When you open your Steemit wallet you can see three tokens which have various purpose and various activities can be performed on each of them. Why not just one? I'll try to explain as simple as possible.
STEEM - Steem token tradable at crypto exchanges (currently around 2USD)
It is like stock share, if you want to trade Steem on exchanges , you need Steems. Steem is good for trading but not that good for long-term holding because of high Steem inflation. Possible actions:
- Transfer : move to another account
- Power Up : translate to Steem Power token
- Deposit: buy Steem from blocktrades (like instant Steem buying for BTC)
- Buy or sell: trade on market (Steems to SteemDollars)
It's like long-term investment and there is an "full-interest" so it's protected against inflation. Steem power is locked for 2 years before it can be transfered to Steems. Full story is little bit more complex, but this should be enough for basic understanding. Possible actions:
- Power Down: translate Steem Power to Steem
- Deposit: buy Steem Power from blocktrades
This is the most simple one. All earnings in SD (SteemDollars) are traded around 1USD so it provides stable - in terms of USD volatility and unit usable for non-crypto world.
- Transfer: transfer SD to another account
- Convert to Steem: translate SD to Steems (takes one week)
- Buy or sell : trade on market (SteemDollars to Steems)
As you can see, although it might seem strange there are three Steem type of tokens, there is very good idea behind it.
DISCLAMER: I'm not any Steem expert so information are based on my best understanding. Feel free to point out on mistakes in the article.