How Steem Money Works and Becomes Cash! Short, Easy Explanation
I now know how steem works and it took about 10 minutes. Here's what you need to know so you can quickly understand the money involved!
Let me explain first the difference among steem, steem dollars, and steem power.
How Steem Works
First thing to know is that steem has no real value in the steemit.com ecosystem. It's a currency that is traded on open platforms and is volatile just like the others you've probably heard of. People trade steem on coinbase, poloniex and others because of speculation.
As a user of steemit.com, you would use steem to either cash out your steem dollars or steem power OR to buy into either of the two.
Like I said, steem is volatile and one shouldn't hold steem in their account and do nothing with it. Instead, trade steem for bitcoin or trade bitcoin to steem power and buy more influence in the steemit community..
Your steem can be used to purchase steem dollars or steem power or vice versa.
What are Steem Dollars
Steem dollars is the currency of the steemit economy, just like US dollars is the currency of the American economy. However, unlike steem, steem dollars have no value in the real world. They are used to give and receive value in the steemit community.
Geniously, the founders of Steemit pegged the steem dollar to the US dollar. That means it is a much more secure investment, just like the US Dollar (for now). It does not go up and down crazily in price like crypto currencies or some other digital assets. It is also more liquid that steem power (explained below) so it can be converted quicker to steem.
It also collects 10% interest from the new steem created (more on that in @andrarchy 's video below). So consider it a short term investment and means of trade in our ecosystem.
What is Steem Power
Basically put, steem power is a longterm investment in the steemit project!
When you invest in steem power you invest in your influence on the platform AND the other 90% of the newly created steem!
However, once your earnings are steem power by buying with steem or steem dollars, you can only convert that steem power back over a 13 week period. That just means it is not very liquid, but like I mentioned, it's a longterm investment.
Use steem power to save if you believe in steemit AND to have more influence on steemit.com
Keep Steeming to Learn More!
I have been on steemit for more than a week and it took me a while to really understand how the how Steem money works and how to turn it into Cash!
I learned simply by using the platform (and making a bit of money at the same time).
More Explanations of Steem, SBD and Steem Power
The original video that taught ME about steem was from @andrarchy who explains it so well in a video a year ago:
Andrew also generously did an interview from the great request of @anialexander where he explains more!
Disclaimer: I am new on steemit, so the info is as accurate as I know best. For further 100% accurate info, you should read the white papers on steemit.io
This is perhaps the best and most easy way to understand all of this . One things I dont get is the amount of steem power in parentheses?? Can it be withdrawn or is kinda like a history of power?
You can withdraw your steem power at any time by powering down. It will be converted to steem tokens meaning the value of your steem power is whatever the value of steem is on the market at every interval you power down. The whole power down process if you choose to initiate it is 13 weeks. That means if you have 13 steem power every week it will be converted to 1 steem until the end of t. If you choose, you can stop the power down at any time.
You can learn more about it here
https://steemit.com/steemit/@cryptos/how-to-power-down-your-steem-power-the-smart-way
Such a great article! There are many new people on here, like myself, that don't fully understand the Steemit concept. Now that you've explained it, I completely understand. I think it's important that people reinvest back into Steemit (using steem power, at least 50/50) so we can keep Steemit growing and a positive influence for the community. Thanks again :)
I've set my settings so that payout is 100% Steem Power. I'm fully invested! It's a great place to spend time. Thanks for your input
So good to have people that'll put great explanations for beginners and easy to find, expecting more ^^
Thanks, it's all about having fun! I'm really enjoying steemit. Glad you could find my post
I wish this concise of a description of the variants of steemit's payout options/crypto was available when I was first poking around here.
Having this info (including links to the videos) all in one place should be really convenient for some of those first starting out.
Nice work!
Thanks for the compliment! It's fun to add value -- and earn from upvotes :-)
"earn from upvotes" - AND resteems, here's one for you!
Thank you! And I'm honored to be your most recent follower
Thank you for your very clear and concise explanation of the differences between Steem, Steem Dollars and Steem Power. Your post made it simple and easy to understand for new users.
Very happy to help! Thanks
Great post, very helpfull video. This really helped me better understand the Steem mechanics. Since I am here to really contribute to the platform, I'll be converting a proper portion to Steem Power. Thanks for the explanation! :-)
I hope you enjoy it as much as I do! Good luck! I've followed you to keep up
Great article especially for new people to Steemit like meself.
Cheers
Thanks! Glad it helped
Thanks.
Thanks
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getting
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Me too!