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From my limited understanding it has to be converted to Bitcoin or Fiat. Another blog demonstrated how they used wireapp.com

Maybe you should convince someone to give you a pizza for 10,000 Steem? FYI today is Bitcoin Pizza Day

Of course, converting to fiat will give you the most options, but there are some places where you can spend Steem. @steemshop is an up and coming one. SteemVerify.com is a verification service that any Steemit community member can utilize anonymously and securely. Also, SteemGyft.com - Exchange SBD/(steem soon) for Amazon Gift Cards.

You can, of course, use steem to do transactions with other Steemians. I'm a musician and I accept steem in exchange for performing music for you.

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