I wanted to know where the money came from before even joining Steemit.

This really is an important one for our users to understand, primarily for when talking with others about joining here. It tends to be a major factor of whether Steemit's viewed as too good to be true versus the next killer app. So let's go through some common questions about where our author and curation rewards come from.

Q: Where does the money come from?

Short Answer: New Steem is printed each day and distributed out as Author Rewards, Curation Rewards, 'Interest' on Steem Power and Payments to Witnesses.

Under the new economic rules for the Steem blockchain (post-Nov. 2016), there is 54,720 new Steem printed each day to be distributed out in various ways. The breakdown is among:

• Authors/Curators (posts and comments) get 75% = 41,040 Steem per day
• Steem Power Interest get 15% = 8,208 Steem per day
• Witness Pay gets 10% = 5,472 Steem per day.

As you can see, the VAST majority of this new money is given out to people who are actively posting, commenting and voting!

Q: So, how much are the daily Author/Curator rewards worth in US dollars (or your preferred fiat currency)?

Short Answer: Just multiply the number of Steem times the current price of it.

At the time of writing this, the Steem price is $0.81, so today's daily author/curator rewards total:
41,040 Steem * $0.81 = $33,242.40

[NOTE: The rewards pool is actually determined by a running 30 day average of the price of Steem...NOT the daily price.]

Q: What about inflation? Does it make my Steem worth less?

Short Answer: Yes, this leads to 9.5% inflation each year. However demand for the currency has been offsetting this.

Up to November 2016, the inflation had actually been 100% - 160% per year that ended up having long, somewhat slow decline in Steem price. After this change it was brought down to the current 9.5% inflation level and we've seen it on a pretty consistent price increase since being $0.10/Steem.

Q: WHAT?!?! I get interest on my Steem Power?!?!

Short Answer: Yes, but it's really not very much now.

Steem Power 'interest' or dividends used to be A LOT higher before November 2016. As you can see above, now this is only allocated 8,208 Steem per day. While this may seem a lot, remember that this is to pay it to every user, based on how much Steem Power they hold.

To put is in perspective, this ends up coming out to about 0.63333% YEARLY interest. This would give my 7,000 SP an extra 44.3 Steem per year (given as SP.) Compare this to my curation rewards of at minimum 8 SP per week, which yearly would be about 416 SP per year. There is a much greater benefit to being ACTIVE on Steemit versus just trying to earn off your held Steem Power.

Q: What are Witnesses and why do we pay them?

Short Answer: Witnesses are the people who actually run the Steem blockchain on their computers. They are paid to offset expenses such as power consumption, maintenance, their time, etc.

Every time you vote, post, comment or do most actions on Steemit, it has to be processed by somebody. This is done by the witnesses, who are all running the same copy of the Steem blockchain, yet able to keep things synced up among each other.

To cover the costs of things like electricity, maintaining their computer and their time, witnesses are paid 1 Steem for each block they process. The top 19 witnesses each get 1 block every three seconds, with 1 being passed to a backup witness (anyone outside the top 19.)

You've probably already come in contact with some of our current top witnesses such as @rolandp, @pfunk, @blocktrades, @bhuz, @klye @smooth or @timcliff and not even known it.

You can see the current witness list here.

If you want to know more about witnesses here is a post that goes into more detail. However, the specific numbers in there are outdated, being before the economy changes.

What's a Steem Witness and Why Should we Care?

Feel free to ask me anything. I'm here to Help!

Previous Helpful Posts for Newbies

❓Answering Common Questions: Should I use 100% Steem Power or 50%/50% Payouts for my Post❓

❓Answering Common Questions: Reputation and Flags! What's this Number by my Name? #️⃣️

❓Answering Common Questions: Steem, Steem Power, Steem Dollars and What Should I do with them? 💲

What's this Slider Bar and Vote Power Percentage? What's the Difference?

Why Newbies Should be Excited about the next Hardfork

Answering Common Questions about Voting and Curation

Don't Miss the Show! Follow the Steemit Talk Podcast (STP) Account

New STP Website!!

Are you new to Steemit and Looking for Answers? - Try https://www.steemithelp.net.

Image Sources:
Rainbow Money Question Mark
Printing Money