Why, When and How to use STEEMIT’s Internal Exchange

Once of the many features of Steemit is the internal Exchange.  Every day many people use this market to swap SBD for STEEM and STEEM for SBD.  Yet at the same time, there are many people on Steemit that don’t use the internal exchange and some that don’t even know it exists.

Why you should use the Internal Exchange

• The internal exchange is rather easy to use.  Even I got the hang of it will little or no trading experience.

• You do not need additional authentication other than your Steemit account to trade on the internal exchange

• There are no costs.  That’s right it is free to use.

• The spread between the buys and sells is always very very small

How to use the Internal Exchange

The internal exchange is rather easy to use.  You can get to the market from your wallet.  If you click on the drop down for either STEEM or SBD you will see Market as an option

 

Once you go into the market you will see a market depth visualisation.  Just above this you will find Last price, 24h volume, Bid, Ask and Spread.  

Below the visualisation you have the BUY STEEM and SELL STEEM options.  You can also see how much SBD or STEEM you have available (1.).  If you click on the actual word Available (2.) under BUY STEEM the total (3.) in the Buy STEEM box will update to your available amount of SBD.  You can also manually enter the amount of SBD you wish to sell.

Under Price for BUY STEEM, the lowest ASK will be the default price (4.).  You can change this by just over typing with your desired price.

Once you have entered all the details of your order all you need to do is select BUY STEEM (6.) You will be promoted to log in and then the order will be placed.  You will find all of your open orders at the bottom of your screen (7.)

 

When you should use the Internal Exchange

You should use the internal exchange any time you have SBD that you wish to convert to STEEM and then Power UP or if you have STEEM and you wish to buy SBD.  SBD is the currency used to pay for services on the STEEMIT block chain, so it may be necessary to use STEEM to buy some.

If you wish to practice trading, the STEEMIT internal exchange is also a good option.  With no costs involved to trade, it make it the perfect platform to get some practice on.

How do you earn SBD to trade on the Internal Exchange?

When you receive Author rewards on Steemit, if you have selected 50%/50% pay-out, portion of the pay-out will be in SBD.  If you select 100% Power up, your payment will be fully in STEEM POWER (SP).

During periods when the price of SBD is higher than STEEM your rewards are worth more by selecting 50%/50% pay-out and then selling the SBD for STEEM.  

To try and explain all of this and to make things simple, let’s look at an example.

A post has a pay-out value of $10.  First of all this represents the SBD value of the pay-out, not US Dollar or even STEEM.

Approximately $2.50 of this goes to curators and $7.50 goes to the author.

For sake of this example STEEM is traded at $2 USD and SBD is at $2.50. STEEM to SBD is 0.80

First, let’s say the authors has decided to power up his post 100%.  This means that the pay-out will be in SP. However the post has been valued in SBD and must be converted to SP.  The Steemit system takes SBD to be valued at $1 USD

Therefore we can say that Steemit values the author’s rewards as $7.50 US$. As we have assumed the price of STEEM is $2 USD, the code says to its self ‘Hay, using this exchange rate of $2 USD per STEEM, how many STEEM can I get for $7.50 USD.’  In this case, the author would receive 3.75 SP as author’s rewards.

 Now let’s say the author had decided to take payment 50%/50%.  The $7.50 SBD value is now split to 3.75 SBD and SP. The SBD actually received is 3.75 as they Steemit system recognised the price to be fixed at $1 USD. But we must calculate the value of the SP. 

So we have 3.75 SBD to convert to SP. At $2 per STEEM, 3.75 will get us 1.875 STEEM

Now we have 3.75 SBD available to trade on the internal exchange.  The STEEM to SBD ration is 0.80 so we could get 3 STEEM.

In total we now have 3 STEEM traded on the exchange and 1.875 STEEM earned directly from the post.  That is a total of 4.875 STEEM.

This equates to 1.125 more in STEEM by taking your payment 50%/50%

So if the price of SBD on the open market is greater than the price of STEEM, then you should take your post rewards 50%50%.  And this is how you earn SBD to trade on the internal Exchange.

You can also enter contests that offer SBD as prizes, or you could offer a service on the block chain and collect SBD as payment

Do you use the internal exchange?  how often do you use it?  what are your thoughts and feelings on it?  Please do share your thoughts and comment below

Hope that you found this post of value - if I have any of the calculations or facts above wrong, please do let me know as this post is part of the copy for my upcoming online STEEMIT course