The Ultimate Guide To Steemit Money

in steemit •  2 years ago

Continuing on from my last post The Ultimate Guide To Steemit Payouts, this time we're talking about "money."

Money is in quotes because the money on Steemit is more like game tokens than what we traditionally think of as money. When playing the Steemit game, you earn tokens. These tokens have value outside of Steemit because there are users and investors who are willing to pay for what the tokens represent - A claim to partial ownership of the system.



Can I earn money on Steemit? How?

You can earn money various ways on Steemit:

Blogging - By sharing your original and unique posts, you can get upvotes by community members. Depending on the upvotes you receive, you will get a portion of that day’s total payout.

Commenting - Not everyone has the desire to blog. But that's just fine, because there are plenty of rewards to be had by leaving comments and interacting with other users.

Curating - If you own some Steem Power, discover a post, and upvote it before it becomes popular, you'll receive a curation reward (assuming the curation award is at least 0.001 Steem Power).

Investing - If you believe Steem tokens will increase in value, you may purchase STEEM. You have the option to "Power Up" your STEEM to turn it into Steem Power.
See: What is the difference between STEEM, Steem Power, and Steem Dollars?

How can I invest in Steemit?

For clarity, you would be investing in Steem the system, not Steemit the private company.

You can invest by purchasing STEEM or Steem Power.

  • Purchasing STEEM is similar to buying shares of a company.
  • Purchasing Steem Power (SP) is similar to buying restricted shares of a company.

You can also invest your time by commenting, curating and posting.

When you invest your time into the platform, you'll receive upvotes, and with the upvotes a proportionate amount of the newly-created STEEM.
See: What are STEEM, Steem Power, and Steem Dollars?

What are STEEM, Steem Power, and Steem Dollars?

There are three types of tokens within the Steem Ecosystem, each playing a unique role:

STEEM - STEEM represents ownership of the Steem blockchain. It can be sold on an exchange or transferred to another user at any time. The drawback to STEEM is that it doesn't give you any voting rights.

Steem Power - Steem Power is the same as STEEM except it's locked away for a period of time, it gives you influence in the system that STEEM does not, and it gives you some protection from dilution.

You can't purchase Steem Power directly - you need to purchase STEEM then "Power Up" your STEEM.

Owning Steem Power (SP) is kind of like having restricted shares in a company, or in this case, the Steem blockchain. Increase your SP and you’ll have more influence on the network thanks to a more powerful vote. You'll also be able to use your SP to determine the Steem witnesses, who in a way, act like board members of a company. SP is restricted because it's less liquid than STEEM. You cannot sell your Steem Power - it must first be converted into STEEM.

Converting your Steem Power into STEEM is done by "powering down." If you go into your wallet and click "Power Down," exactly one week later you'll receive a payment of STEEM. You'll get 1/13 each week for 13 weeks. If you had 1,300 SP when you first powered down, you'd receive 100 STEEM per week for the next 13 weeks. You can stop the power down process at any time.

While Steem Power cannot be sold, it can be lent out by delegating it to another user.

Steem Dollars - Also referred to as STEEM-Backed Dollars, or SBD, each Steem Dollar is a claim ticket to $1.00 worth of STEEM. If you go to your wallet and click "Convert To STEEM," the system will take the average price of STEEM over the next 3.5 days and give you the appropriate amount. If the average STEEM price during that 3.5-day period is $2.00, you'll receive 0.5 STEEM.

Where does the money come from?

The currency of is Steem. The value of Steem comes from investors, users, and traders on exchanges.

Using a pre-determined mathematical formula, the Steem network continually creates new Steem tokens to reward content creators and curators. Some of the newly-created currency gets transferred to users who add value to Steemit by blogging, commenting, and voting on other people's blog posts. The remainder is distributed to holders of Steem Power and Steem witnesses.

The "money" at its core is like game tokens, distributed to creators and curators as rewards for successfully playing the game. What makes the system robust is that the tokens, traded on markets, have a real-time value. The markets allow Steem tokens to demonstrate their value. This way, when one has a Steem token, that person can know what their token is worth to other people. It is similar to how someone playing a video game could obtain a rare item by playing the game. If they have the scarce item, then they could potentially sell it on video game item markets. Think of Steem as a game system for content, where the rewards people earn are video game tokens that have real market value and are readily tradable for Bitcoin and USD.

Another way of looking at Steemit is as a website much like Reddit. However, it is different in that it pulls its information from a decentralized blockchain and cryptocurrency database called Steem rather than a centralized, private database. In this way, Steemit is also analogous to other blockchain-based businesses such as, which pulls its data from the Bitcoin network.

Rewards paid to bloggers do not come from Steemit Inc, or investment in Steemit Inc. It comes from the Steem blockchain itself. Steemit does not and will not ever compensate the contributors of the Steem network for curating and creating content. Steemit is not a middleman to any of the blockchain processes, and the technology remains completely open source and transparent for anyone to audit and verify. Steemit is a social network built on the Steem blockchain, whose users are paid by the blockchain.
For a more in-depth look, check out:

Since new STEEM is always being created, how am I affected by holding STEEM, Steem Power, and Steem Dollars?

STEEM - Today, the inflation rate sits at about 9.25%, and it is decreasing by about 0.5% each year. 9.25% is your annual dilution rate.

Steem Power - 15% of the newly-created STEEM is paid as interest to holders of Steem Power. If you receive zero curation rewards, you will still have some dilution, but not as much as if you were holding STEEM.

Currently, the top curators on the platform are earning significant returns after taking into account dilution.

Steem Dollars - No dilution. At times, Steem Dollars earn interest (go to your wallet to see the current interest rate).

Why won’t Steem Dollars become inflated?

Steem Dollars work differently from standard STEEM tokens. The issuance of STEEM tokens back Steem Dollars. When the value of the STEEM token goes down, more STEEM tokens are used to back the Steem Dollar. The Steem Dollar is affected little by the inflation of Steem with one exception: If the price of Steem tends towards zero.

In general, the price of 1 USD is a target price but the network cannot guarantee it under all circumstances. In particular, there are a few unlikely "Black Swan" events, like USD hyperinflation and STEEM going to zero, which can affect the backing mechanism. Additionally, the number of Steem Dollars in circulation should not exceed 20% of Steem’s market capitalization for safety reasons.
To read more about the limits of Steem Dollars, check out:

What is Powering Up and Powering Down?

Powering Up - If you wish to gain more influence in the network, you must increase your Steem Power. Powering Up is the process of turning your STEEM into Steem Power.

Powering Down - If you have Steem Power, and wish to cash out, you can begin to Power Down. While powering down, the network has calculated your Vests, which are a stable measure of STEEM supply. The system will transfer 1/13 of your Steem Power, computed as Vests, to STEEM each week for 13 weeks.
Example: 1,300 Steem Power will be paid out as 13 weekly payments of 100 STEEM.

Users can continue to curate and earn curation rewards while powering down and may stop a power down at any time.

What are Vests?

To put it simply, Vests are your investment tokens whose value is represented by Steem Power. Steem Power is akin to Steem held in a fund. Vests are Shares in that fund.
For more details, check out:

How do I get more Steem Power?

If you have Steem Dollars, you can convert them to STEEM from your wallet. Once you have STEEM in your wallet, click Power Up to turn it into Steem Power.

If you don’t already have STEEM or Steem Dollars in your wallet, you’ll first need some Bitcoin or another cryptocurrency. You may purchase Bitcoin on various exchanges. A couple popular Bitcoin exchanges are, and Once you have your bitcoin:

Click the three horizontal lines in the top right corner of
Click “Buy Steem”
Send the amount you want to purchase to the address on the screen.
Here are a few other tutorials on how to buy Steem and transfer it to Steemit:
For more information, this post contains a few tutorials about buying STEEM:

How do I withdraw money?

You can withdraw money many ways. Here are step-by-step tutorials for several different options:

Sell Steem Dollars via Poloniex

Withdraw Steem Dollars to a bitcoin address

Convert Steem Dollars to a country’s currency and withdraw to a bank account

Convert Steem Dollars to WIREX debit card (USD EURO & GBP Supported)

Convert STEEM to many other cryptocurrencies via ShapeShift

Why should I Power Up and not cash out?

Everyone has different priorities. Some may want to power up to increase their voting influence and curation rewards. Others may want to cash out. It’s strictly a personal choice.

If you believe Steemit has the potential for significant growth, you might think it wise to power up. Not only will you immediately gain more influence in the network, but it also has the potential to increase in value.

Is it true that payout money is coming from new investment in Steem?

Yes, but it is highly misleading to say so. When someone cashes out, he effectively decreases his investment in Steem. At the same time, another individual increases his investment in Steem. Therefore, it is not fair to only mention the "new investment" and skip the fact that simultaneously a current investment ceases to exist.

Payout money is always in the form of Steem tokens. For your convenience, and to hedge against price volatility, those tokens are packaged as Steem Dollars when the blockchain pays you.

STEEM has value since they are like shares in an enterprise which has a real market value. When you cash out, you sell those tokens (shares), and somebody else buys them from you. Therefore, these are just shares of a company changing hands: one person exits, the other takes their place.

Let's consider an example: If Mark Zuckerberg wanted, he could reward the most popular Facebook pages with shares of the Facebook. Those users could then cash out by selling their shares, and somebody would surely buy them. This hypothetical scenario is akin to the daily happenings in Steem, just on a different scale.

What determines the price of STEEM?

Much like how the price of a stock goes up and down, the value of STEEM varies, determined by buyers and sellers on exchanges.

Will I make a profit by powering up?

Powering up does not ensure that you will automatically earn a profit. Profit is contingent on how the price of STEEM changes over a given period as well as how much you earn as a content creator or curator.

Powering up does a couple things for you:

  • Increases voting power and curation rewards
  • Protects against dilution (15% protection compared to the running inflation rate)

How do I send money to another user?

  • Click on your avatar to get the drop-down menu, and select ‘Wallet.’
  • Click the down arrow where your STEEM or Steem Dollars are displayed
  • In the drop-down menu, click ‘Transfer.’
  • In the box ‘To’, type in the username of the account you want to send the STEEM/Steem Dollars to.
  • Type your password to authenticate.
  • Check your history to confirm your transfer.
    Check out this post for instructions with photos:

What are fees for transferring money between Steem’s three currencies and between other users?

There are never any fees for transfers within the Steem network. However, if you transfer Steem to an exchange and convert it to another currency, you will incur a small fee.

If you have any questions, let me know in the comments!

Follow me @shenanigator

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Another fantastic post. Resteeming for my fellow ignoramuses, thank you for really making the Steem thing accessible to those of us not blockchain savvy.


Thanks for the kind comment. I was trying to keep things simple. I had the feeling that the post was getting a little too technical at times and using too much financial jargon, but I'm glad to hear it was readable.


So is the $ amount listed to the right of the upvote arrow, at the bottom of each article, the amount you earned in USD or is this the amount in steem dollars?


You and me both! ;)


This post is pretty rad!

Thank you! Very useful article!
Does someone work to transmitt STD to debt card via telephone? So, when it would be easy to insert and out real money to system, then Steem would be more popular. I mean, that it would be cool, if it looks like switch on radio :)


I'm glad you found it helpful, but please don't transmit any STDs.

If you're asking about transmitting SBDs to a debit card - Depending on where you live, you can try options like Wirex or Bitpay. If those don't work for you, try searching for "Bitcoin debit card."

You can transfer funds to the debit card by selling your SBD for Bitcoin on an exchange, or with slightly higher fees, you can use a simple service at

There are many posts on Steemit with step-by-step instructions showing how to use these services.


Thank you very much! I understood, but i want something more - i want Steem to be a usual payment system, because i believe, that using this instrument we can build decentralized country! And i tell all my important friends about it, because they are also want changes. I have a big communities in different social network and i explain them, that one of the main article to live and to create in decentalized word - it is voting system and good financial system. And i call them, to share knowledge.


I picture Steemit growing big enough that we don't need a debit card to make purchases. The users can pay each other for products and services. I think that, in time, we'll see a lot of transactions happening within the system. I think businesses will eventually accept STEEM as payment and you'll just send STEEM to their business account.

Very helpful and informative post! Thank you for this, now I understand Steem better! Alot of Steem guides here but this is the most informative one so far.

Wow! I thought the whole "Ultimate Guide" was a pretty big stretch but I think it's pretty accurate. Thanks for the hard work!


Haha, I thought the same thing about my previous post. I was thinking "Is this enough information to call it an 'Ultimate Guide?'"


I think I'm about 24 hours new. I'm still trying to figure things out but the guide will be a great starting point. Going to study it. This is my first reply and adding to my massive 2 post. I just hit 400 followers so I think I'm on a good track! Thanks for all your help!

This, and the previous guide post are an excellent series, worth updating and republishing. Very, very nice.


I appreciate that, thanks for checking them out!

Very good article. Thanks!


Thanks for the compliment. Hope it helped you out.


thanks for sharing this vital information. Will be a very important guide for most of us new members in this great community...keep it coming mate


I'm glad you found it helpful!


Yes. Very such I am folom already following you to get more of such useful contents...keep it flowing mate. We need such in steemit...

I am new to Steemit, and this was very helpful...Thanks!


You're welcome. Glad it was helpful!

Another eye-opener information for new Steemit users like me.


Very helpfull for someone new like me . Thank you !! :)
I have a question if you or an other steemian can help :p
Today i bought like 2.5 ( for testing ) Steems and powered up my steempower but i did not see any change in my power vote. Is it normal ? should i wait or i need to buy much more than 2.5 steem to see the difference ?


Thanks for the question, you'll need more than that to see any meaningful difference.


Ok i'll try with 10 steems and will se if it make any diff ...
Thx for taking time to answer me :)


Any amount of Steem Power will make a difference, it just might not be enough of a difference to add up to $0.01. The most my vote can possibly be worth at this moment (assuming 100% voting power) is approximately $0.89. This means that each Steem Power can have a maximum vote worth of about .00052. That means you need at least 20 additional Steem Power to add an extra penny to your vote.

This is much appreciated!
You got a fan, now following you :)


Thanks for the follow!

This is the best article I've read about Steemit so far; it helps that it's all in one spot too.


Thanks for the compliment, I'm glad you found it useful!

Good information on where steem money comes from.


Thanks, I'm glad you found it helpful!

great post!



Is there a steem wallet associated with each person's account? If I buy on an exchange (or ShapeShift), what address do I put in as the receiving steem account?


Yes, there is a steem wallet. Your wallet address is your username, so the receiving steem account is going to be your username.

I always recommend sending a small amount the first time so you know you're doing it correctly.

This was a GREAT post, I was insanely confused on the entire token, dollar and steem power thing, this helped a LOT, thank you very much for this - Ill be going 100% steem power


Thanks for the compliment. Just a heads up, when Steem Dollars are selling for more than $1.00 on exchanges, you're better off doing the 50/50 option, then selling your Steem Dollars on an exchange. With Steem Dollar's current prices, you'll get a much bigger payout this way.

Go to to see the current market price of Steem Dollars.


the 50/50 and 100% thing still confuses me

i sat there looking at it, couldnt figure it out and moved along haha


Check out my previous blog post, I cover the various payout options in that one.


will do ! thank you !

I'm new to steemit and I have to say this brought me up to speed really quickly. You now have another follower.


Welcome to Steemit! I appreciate the follow.

Nice overview. A definite upvote from me!


Thanks for the support!

This explains everything perfectly! Thank you so very much!!!! Follow upvote resteem finally an explanation I can understand!


Haha, it can get pretty complicated. Glad it helped!

Good article for me as a beginner! Thank You!


Glad you found it helpful! Be sure to check out my previous post if you haven't yet - A lot more information there!

Nice to have a guide to explain the core of Steemit in layman's terms.


I'm happy to hear it was simple enough. There was a point when I thought I was including too much financial jargon and was getting a little too complex in my explanations.


It can be a complex scenario and there are a lot of moving parts to this new mechanism. Some of the facets are new concepts while others are tried and true. No, your post/article had the right balance and I feel that it had the potential to hit the widest scope of individuals group without alienating anyone at the fringes.


That's good to know, thanks!


I am looking forward to your continued posts that help make sence of this MAD MAD WORLD.

Nice and precise! I will be using this post for newcomers...excellent work buddy.


Thanks, I appreciate the compliment!

What are the options for sending Steem or SBD to PayPal as fiat currency?


Hopefully, others can give you some advice as well, but I know Coinbase allows you to send fiat to Paypal. You'd have to convert your Steem or SBD into one of their supported currencies first though.


Thanks @shenanigator!
I found a better short term solution. I will sell my Steem to a friend and he will make a deposit straight to my account. I cuts out all of the middle men. ;-)


That's a good way to do it as long as you have a friend who's wanting to buy STEEM.


We just sorted it out today. Now I can pay my rent. =)

Hey awesome post, I'm still trying to wrap my head around a lot of this stuff so this post was super helpful and very straightforward. Each day I'm getting a better grasp of how this stuff works


As you spend more time here, you'll learn about the system as you go along. I recommend following @steemitblog to stay up-to-date with the changes.

Good article for beginners. Ill make sure everyone I am asking to join reads this.


Great, thanks for sharing it!

Saving and resteeming to learn more ❤


Thanks for the resteem!


Welcome :-)

This is such a great explanation of everything related to the Steemit platform. Definitely worth the read for new users. Great stuff @shenanigator.


Thanks for reading. I appreciate the compliment!

Awesome post! Thank you for putting this up. I see that you put a lot of effort in this one. I love how it's displaying. It's really easy to locate the information and it's very valuable information.


Thanks for your support. Your vote made it reach a lot more users!

BEST POST OF THE DAY!! You must have read my mind..I was just looking for this very information. Thank you!!


Aren't you kind :) There's some tough competition out there!

Nice work! thx for the info resteemed


Thanks for the resteem!

I'm new to steemit and I found this very VERY helpful. Thank you!


Great, thanks for checking it out! You should also take a look at my other "Ultimate Guide" on my blog.

Thank you for the great post. It will help the newbie minnows tremendously

Nice post

Thanks for the information.
Can this coin be mined?


No, it can't.

Great info - thanks!

what was that?


That was a demonstrative pronoun.

Hi @shenanigator - I just added this article to the front page of /
. Thanks for the great post! :)

Nice info, thanks!

oh yeah!

Thanks for the post. It is really helping me to understand the structure.
I have a ques. What happen if someone give huge amount of like and reply on every post o steemit? How will it affect his/her account?

Great post man.

So whats your personal position on the powering up or powering down?

Are you personally putting it back into the steem power to get more influence? Or are you powering it down to cash out slowly?


Nice article :) it really helped me understand many things

Very informative