Steem Power vs. Steem Dollars - Difference between Power and Dollars on steemit

a-m-s (40)in #steemit • 7 years ago

The STEEM token is the network's base token. It is traded on multiple cryptocurrency exchanges and markets. Its market value determines the value of the pool of rewards paid by Steem. Its value also backs the value of Steem Dollars.

The Steem blockchain has two tokens: STEEM and Steem Dollars.

STEEM Power

STEEM Power (commonly abbreviated SP) is STEEM that has been entered into a smart contract and represents the amount of influence an account has compared to the rest of the network. The more STEEM Power an account has, the higher influence its vote has on posts or comments. STEEM Power also determines an account's weight for witness approval voting.

Accounts are created with a small amount of deposited STEEM in the form of STEEM Power. Content creators have the option to choose post rewards of 100% STEEM Power instead of the default 50% liquid currency (a combination of STEEM and Steem Dollars) and 50% STEEM Power. Users and investors also have the option of converting liquid STEEM into STEEM Power, called powering up.

STEEM Power cannot be transferred or traded directly, but the account owner can choose to withdraw liquid STEEM in weekly payments at a rate of up to 1/13th of the account's total STEEM Power. This is called powering down. The account will lose its voting influence in proportion to the STEEM withdrawn.

Steem Dollars

The Steem Dollar (commonly abbreviated SBD) is an asset intended to be pegged to the United States dollar. Steem Dollars can be traded at cryptocurrency exchanges, and used for payments for goods and services. There is an internal market on the Steem blockchain and integrated in the Steemit website where STEEM can be traded with Steem Dollars and vice-versa. Steem Dollars can be converted into an equivalent-value amount of STEEM in a process that takes 3.5 days. Steem Dollars which are held receive an interest rate. This rate is set as a variable collectively by Steem witnesses. As of March 2017 this rate is 2% annually. If Steem Dollars are being traded below parity with the US dollar and the supply of Steem Dollars is not too high relative to the liquid STEEM supply, the interest rate may rise.