Steem Currency Cheat Sheet

in steem-help •  3 years ago

To better understand the three types of assets in Steem and how they can be converted one into another, I’ve created this Steem Currency Cheat Sheet.

Hopefully this can serve as a helpful reminder. I’m not an expert however, and might have gotten something wrong. So if you spot an error, or just feel like adding something, please let me know!

So the three asset classes in Steem are:

STEEM:

  • Liquid, tradeable on exchanges (currently Bittrex, Poloniex, and BitShares OpenLedger)
  • Can be transferred from an exchange into your wallet, use your account name as the address
  • Alternatively, can be converted directly from BTC, ETH, or BTS. Use the Deposit option in the Steemit wallet
  • Can be transferred to another user. Use the Transfer option in the Steemit wallet
  • Inflates by 100% each year
  • Because of that, should be held short term only
  • Each 3.3 years, a 10:1 reverse split occurs
  • STEEM is like cash in a hyper-inflated economy and can be used to buy SP and SBD, below

Steem Power (SP):

  • Illiquid, implies long term commitment to the Steem network
  • The more SP you have, the larger rewards you get for curation
  • Of the newly emerging STEEM, 90% goes to SP holders, and 10% to content authors and curators
  • Acquired by Powering Up STEEM or with a direct BTC/ETH/BTS deposit in the Steemit wallet
  • Take 104 weeks to be converted back to STEEM — use Power Down in the wallet
  • SP is like company shares — the Steem network distributes its revenue among SP holders proportionally to the size of their holdings

Steem Backed Dollars (SBD or SMD):

  • Liquid, tradeable on exchanges and Steemit internal market
  • Designed to have stable value of about $1. Current values are listed here (see the Feed column)
  • Pay holders 10% annual interest
  • Can be converted to STEEM right in the wallet. Conversion takes 1 week and the price is median price over that week
  • Can be transferred to another user. Use the Transfer option in the Steemit wallet
  • SBDs are like bonds. By holding 1 SBD you effectively lend the Steem network $1, and are paid some reward in return, though likely not as much as with SP. On the other hand, you can sell SBD at any time unlike SP

This neat diagram shows how you can convert between those assets and Bitcoin:

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But this is wrong? You cannot buy SP with Steem that entire arrow is extraneous. {correction I was wrong about this, see below}

Btw a Bitcoin maximalist used this chart to outline Steem as a Ponzi:

The #steem Ponzi explained in one easy chart. Bitcoin bagholders deposit BTC to pay earlier Steem users.

I disagree obviously.

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You sign up, you blog, you get paid. That's what most people will do. There's no financial accusation that one can launch against this. There's only gain involved. You start with zero and try to make something.

Cryptoinvestments are a different animal altogether, and there is not a single cryptocurrency, BTC included, that has not been labeled a ponzi, a pyramid, etc.

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Completely agree. It's reductive to absurdity. Everything that goes up is basically a Ponzi through that lens. Tesla, AMZN, Scty, AAPL, goog, Enron, etc

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lol, even if the chart is not from peterez, at least he used it as something helpful instead something used for blaming :)

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Do you mean the Power Up arrow? It's here to denote that STEEM is converted to SP by means of Powering Up

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The deposit arrow from BTC to SP. That is not a transaction that it is possible.

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You can deposit BTC and buy Steem Power directly using the "Deposit" button on Steem Power in your wallet.

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Hunh you guys are right, I stand corrected I just checked that out. Thanks!

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@blocktrades lets you do it.

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I stand corrected!

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It is possible through blocktrades, I believe. The chart should probably show that it's talking about using blocktrades.

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Thanks, I stand corrected.

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thestringpuller Stevie F. tweeted @ 28 Jul 2016 - 17:12 UTC

The #steem Ponzi explained in one easy chart. Bitcoin bagholders deposit BTC to pay earlier Steem users. https://t.co/QtIzLtfuw5

Disclaimer: I am just a bot trying to be helpful.

This is HUGE!

Thanks for putting this together. Very, very useful. Do you have a license in mind for it? Are others free to use it as well when they present on Steem and how it all works?

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I hereby submit this work to the public domain. Feel free to reuse ;)

Potent piece of information there, thank you! Namaste :)

well explained! Good job! I'm going to keep your post as a reference, where I can easy get back to.

How do you power down? From what I read as you power down you continue to accumulate "interest". So you'll alwasy have more than you powered one. Can one EVER withdraw everything from SP, even in 2 years time...

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Good question, I don't know the answer as I never powered down yet. It is possible that your power balance is decreased right away when you power down, in which case you accumulate no "interest"

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well,. that's my point. that's not how it happens. you continue to accumulate. for example at 2000 sp you powerdown about 20sp/week and accumulate about 80. so after 104 weeks you'll have 6000+ than you started and maybemore with the curation and author rewards..this must be addressed :)

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There in fact not Steem Power, but VESTS you really have on you balance.
VESTS qty is fixed and you "power down" VESTS.
Steem Power is dynamically risen up because VESTS rise in price vs Steem.

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That's a good explanation but then how do i increase my vests?

True (embarrassing) story. When I tried to convert some of my BTC for Steem a week or so back, I thought you had to get Steem at an exchange first to do so. When fumbling around on my wallet with how to get Steem in, and only then, did I carefully read each of the other drop down menus.

You mean I could have just sent it here in the first place?!??

So yeah, this tutorial is awesome. Totally bookmarking as a necessary read for newbies....and I.

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Well, don't feel embarrassed about that. The exchange might well have had better rate than the built-in option. Convenience often comes at a price, doesn't it?

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Very true on paying for convenience, ie convenience store vs grocery store for food or drink.

This is wery usefull. Ewerybody should know this.
This should be linked to the main page of wallet, so ewerybody could read it, insted of always asking and wondering.
This was great made @peterz keep upp the good work.

omg,you are genius.I throw away my sheet after seeing your cheat sheet

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Thanks! I wonder how did you find it? It seems long dropped off all radars

I've created a Russian version of this cheat sheet

So clever... they've created a market for themselves consisting of cash, stock, and bonds, without ever going through the SEC.

Nice compilation of info. So SD is like t bill whereas Steam power behaves like short term bond. Can you clarify further on the purpose of steem since it depreciates in Value? Especially when SD can be transfer around so there is really no need for steem right?

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Good question! I think I'll need to consult the white paper before I can answer. From top of my head, I think STEEM may provide flexibility needed to maintain all the invariants ($1 per SBD and the author/curator rewards).

After all, real companies use a multitude of financial tools too: bonds, stocks, bank loans etc

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So the white paper discusses a principle known as the Impossible Trinity in the Setting Price Feeds section:

... it is impossible to have all three of the following at the same time:
A stable exchange rate
Free capital movement
An independent monetary policy

That might be the reason. If we used SBD to reward authors, we'd want to be able to mint new coins at any time, and the principle says it would be then impossible to maintain the exchange rate. But I'm definitely on thin ice here. Never really understood monetary politics

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This seems like a theory from Macro economics. A stable exchange rate would mean no free capital movement and independent monetary policy. If there is freedom of capital movement and independent monetary policy then there will natural fluctuation of exchange rate as per determined by market force.

Developer of #Steemit can manage exchange rate by limiting the supply of Steem payout. This is one example of no free capital movement and an independent monetary policy.

However I do not understand that since no monetary tools are available apart from managing supply/ demand, Steem developer cannot increase nor depreciates the exchange rate through managing the interest rate since Steem power and Steem dollar interest rates are sort of fixed.

Anyone have an idea on this? And what are the tools that Steemit developer can use to manage and maintain a stable exchange rate?

You forgot to include ether which you can deposit to power up.
Poor ethereum :(
It's having such a hard time right now

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But really they've sorta brought it on themselves. Crypto, like I've heard (and experienced) over the last 20 years said about the stock market, can be a very cruel mistress.

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Definitely missed Ethereum as well as BitShares, thanks! I've updated my post

This is freakin awesome for us newbies to Steem and the whole crypto world like myself.

One thing I still am confused about is, how exactly can any of this actually be turned into and actual USD payout? Maybe add that to this graph as well?

At this point by the little I know and understand the only way this can be done is turning your steem into bitcoins than bitcoins into USD? Is this correct?

Personally I want to invest into the long term Steem option, but like myself and others new to the "game" might want to know exactly how this is done.

Is there a future plan maybe where steem could actually be converted into USD directly???

Thanks to anyone who can answer this!

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I believe STEEM -> BTC -> USD is the most used option. Some steemians might be willing to buy your STEEM for USD from you, I believe I have seen posts here offering such a service. But of course you'll need to trust them.

When Steem wins the world, I'm sure there will be direct USD <-> STEEM exchange services, it's just that the time is not ripe for them yet...

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I laid out how (and some theory as to why) I invested in STEEM here. It is a personal decision though which you need to make yourself; I cannot make a recommendation for others.

Hey, congratulations. It seems you got to the TOP 10 Trending posts on Steemit today so your post has been added to the Flipboard Steemit Trending Magazine for everyone to see it.

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Ah cool! It's a pity Flipboard folks cannot vote =)

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You can open the article in the browser from Flipboard and vote there (after you login :) )

Excellent guide, many users are confused about the different token, I hope it will help them.

not quite right with SBD. You cannot transfer SBD into your account or transfer BTC in to buy SBD directly. You can go from Exchange/BTC -> STEEM -> SBD internally, though. Right?

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You can buy SBD for BTC on an exchange. Then, I've never done that, but I presume you should be able to transfer those SBD to your account -- just like any other cryptocurrency. Did anyone try that?

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there is no deposit method for SBD. Actually, there isn't one for STEEM either. You'll notice that "deposit" for STEEM is in BTC (which then they presumably use to buy STEEM on their internal exchange).

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I mean, you can initiate a withdrawal from your exchange's wallet into your own wallet. This works for STEEM, should also work for SBD I think

Thank you I needed this visual explanation.

Could you elaborate on the influence of steem power? If I upvote with 1 steem power in my account, what does this equate to in terms of reward for content creator? Is my upvote worth 1 Steem? 10 steem? How does the math work? I asked this in a recent post but didn't get a response.

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I agree. There doesn't seem to be much about the calculation.

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I guess the reward is proportional to your power balance and your voting power (which in turn depends on how often you vote), but I'm not sure about the exact formula. I'll need to get a closer look at rewards, many things about them are unclear for me too

Let the trending goes on and on hahaha!

  • Each 3.3 years, a 10:1 reverse split occurs.

Can you explain why is that?

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Quoting the white paper:

In order to compensate for the ever increasing precision, the STEEM network performs a 10:1 “reverse split” every 32,000,000 blocks (about 3 years). At this point in time all balances of STEEM are divided by 10 and all prices are multiplied by 10. Cryptocurrency exchanges will have to suspend trading around this time and update the account balances and price history to reflect the “reverse split” before resuming trading.

The "ever increasing precision" thing means that as new STEEM is minted, the total number of tokens will eventually exceed the maximum number a modern 64-bit computer can represent. Without the split, token supply would increase 1000 times in 10 years.

Great explanation, I didn't previously understand the bond analogy for the steem backed dollars, your article and diagram made it crystal clear.

Very Helpful thank you a lot !

my Steem Power to convert to Steem need 104 weeks? only this??
pffff

Awesome Peterz, QUESTION: Would you happen to know how your SP voting power is affected once you action the Power Down option? Listening to World Crypto Network yesterday and it sounded like one of the very informative members was saying you loose all your voting power onced powered down? I may have misunderstood. I would think you only loose the power to 1% that comes out every 7 days. Cheers and great post.

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This discussion suggests that the voting power is reduced gradually over the two years

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Thanks Peter, that answers my question perfectly. It what I thought it should be. Cheers

Jeez in my pants

This was very helpful. I've only been on steemit for a week, and was a bit confused about all this. So this was very useful for me, and I guess every other newcomer. :D

Brilliant post. Not many people actually read the White paper (me being one of the crowd) and so this post is like a godsent. I was very confused by so many tokens/coins icoexisting together. Many thanks

Thank you for the useful post

getting 5000 dollars writing things that were already known??? Unbelievable!

As a n00b, is there a ressource anywhere that indicates what is the relative value of those currencies against one another? I understand the Steem-backed dollars are pegged against the USD, but I'm wondering where to find the recent SBD/STEEM and STEEM/SP ratios?

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SBD/STEEM ratio you can find on the internal market, and STEEM/SP is 1:1 I believe (at least in the Steemit wallet, Steem power is expressed as the amount of STEEM needed to buy that much power)

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I finally get it. Thanks

Great to have clarity on this! Curious to see how the platform matures with the rise of cryptocurrency. Thank you!

One question I have is how is Steem, or SBD actually converted to BTC? Is it something availble through our wallets or do we have to go through some sort of intermediary. I apologize if this is a novice question but I cannot see the method of transfer.

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You'll have to sell them on an exchange I believe

Aquí esta traducido al español

Good post!

Do you like it?:
My God STEEM

this detailed explanation is remarkable!
#laymanhere

the BTC to steem is a transaction which is possibe

Good explanation of the ecosystem.

thank you for creating this cheat sheet its been most helpful!

STEEM still has much room to grow in terms of value.

Can be converted to STEEM right in the wallet. Conversion takes 1 week and the price is median price over that week

In your wallet, instead of pressing the convert to STEEM, you can press "Buy or Sell" .

In the next window:
you can enter that you want to buy STEEM.
Specify the number of SDB you wish to sell
Specify a price that you would like to sell at
The tool will automatically fill in how many STEEM you will get
Press the Buy button. If your trade price matches market value, your SBD will be converted to STEEM almost instantly (seconds)

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Right, this is the internal market. I've mentioned it too, in the first bullet item

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Thanks @peterz,
I had never heard of it as the internal market before (I should have clicked on the link).

BTW, This is a very clear guide. I find it very useful.

This is a huge help for us new to Steem, thank you for posting! I just received my first payout and was trying to figure out how to convert steem dollars to SP without waiting a week. Now I know I can convert to bitcoin via an exchange and deposit back as SP today... if I understand that correctly??

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There's also a shortcut: sell your Steem dollars for STEEM on the internal market, then power up that STEEM

Thanks for your guide! Very clear figure!

it's curious that will call inflation the increase of monetary base.

In reality Steem value is going to probably increase a lot in the future, and there won't be inflation until Steem becomes the most used currency in the world.

At that point some change will be necessary to keep inflation under 10%