Still Confused by Steem, Steem Dollars, and Steem Power? The Power Plant Analogy

in #steemit8 years ago (edited)


Welcome to all of our new users! Like most people who discover Steemit, you’re probably wondering about the currency tokens: STEEM, Steem Dollars, and Steem Power. Why do we need three of them? How are they different? When will I get paid? These questions are understandable, but they focus on the pieces. What we really need is a 200-foot view.

Let’s power up the drone

The basics of Steemit are easy to understand: you make money by posting and voting on good content. But as you get hooked on the great articles and moneymaking potential, you’ll want to understand how it really works. Steemit and the Steem economy are a complex system with lots of moving parts, so you’re in for quite an education.

If you try to understand the each part of Steemit, you’ll get there eventually. But I think there’s an easier way to begin. Turn on that monitor, please, and I’ll take the drone over STEEM CENTRAL, our main power plant. When you see the whole platform functioning, I think you’ll have a better understanding of the parts themselves and the roles they play. It's an imperfect analogy, to be sure, but a helpful one also!


What Powers Steemit?

What powers Steemit? The blockchain spins the gears. Witnesses keep it honest. Developers enable the Steemit social media platform and the payment systems with which we interact. Average people like us provide the content that gives the site its chief value. And we curate it, too, deciding which content is rewarded. Everybody tells their friends about it.

Put that together and what does it give you?

Holy guacamole! If a holistic whole is what you want, here is a model for you. We can compare Steemit to a conventional thermal steam electric power plant. Steam power, get it? Wink, wink. Change the ‘a’ to an ‘e’. But before we go there, I need to explain how a normal steam power plant works.

By then, our drone should be in position.

Steam Power Plants

Thermal steam power plants are used to generate power from coal, nuclear, geothermal, solar thermal, waste incineration, and many natural gas sources. Though there are many variations, these plants basically turn heat energy into electricity. This basic model forms the bones for much of the world’s energy generation.

Here is a picture of a geothermal power plant in Iceland, which uses steam to convert heat from the earth into electricity. Don’t worry about pollution; there isn't much of that. It is just releasing extra steam into the air. This is a very renewable and sustainable energy source.


Here is a diagram of how the main parts of a steam power plant work:


A steam power plant requires water (which can be recycled and reused) and a heat source. The heat could come from geothermal, solar thermal, coal, nuclear, natural gas, or some other source that is hot or can be burned. A pump sends the water to a boiler, which heats it into steam, and then that steam powers a turbine. When the turbine spins, it creates electricity with help from the generator. The generator is connected to an electrical grid, and customers who plug into the grid are able to use that electricity. The steam condensate is then collected an cooled, and that water gets pumped back into the system for reuse.

The Steemit Power Plant

The weather is nice today and they have the top down. Love that retractable roof, Steemians! Did one of the witnesses spring for that? My, it's a sleek machine. STEEM CENTRAL sure looks so light and airy. Such a transparent place.


Now the drone is directly overhead. STEEM CENTRAL sits right below us and we’re looking down inside. The inner workings are plainly visible on our monitor. They look something like this:


Content provides the value to the Steemit social media platform. It is most similar to the water that circulates through a conventional steam power plant. Vaporized into steam one day, more content appears instantly. Content is ever present, always changing, and capable of reuse and regeneration as content creators contribute fresh ideas with new written blog posts, videos, photographs, art, music, and more.

The Blockchain drives everything, like the great pump at a conventional power plant. Spinning out new blocks, generating new data that grows continually, it verifies and enables transactions and posting information. Content can be posted, more currency can be created, and people can get paid. This beast never sleeps.

Steem Power (SP) operates like a concentrating force. Like a boiler, it superheats the content and creates steam. Oops, I misspelled that; I meant STEEM! When you earn rewards for posting and voting, part of this is paid to you in SP. When you Power Up, you are increasing your SP also. Congratulations, you are becoming a virtual Class A shareholder with your bucketful of shiny tokens. SP gives you stronger voting influence. It also gives you a virtual stake in the future growth of Steemit and the Steem economy, since most of the new currency tokens created are paid out to SP holders. Where does the real muscle come from? From your hard work, of course. Creating and curating content makes it all start to bubble happily.

Steem Dollars are the price-stable currency tokens that represent about $1 each in value. You will get paid partly in Steem Dollars (SD or SBD). There are so many possibilities with SD. You can spend these in the virtual economy which is soon to come, you can hold them and accumulate a 10% return, or you can sell or transfer them into Steem, Bitcoin, or other currencies. Like the turbine that’s spun by steam power in a conventional steam power plant, SD bridge the raw power of Steemit with the real world applications of a price stable currency.

STEEM is the liquid currency, much as electricity is the final product from a conventional steam power plant. You can transfer it, spend it, or Power Up into SP. Passing through this generator is the final step before the product of all your hard work is realized. Through bridges, gateways, merchants, and exchanges, your STEEM plugs right into the online economy. When the market cap of STEEM goes up, you are paid more for bringing your STEEM to the market, just as if wholesale electricity rates had gone up and a conventional power plant operator cashed in by selling it back to the customers on the grid.

World Domination

The drone is out of power now. We’re grounding the sucker. Fortunately, we have an appointment with the man himself, the evil genius in charge of the Steemit Power Plant. Let’s see what he can add to our understanding of how Steemit works.


What’s that? He says he has no time to speak at the moment. He’ll make one statement and that’s all the time he can give us. Let the great man make his statement:

“This Power Plant facility is a most impressive creation. And yet, my Power Plant is only the beginning. If you thought I would stop here, you were wrong. (evil laughter ensues) I will not rest until we have achieved total world domination. Onward and Upward, Steemians!


I just signed up after some urging by my subscriber base on youtube. I am glad to be here and am excited to see what I can bring to the table.

I'm here too soon, and I can not believe how useful the platform is

Awesome! Welcome aboard. Please join and contact me there; I'll be glad to help get you started and make sure you get some votes, etc.

how to convert steem power into steem ?

When logged into your account, you will see some drop-down arrows next to your balances. Next to the Steem balance, there should be an option to power down. It takes 13 weeks for the full amount, a one week wait for the first part of that.

Is it 13 for a certain amount or is it for amount? For instance if I make $100 do get ALL of it or do I get to only have a small percentage of it and the rest I get after 13 weeks. Seems like a long time to something you've earned. I don't know if this is worth it if that case.

Your Steem Power is locked up, but can be powered down in 13 equal installments over that many weeks.

Thanks for your reply and please do help out a newbie if you can and up vote.

thx sir for your quick response

I´m still not sure about it, however, I have learnt quite a bit. Thank you very much.

Do you mean it takes 13 weeks for the full amount to be transferred to Steam dollars?
Is that to prevent people from all 'withdrawing' their money right away?

donkey can you help me get some votes and give some advice and tips?

I helped you out with a vote.

I don't know steem will succeed or not because you see there are 13 votes and not even a cent in place . Thats ridiculous.

depends who votes

I just saw this.. could I contact you for help too? I'm a bit baffled - but loving this as as an outlet for my writing.

hey.. I have created my account last year. but had not used it. though I did not get the concept. your article is good for beginners and it helps me a lot. would be great if you share some links. and one more thing... whats your username?

hello, is this thing still active? does it have potential?

Good to see you here juniusmaltby.... i watch your videos on youtube.... keep up the good work!

Steem is very much in need of quality material. I am a part time travel blogger and I'm very much resisting any urge to post memes that appear to get attention, however detract from the blog and the purpose of my writing. good luck with your following here, too on Steem it.


Awesome! I just joined as well. I create mediation films that I hope help people to relax when they watch them. I have not been posting my new content for a few years on youtube or vimeo because I have been waiting for a cool platform such as steemit to post them to. I can't wait to show the steamit community some of my new videos! For now posting a bunch of old content to try and get some followers. Hope you all enjoy!

Somebody tell me again what I can buy with Steem Dollars. I just read the article and still am not sure. Can I use them to promote a post -- or something like that?

Steem Dollars can be sent to an exchange (ex: Bittrex), then exchanged to BTC, which then can be exchanged for STEEM. Steem Dollars are a separate trade-able unit, and can, but do not have to be used on the Steemit Site.

You can buy just about anything with Steem Dollars, as long as the seller will accept them. Otherwise, going through an exchange like Bittrex will allow you to convert them into an acceptable crypto. Hope this helps! Let me know if I can clarify further.

That helped :) Thanks bro

Coinbase will put BTC, LTC, BCH OR ETH right into yo bank account as cash deposit.
You have to send to there first. 2.99% fee I think.

Great explanation of steem power, dollars and how it works like a steam powerplant. I have a better understanding of how you simplified it for a new user to steem my self. Great post!

I also found this post very rich and helpful. Bravo, bravo!

I have never experienced something like Steemit, this is too cool.

Do I spend SD when I up vote others?

Please follow my account, I post daily! :)

It does not cost you anything to vote. You are spending part of the daily reward pool, but your own money remains in your wallet. The more Steem Power you have, the more value you can allocate with those votes.

Understand, thank you very much for the information!

Thanks - I was confused before. But I think I understand now. If my wallet says I have the equivalent of $100,000 does that mean I can transfer to Bitcoin and eventually US dollars? I need a good Steementor!

Thanks for the information! So does that mean that the more Steem power you have te more steem dollars your upvote is worth? And does your Steem Power go down if you upvote?

Informative post. Though it would have been nice to give a little bit more info on Steam Power...the vesting you can convert it to other currencies. Whether the vesting period starts when you power down or not and so on.

That could be a whole new post right there I think. I'm really glad that this content is here for us to learn and have a better understanding of how things work around here. But I am even more thankful to have this network, because I can relate to most people here thoughts. We are all trying to make of this the better workplace and social environment. Cheers @avrdan and @donkeypong, thanks again for the info!

Thank you @donkeypong for taking the time to write such an informative post that helps newer people to the community like myself understand a little more about how things work. Following you and upvoting you. (and looks like I'm comment #200 here so obviously the community really appreciates your work). Thanks again!

this has just confused me more.

SUMMARY: I understand @donkeypong to be saying, you get paid in SBD and can recieve 10% annual interest on it. You can buy products in the STEEM Market Place with SBD or pay to promote your content in the promotion section. If you want to receive money for your SBD, or invest in the STEEM crypto currency that is traded on the exchanges, you must convert it to STEEM. If you want to Power Up, since it's the only way to receive 90% interest or value on the SBD you have to first convert the SBD into STEEM and then convert it into STEEM Power by powering up. You can also withdraw SBD as real hard cash you can touch, by converting SBD into STEEM and then withdrawing it to poloniex where you convert it to bitcoin and then withdraw to Payza or Paypal, or your bank etc...

I am 99% certain this is what he was trying to say.




If it's true, that you no longer receive money on content more than 7 days old, then that will be the tragic flaw of Steemit, or the entry point for a competitor.

People will not produce long lasting high quality evergreen content, but quick timely content they know can run good for 7 days.

I hope that is not the case, but even if it is, it just means Steemit is more supplement and less disrupt.

Please reply if you know the answers to my questions.
@thelordesfinest @knircky @botomatic @drpeanus @stealthtrader @atomica @owdy @gregor-f @beastmastermason @doggguy @beadunks @vilivolcini @skapaneas @easteagle13 @bergy @monty-kirkman @paulmlomonaco @splatterhaus @leprechaun @darknet @johnmelendez @djleo @donkeypong @freedomrings @hitmeasap @bravenewcoin

Did you ever find out if you don't accrue on content after 7 days? I agree with you 100%, I was hoping to put some solid research in some articles but if I knew I'd only have 7 days to yield anything that would never be the case! Quick hits only!

Yeah WOW. THIS NEW FORK THEY JUST IMPLEMENTED IS AMAZING. My upvotes jumped 10x and in some cases 40x, from 0.01 to 0.10, AND ON THIS PARTICULAR UPVOTE IT SEEMS, when I added my vote to yours it jumped to 0.45 so that is a major plus. Regarding the 7 days, you don't earn after 7 days. I am sure of that. They stopped the 30 day rule.

Get busy upvoting or get busy dying.

So if I have 10$ in each SBD, Steem & Steem Power for example & assuming Steemit continues to grow which of the 3 has the greatest potential for growth? If Steem value becomes 10x greater would all 3 categories be 10x greater, or one of them 100x greater etc? Guess I am asking what the potential is for growth in each category, and what needs to happen for that growth in each. #steemon

I brlieve this is hoe it goes. I feel it is acceptable to repeat content.

I too was wondering this please check my blog out too for crypto investing

wow dude thanks for the summary lol that helped a lot!

Very helpful man, I sure have a lot to learn. Many great users help me keep pushing forward though so hopefully I'll make a post that can help others :)

I've created a full ASTRO-prediction to @Reddcoin to entire 2018. You can watch it for free.
Watch it here (FREE):

Same here...I read it twice

you guys ever figured out how to explain STEEM a little easier? it's been a month and figured you might know by now

I got more confused.

These posts are getting me more confused..

The confusion level is beyond 9000 at this point.. lol at least he tried, I get what he was saying though to a degree.

Yo tbh I think im almost there

I upvoted your reply to give you Steem Power! or Steem dollars, or maybe both, I'm not too sure ahah

Do whaaat?

They dont want us understanding it they just want us using it.. lol

yes, i think you are onto something there! lol

Ohh yeah! This post is kinda confusing :p

While analogies make things clearer to you this one for sure has confused me more.

The way that I understand it, Steem Power is used to give people an incentive to keep creating and curating quality content. The more Power you have, the easier it is to have your content seen and distributed. An analogy, if this were twitter--SP is more like the number of followers you have. So by building power, you have a higher stake in the gaining of future currency that is released.

is that it? That could actually be the answer you just gave and nobody noticed it! :) Nice one if that's true... That helps.

This is perfect for new comers.. Very well said!

Hello I just found this article today and it's very informative; thanks so much for the amount of work you put into writing this and please keep sharing great content.

Grate article, I enjoy reading the blog. :-)

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