the money will continue to come…

Sources (Page 8 onwards)

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Excellent post. Very helpful for the rookies like me. Although I imagine most of us here are rookies. But I am doubly a rookie as I am newer to the cryptocurrency world as well. Thanks again.

double rookie myself but learning a lot every day...:)

Double quadruple rookie here! Still trying to get my head around currency being anything else other than notes and coins! I will keep on keeping on and after clicking on a few more links, it should all fall into place !

I just got into bitcoin, then ether now this WOOH im going fast in 2 weeks.

check out - that might help you.

You know I'm in the same boat. I can only learn so much at one time. And there is so much to learn! :-)

Thanks @freeinthought Glad it helped. Let me know if you have any questions. Happy to help

The simple system diagram is worth it's weight in gold alone. I was so confused on the whole concept of powering up and down and how everything interrelates. Thanks again.

I'm passing that on to @cass to work their graphical magic on....

👍nice to read, It would be helpful to know

Where do US dollars come from? They are created inside Janet Yellen's arse.

@cryptobary Hilarious :)

Thx lol

We can find answers by watching the movie Bitcoin the end of money as we know it.

That arse is a heaven. The growth rate of creation is mindblowing.

That visual just ruined by day, which isn't to say it's not valid.

By the way, I've been trying to post an essay I wrote, but all I get is pinwheeling. I tried to enter the chat room, but it won't accept my password, which was issued by Steemit.

Can anyone help me?

the chat room is separate to steemit, you have to create a new account (use same name as here) and a new password

Thanks, wings, much appreciated!

7 additional posts well worth reading to deepen one's understanding:

The Top SEVEN Essential MUST-Read Posts To Deepen Your Understanding Of The Steem Ecosystem...

Thanks @rok-sivante Very kind of you to include one of my posts!!

Oh, I missed this one. Great write up!

Very cool post.

This inspires me to write a post related to this. Basically explaining how I've narrowed down my pitch to make anyone understand it in no time.

I could link to this one, for those looking to go deeper under the hood.

Very informative. I have such a hard time wrapping my head around the whole Steem concept but this was really helpful. High five.

@rhi-marie Glad to hear that :)

This is a great and simple way to help us understand how all of this works and inspire us to do what we can to keep the value in the Steemit community.

Cheers mate! followed

In other words, the value comes from the people engaging in the system, regardless of the way they do it; invest, content, curation, mining, etc.
A system that is useful bootstraps its value in consequence of that.

  ·  3 years ago (edited)

"each action on the Steem(it) platform is an exchange of labour, for which you get rewarded (paid) for. "

Should be "...MIGHT get rewarded (paid) for."

Thanks @telos I have updated.

I theory, if you up-vote your own posts and replies, you will receive a reward (for new users a very small one I grant you) for each action, however your EDIT makes sense.

I guess I didn't know I should upvote my own replies? I've gotten a grand total of .003SP, and that was from one upvote.

Great post, now we can finally debunk the ponzi scheme myths. No , it's just a growing economy, that has controlled inflation added to it, there is nothing wrong with that.

Very good explanation. I am not an economist but I guess it would be the best for a long term growth of steemit if everyone on steemit is taking both roles seriously.
Be the investor but also being a diligent curator/content creator.
Let's invest, cooperate, learn from each other and most important stay entertained and don't let this become a boring place with boring greedy people.

Good post @blocksurf

  ·  3 years ago (edited)

As always great blog post. You explained to a great extent how internal and external market price of steem is created. What I feel you haven't explained is how reward for an individual post is created (it's some kind of debt). Because there is no transfer of value from others to one that is receiving, it's just created from a value of one's post (new steem is created in means of steemdolars and consequently steempower).
That part is explained in white paper under the section of Sustainable Debt to Ownership Ratios. This is a vital part of steem system, but people don't understand it or don't bother to understand. Talking about those things would only further confuse people wondering where the money comes from and it's good that you haven't included it.
Most troubling part of people's minds is preoccupation with money.
Wouldn't it be wonderful that we are all creating new social network that still isn't worth anything, that is just adjusting ownership ratios to anyone willing to participate. Then after we create a wonderful society, we would have ownership of something great that would have value not in means of money but in a wonderful piece of technology. Then we could maybe sell its shares, but even that would be wrong.
The value of everything is measured in money that generates and not in "goodwill" that it creates, but that is just our sick world. Even the definition of "goodwill" has been changed from that it was in 16'th century meaning something like the well-being of everyone to modern one which means how much money it can bring by good name of the asset.​
Anyways thank you again for good and educated reading material which brings value to us.

@leksimus Thanks for your post. You've given me food for thought!! I will think about explaining your former idea's in my next post...

I would love to see a good post on that matter since I haven't seen no one talking about it. Idk if its forbidden to talk about truth and what recognition you would get for that. That part to some extent explains how Steem really works while giving money. Part about getting money out is not really connected to Steem creation, but at the same time, it is. Since Steem has value on external market. That is what really differentiates Steem from other cryptocurrencies and what people don't understand. In a way, this might be flaw of steem or genius solution for new economy where the whole platform is getting stronger trough debt in ownership while paying someone with currency. Anyways if You do research on that matter, I would be thrilled to see​ some stats and explanations behind it, because I as usual have only feelings and questions, not logic and deep understanding of the matter. ​

I already know how it works. Dilution is the answer. I will do a more detail simple explanation, however this could be a good thing to read before I post this in a couple of days; Apologise for post promoting myself;

I will wallet message you when it is done

I've already gone through that post, but I guess I didn't get it fully. No need to prompt me about your posts I am waiting for them at the hourly base through feeds. Just keep up doing good work educating us.

excellent post! I think it cleared several things for me as well, so it will be very helpful to everyone who is new to this! Thank you for sharing! That is why the more we spread the word about the platform, the more money will be invested into steemit!

thank you so much for writing this! I am an artist and a writer so I have very little understanding of how the market works - but I would venture to say that the USD IS a PONZI and Steem is not - one of these days enough people are going to wise up to the USD ponzi and then our bitcoin and barter dollars are going to increase in value. The USD has nothing to back it and is owned by the FED a private bank - whereas Steemit dollars are backed by content - perhaps Steemit and Bitcoin are here to inform the public about money and how it works to begin to FREE us from the ponzi scheme of the FED.

Interesting post. I think you've got a good grasp of what is going on. My thoughts on the USD is that, it's only a Ponzi if the FED are 'printing' more than they say they are (Fraud). Otherwise, transparency makes it legit. 'Money' nowadays (since the gold standard) in all it's forms is not backed by anything...But it does have the trust of the people, which is all something needs to have value..

Good explanation, and yet I wonder how so many posts essentially stating the same things over and over get upvoted so much.

The unaddressed question is what happens if the system stops growing. That is exactly what differentiates a ponzi from a sustainable business model. And your other post does not clearly address this either.

I have found very few posts how steem can sustain its market cap with a constant or shrinking user base.
(For my own take on it:


IMO it's can't sustain the current price without growth. Constant or falling user base would result in Steem falling in value. Exactly like a startup raising capital. Without growth, it will not be able to raise money to sustain it's operations. The money flowing into the Steemit system would stop. Luckily, Steemit is currently growing nicely.

All this however does not make it a Ponzi, by my definition. It seems like there are a number of different opinions on what a Ponzi is, so I won't argue with you because your not alone. My 2 cents is that, there needs to be Fraud. There is no fraud here.

Thanks for sharing your thoughts

@hisnameisolllie True, maybe it's a problem of definition. Also I agree that in this instance there is no fraud, even if steem should collaps.

Constant or falling user base would result in Steem falling in value.

Agreed. I should have asked more precisely: Will the price/cap go to $0? Assuming that a part of SBD will be cashed out and no new capital flows in, it should eventually reach zero. If a startup has no plans to ever sell goods or services to customers, should it be worth anything?

I would refer you to this, for the latter point (Bitcoin 2.0...);

With regards to the former, there would certainly be issues if market cap went below SBD circulation. It is possible, but unlikely IMO. SBD supply will be 2.5% of the value of New Steem Created moving forward though, and is currently (roughly) 1% of Mcap, so we have quiet a bit of room..

We already have 10000+ with same information on this topic.

And almost every single one of them is giving the wrong answer. The true answer is that in the long-term, advertising and politics will be Steem's source of funding.

The money (in terms of $USD…) comes from investors and speculators buying Steem and Steem Dollars off users who have earned them.

An entire post of noise and then you mess up the only thing relevant to the title. Clickbait article that fucked up the math of the conclusion.

How many times have we heard this question?

My thoughts indeed.

I'll repeat what I've been saying every time this question comes up, because I'm absolutely stunned that everybody is ignoring it:

In the long term, the money comes from advertisers and politicians who realize that they can promote and censor ideas just by having enough cash.

@biophil That was in there. See the end of Section "Power".

Also, from what I understand, advertising is not the current aim of the founders. I've heard discussion on users buying premium slots. Although nothing has been ruled out just yet.

Advertisers may have to buy Steem Power like everyone else...

I don't mean that will sell ads. I mean exactly what you say: advertisers will buy SP (oversimplifying actually; they'll probably essentially lease SP from whale-sized accounts). When they spend real money on SP, that money will go to paying content creators.

@biophil It appears we agree with each other :) I have spoken about this before a few time, and we are on the same page. I've headed up a post a few weeks ago called "Steem It's all about Power". This article is meant for new users to explain where the money is coming from 'now'. As you put it 'In the long term'... I stand by my summary for the time being.

You are far from a new user. So I hope you appreciate my intentions here...

Yeah, read your post a little more carefully and everything you're saying is something I'd say. :) In fact, maybe you and I have had this exact conversation before...

Also, I believe a delegated voting system will be brought in to prevent the censorship issue in time..

I totally agree on the part "where" the money come from... Now I am still waiting for a satisfactory answer on the "why" (the money come in). I read your answer, but sorry I do not buy it...still waiting for someone to come with an answer I can agree with.

check out my last couple of posts


Most people should know about where the money goes. To the creative and good content :)

nice article for newbie users steemit!

Great article!

This is what I agree with:

Money comes from speculators and investors. This is same way as with gold.

But here is why you can't compare gold to STEEM:

  1. Gold supply is not infinite, it is limited - it is much harder/slower to mine.
  2. Gold has already established trust and has a long history of having high value. It is widely accepted.
  3. STEEM value is still in the phase of pure speculation

STEEM needs to establish trust first. Then it can rely on speculations. All whales powering down is not a great way to establish long term trust. Imagine everyone who is holding considerable amounts of gold dumping their gold every week - I wonder what it would do to the price of gold.

Good points @deepbits. The mining of Steem needs a better understanding especially with market understanding around supply and demand economics.

good post @hisnameisolllie for noobs 8]

First of all, thx for your good post. However, I think there are some flaws in the accumulation of each currency in your MODEL: It would be as follows:

  1. Steem:
    Buy (with Bitcoin)
    Convert with Steem Dollars
    Power Down (from Steem Power, in 104 recurring months)
    Transfer from another account

  2. Steem Dollars:
    Convert with Steem
    Earn via creating Content on Steemit (%50)
    Transfer from another account

  3. Steem Power:
    Buy (with Bitcoin)
    Earn via creating content on Steemit (50%)
    Earn via curating Content on Steemit
    Earn via being a Witness (Mining) on Steemit Blockchain
    Power Up (from Steem)

Pls be kind to reply to me if you don't think my MODEL above is right. I am also a newbie and don't want to start with the wrong foot.

Thx in advance and regards,

you keep hitting these out of the park, ollie ;)

Very important post @hisnameisolllie What I can't understand is why can't I transfer STEEM from other sources into my SteemIT wallet. This seems strange. No?

Most steemit users have written about this important topic but you did the best as no one described the steemit like you.

Excellent, concise breakdown of how Steemit works and the way Steemit Power and SBD relate to it. Thus was incredibly informative, and it's helped clarify what I can accomplish through my content creation and curation. Upvoted and following now for more info in the future!

Great post but I have a legit question, is everyone here a friggin financial guru or what?

nice post, will need to digest it with more time ;)

Is there a ceiling?

Let's say for arguments sake (it won't happen, but hypothetically), that EVERY person on the planet goes online and posts engagely on Steemit.

Would the currency hit a top ceiling where it can no longer increase in value?

I'm just thinking about that "user base keeps increasing" thingy. Does it always have to increase in order to be sustainable, or does it ever hit a level where you can just relax?

It might be a dumb question, but I'm asking it anyway :)

Steemit is just the first phase in a much bigger plan...

Eventually the founders want Steem's value to become devoid of the success of Steemit, and for it to become a currency in it's own right. Check the link out, posted by one of the founders a month or so ago...

In answer to your question, no (at least, there is no ceiling based on user number etc). My point was short term looking. We need Steemit to be successful, to get ourselves to the next stage.

Nice, I love evil plans ;)

Can you explain how interest as accrued?

You are rewarded for having Steem Power. At the moment the reward is around 0.9% per day. This falls each day over the next 12-15months, until it hits 0.18% per day, and then it stay there for the rest of time...

Technical Explanation:

I like the comment and steem. However, I still find the system with 3 currencies and 4 different keys per account a bit confusing :/

I love seeing posts like this! That's why I put together the #bitcoinpizza challenge a couple weeks ago. Thanks for such a great post!

Best explanation by far !!! <3

Excelente lo que has publicado, Muy Bueno

Thank you for this clear explanation , I was struggling to describe these concepts to a critic who wouldn't even look at the site let alone read the white paper.

Thank you so much for this @hisnameisolllie . This will definitely make things easier to explain to friends and family.

Thanks for posting another attempt at clarifying the complex Steem economics. I want to add, though, something important: when quoting something word-for-word, as you often do from the White Paper, it's good form to make it clear somehow that these words are not yours - by putting them in quotation marks, or offsetting them in blockquotes like this:

The sun was shining on the sea, shining with all his might. He did his very best to make the billows smooth and bright. And this is odd, because it was the middle of the night.

--Lewis Carroll, "The Walrus and the Carpenter"

If you don't quote it strictly counts as plagiarism, since you are presenting others' ideas (including their wording) as your own.

I did write this directly before....

"The White Paper is the best place to start. Here are some extracts defining each of the 3 crypto-currencies based on the Steem Blockchain.. (feel free to skip this section if you are a well read user)"

I will use quotation marks from now on to make it clearer. I would contest your plagiarism claim.

Thanks! I know you did say you were quoting from the White Paper, and I'm not actually accusing you of plagiarism - I know the intent wasn't there. But it would have been unclear to anyone who hadn't read the White Paper already which parts were theirs and which yours. So I'm glad to hear you agree it's a good idea to use quotation marks!

Thanks for your great post. As a newbie this helps tremendously!

Great post. I've been trying to wrap my head around how much Steem will be issued and how much will be in circulation over time and the potential value of Steem in the future. Any thoughts on that?

Great Post. I've been trying to figure this out for days this is really helpful presentation.

We need to raise demand to compensate for the slow inflation. If we do this, we might have a chance of making Steem skyrocket!

I can finally understand how this works. Great chart..

Best economics thought i have ever found

Great post. Even after being here for several days and doing a lot of reading and learning about the currency and platform it's nice to see a post that breaks it down so clearly.

Very good explanation of the steemit economy! Easy enough for anyone (especially newer people) to understand:) Thank you!

I would like to have contrary writing here. I'm seeing since the steem launch. It was trading at 3 to 4 times higher price in the beginning than the price at this time of writing this post. This shows further decline in the price in the coming days. It may occur naturally. Why people invest at this earlier time to purchase at higher price? Advanced and Expert traders don't buy steem at this point is my opinion. The writer of the blog, if you have time to read this post, can you care explain me if I'm thinking in the wrong way.

I bookmarked a few those past 2 weeks but yours is really good and clear . Thanks !

  ·  3 years ago (edited)

Great article! I think anyone who can write a top 10 tips to monetize steemit will probably score HIGH here!!! Steemit is becoming a money driven blog machine instead of traditional blog!

Nice Post

Now let's keep the Steem in Steem SteemBlubber.

Why has somebody flagged this post?

Yeah, but that is their prerogative. Think they felt like this kind information had been posted too many times. This is original, and it's one flag out of a lot of people finding it useful. So, no problem..

Two flags now

I thought the article and diagram was helpful

Thanks @anarchic :) As long as new users are finding this post helpful, that's all that matter.

I love the graphic showing how the different currencies are related and can be exchanged back and forth. Thanks for the post.

It's true. I already want to invest in steemit real money.

Thanks! I think I will have to read it multiple times to make sure I make the best moves possible.

Thanks for clearing up some of the questions I had. I like your analogy of why people are investing and others earning it for free. My remain optimistic for the future of steemit and believe it will improve over time.

Absolutely amazing article. Thank you for taking the time.

Who are the original investors of Who are the original investors of Steem? Was it seeded with an initial boost?

No significant monetary investment. The 'original investors' are the users who donated time and computer power to get the network up and running. They have been rewarded handsomely thus far, but had no guarantees there efforts would be in vein...

Nice post, I still have doubts, so maybe I will translate to Spanish to understand it better.

Yes I have encounter with this kind of questions few hours ago . I will tag him here once he sign up for steemit

Thanks for giving this thorough explanation of the Steem economic ecosystem @hisnameisolllie. Do you know by any chance what the daily dilution rate of STEEM tokens is? I'm also wondering that if you buy STEEM tokens on an exchange if they still dilute and if they are stored on chain or off chain. Again, thanks for doing this awesome write up and sharing your knowledge!

It is %100/365 daily depreciation because of doubling the total circulation of Steem every year by printing a year worth of STEEM. As far as I know, it does not matter if it is exchanged on internal/externals markets; it is all about the magnitute of the circulation. I hope this helps.

  ·  3 years ago (edited)

Steem Dollars:
Buy (with Bitcoin)
Create Content on Steemit

Why I should buy? For now I don't see any purpose for Steem Dollars unfortunately. People simply dump it to cash out rewards. This is probably a reason why it's far lower than USD parity rate. If I need POWER I will just buy STEEM for BTC.

I am not sure if it is possible to buy Steem Dollars directly with BTC. You can only convert it from/to STEEM; or earn it via creating content. There seems to be a misinformation in the post. That is why, I summarized my MODEL in a reply above. Pasting my model below again and requesting you guys to cross-check it pls:

Buy (with Bitcoin)
Convert with Steem Dollars
Power Down (from Steem Power, in 104 recurring months)
Transfer from another account

Steem Dollars:
Convert with Steem
Earn via creating Content on Steemit (%50)
Transfer from another account

Steem Power:
Buy (with Bitcoin)
Earn via creating content on Steemit (50%)
Earn via curating Content on Steemit
Earn via being a Witness (Mining) on Steemit Blockchain
Power Up (from Steem)

It's possible, Steem Dollars and STEEM trading on poloniex.

I can see STEEM trading on poloniex but not Steem Dollars ??? Confused. Anyway, since we can convert SD to Steem easily, np. thx for your feedback.

I'm guessing that payouts are also derived from speculation on the value of Steem Power two years from now (when SP can be converted to SBD).

Didnt know nearly as much as i thought.. Great explaination .. Thank you so much

You taught me 90% of what i know about steem it in one post. Powerful

Thanks for taking the time and making sense of it


Bookmarked. A really helpful article for beginners.

Excellent post. Answered some questions I have. Thank you!

Quite a clear guide!! What I like in this one compared to there's is the emphasis on time being a commodity in which by investing you get paid. Your work totally isn't free and that's what lot of other guides miss out!

OK, I get it! Value is in the eye of the beholder. I live the gold miner example - perfect.

I never read so much about steemit stuff. But this post, this explains all! Hooraay for the new learnings!

Great post

Sorry for rookie question, but I just signed up and wanted to support the network so I bought some steem at Poloniex. Is it possible to transfer steem from poloniex directly to my account? Or do I need to change them to BTC first?

Thank you so much for your excellent and easy to understand post of the relationship between steeem dollars, steem, and steem power. I will be directing newbies who have questions about steemit, steem, and steem power to your post.

I especially liked your analogy to gold panning. As a gold panner myself I totally got the analogy.

Steem on,

Almost all currencies are printed out of thin air. Same thing with Steem. The only thing that gives it value is your belief in it.

I just have one major doubt, what drives the demand? if it is only speculation then shouldn't it plunge cause the offer keeps rising and rising? Cause other that speculation what could make someone want to buy Steem?

A new platform being honest about it's aspirations and where the money comes from right off the bat.

Hey, at least we're getting paid this time.

That's a good explanation and thank you. While there is still something I don't understand. What determines the number of total Steem's available? Who or what determines the Steem supply? Do dan and ned decide it on their own, like Fed? Is there an algorithm or a formula to it? I hear it has no total cap (like bitcoin cap) so that's one thing I don't actually understand.

Really good post!! It's the first time that I understood a little bit how the steemit financial part works. Upvoted!

I am still confused. How the "content" is getting "monetized" in the whole ecosystem? e.g. in case of FB there are ads. How about steemit?

Seriously helpful post! Have you found any animated videos or such that translate what you've presented here into an engaging video format? I think I might try to create something like that.

i've been reading a lot but it seems there are a lot of conflicting ideas.

my question simply is this: do we earn steem when we power up? i don't blog, i just comment and upvote. but i believe in steemit long term (as a coin)?

Thanks for taking the time to write this - finally, I get it :smile: much appreciated.

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