Steemit Vlog #4: Steemit 101 - Steem, Steem Dollars, and Steem Power
In today's video I explain the differences between Steem, Steem Dollars, and Steem Power for those new to the platform, as well as those who might still not feel as comfortable with these concepts as they feel they should be. The explanation is designed to be as informative as possible without being especially technical so that anyone using Steemit can feel comfortable with these three different forms of money.
I made this video because, to be honest, I've been struggling with these concepts despite an economics and finance background. Thankfully @wingz posted Peeling Back The Economic Layers of the Steemit Onion, which was a big help, and was kind enough to put up with my incessant questions over slack. @aem's Steem for Noobs was also a big help and is recommended reading for anyone looking to dive a bit deeper.
@wingz also published a more thorough written explanation which you can read here: https://steemit.com/steemit/@wingz/the-ultimate-visual-guide-to-using-the-steemit-site-with-full-explanations
Follow me on instagram and Twitter also @andrarchy
Why I may never power down...
Ooo that makes me think that another way to describe it is as your 401K (tax-free retirement accounts in the US). It should be thought of as a retirement fund. Thanks for the idea ;)
andrarchy your saying 1 steem power = 1 steem when you power down payed out in equal payments over 104 weeks so that is 0.0096153 steem per week if you powered down 1 steem power .
Here's an example let me know if this is correct lets say 1 steem is worth 5.00 dollars on bittrex so therefore 1 steem power is worth 5.00 dollars
1 steem power = 5.00 us dollars
1 steem = 5.00 us dollars
So when I power down lets say 1000 steem power and steem is trading for lets say 15.00 dollars on bittrex 1000 steem X 15.00 dollars = 15000 dollars so 15000 dollars / 104 weeks = 144.2307 dollars a week for 104 weeks assuming steem was a steady price of 5.00 us dollars every week for 104 weeks.
Now this leads me to another question on the day I power down the 1000 steem power is my 1000 steem power converted to steem at the price of steem that day and then payed out over 104 weeks or is it prorated every week for 104 weeks ???
As we all know cryptocurrencies are very volatile so I for one think the community needs to know if your steem power is priced all on the powered down day or prorated , so we each can make are own plan of powering down
me-tarzan
After you elect to "power down" X steem power, a week later X/104 IOUs (Steem Power Units) are removed from your Steem Power account and you are transferred X/104 Steem. Those X/104 Steem will be worth whatever the market rate for Steem is in the present moment. So yes, if you power down and a week later the value of steem plummets right before you are going to receive your Steem payout, then yes the Steem you receive will have a low price. BUT if 3 days later the price of Steem spikes, then obviously the "cheap" Steem you received three days ago will now be worth whatever the new price is. For steem power the time at which it is converted into Steem is IRRELEVANT. To understand this, think about Steem Dollars. For Steem Dollars, the time at which you convert IS relevant. For example, let's say Steem is having a bad day and it is trading for 10 cents. That means that if you cash out 1 Steem dollar, the Steem system will give you 10 Steem. If the next day the price were to jump to 50 cents, the Steem you received yesterday went up in value 500% and you made a very good profit. And if you were to cash out another Steem Dollar on that day you would only receive 2 Steem. None of this happens when you are dealing with Steem Power because 1 unit of Steem Power is equal to 1 Steem. Price is irrelevant.
Andrarchy Thank you for your reply
ME-TARZAN
GOLD! Good to know there are other HoC fans on here :)
Thank you for putting this into a video with diagrams. It answered many questions, and like you said, simplified the process without the tech language I am unfamiliar with at this point. Well done!
Really glad it helped, thanks so much for the kind words. In my next video I will use those diagrams more and explain the system a bit further, but I will still stay clear of the technical aspects so stay tuned.
Lunchtime: day 1 of Steemit and I spent any free time during the work morning to try and understand the difference between these categories. Your video has definitely reassured me about the meaning and implications behind each one... This thing is going to change everything, thanks for your hard work!
This comment made my day. And I agree! Thank you!
Many thanks from me for so shi video
This is SO helpful! Thanks so much for explaining this so clearly, andrarchy! I'm going to share your post with friends who are new to steemit.
Glad it helps. Thanks for watching and sharing :)
My question is in regards to powering down. If I am powering down, but still posting blogs, comments and upvotes, I still receive Steem Power from those new posts correct? If that is true, I I should be receiving a weekly payout that increases as time moves along. Am I correct in that? Thanks again for the great video.
That is a REALLY good question and one I had myself, which is why I didn't specifically talk about it in addition to the fact that it's a bit more detail than I wanted to go into. I always assumed that you could power down a specific amount. So if you have 11,000 and you powered down 1,000 Steem Power, you would start receiving payouts of 9.62 Steem every week until that 1,000 is payed out. You would still have 10,000 in Steem Power, and any new SP awards would be added to this balance. If you can only fully power down, then yes I would assume that you will still receive new steem power
I noticed that the Wang bot is doing it. It is powering down and of course posting and voting like crazy. If I power down at 11,000, am I ONLY powering down the principal of 11,000? Or am I powering down the 11,000 PLUS interest and other Power created? Because if that is true, it may be financially useful to powerdown and keep posting and voting like crazy. Thanks again.
To be honest, I don't know. I'm of the personal opinion that the most financially rewarding strategy is to post quality content as frequently as you can and curate content well. I think any time spent trying to "play the system" is probably time that would be better spent creating quality content. But that's just me. That being said, I don't think principal and interest are in any way differentiated. Your steem power is like a safety deposit box filled with IOUs. When you are rewarded interest a fungible IOU is simply added to "the pile." If you want to cash out 20 steem power, then 20 IOUs will be taken off the pile and then distributed out to you in 104 weekly payments of steem. My guess would be that what the wang bot is doing is a good short term strategy especially if the goal is to cash out into BTC or USD as soon as possible. But I doubt it beats just leaving your steem power as is over the long run, considering the high rate of interest as well as the additional influence you have in the system.
I'm experimenting. I powered down today just see what would happen. And I was told I powered down a specific amount of Vests, that equaled the amount of Steempower I had at that moment. I have since posted and upvoted content and I still am giving out about 4 cents per vote. So I will wait and see if the steem power created from those posts, including this one, will be powered down with the original vests, or left alone.
I found your video refreshingly straightforward and easy to understand. I'm new to the platform and was looking for an introduction to this particular set of ideas that was not too deep for me to get my head around. This was the ticket! Thanks!
The most simplified version I've found so far! Still a little complicated, but I'm sure everything is going to be streamlined (steemlined* hehe) very soon and Steemit is going to be as simple as Instagram.
Great explanation. Thank you !
I like the analogy.
Very interesting! I like it! Good Luck To You!