So you've joined up to Steem and had a chance to navigate around this new space and you get to your wallet and realise that there are in fact three different kinds of currency in your wallet? How confusing!!! I'm here to help you navigate and understand how these 3 currencies work and interact together.

STEEM is the easiest to understand as it is the cryptocurrency of the STEEM network (similar to Bitcoin or Ethereum). STEEM can be traded onto any of the crypto exchanges and you can check the price of STEEM on coinmarketcap.com:

As you can see the price of STEEM right now is $4.37

Although STEEM power is the least liquid it is also the most important when you are new to Steemit. SP is essentially a measure of your influence on Steem. The more SP you have the more weight your votes count towards the final payouts of a post. The major downside of SP (and something newbies don't always understand) is that SP can't be quickly converted back into STEEM and sold on the crypto market. According the the Steemit FAQ page ‘If a user wishes to “Power Down” SP, they will receive equal distributions of the STEEM weekly, over a 13 week period’. So although your wallet shows your estimated account balance you cannot instantly trade your SP. Heres an example from my wallet:

As you can see my estimated value is $16.12 but I only have $6.651 as SBD and the rest tied up in SP.

If you want to have more influence on Steem you new to gain more SP - you can either earn it through generating content or you can buy it instantly. If you have the money I recommend buying some SP early on as it is essentially a ‘shortcut’ and will help you grow your blog quicker (unfortunately I don't have enough spare $$ to do this at the moment so Im growing the slow way).

So SP is the most important when you are new to Steem as the more you have the more your influence you will have (remember you can upvote your own posts too!). More influence also means more curation rewards.

Steem dollars (SBD) are the other currency on Steemit and are designed to be pegged to $1USD. SBD are often used to transfer to other users in Steemit (such as for competitions, and can also be traded to bots for upvotes).

A real life example featuring our friend Bill

Meet Bill

Bill is financially secure and has his money tied up in fixed term deposits (think of these as SP) which will earn him interest. Bill also has money that is liquid (cash and bank card). If Bill wants to spend money right away he can use his cash or bank card (similar to STEEM). However if Bill finds a new Lambo he wants to buy he will have to ‘power down’ some of his investments so he has enough money. This takes time as you can’t usually withdrawal fixed term deposits (this is similar to SP you cant spend it automatically it takes time to convert to the liquid currency STEEM.

Bill has a balanced portfolio. Be like Bill

Be sure to check out my other introductory posts for newbies to STEEM:

Why its important to use tags correctly - an introduction

Should you be using an upvote bot - an introduction guide for minnows

The compete newbies guide to curation rewards

Things I wish I knew when I joined Steemit

Remeber to upvote, follow and RESTEEM if you or your followers will find this useful

References:

https://steemit.com/faq.html