Hey guys,
If you're new to Steemit, here's a starter guide:
https://steemit.com/steemit/@mindover/steemit-for-dummies-like-me-everything-you-need-know-to-get-started
The financial information is outdated by now, but its still a good introduction.
I've updated my information in this article to be correct for september.
Steem, Steem Dollars and Steem Power
When you check your Steemit wallet you see you earned Steem Dollars, Steem power and some Steem as well. Nice! But what are those currencies?
Here is a good 101 introduction into the different coins on the Steemit platform:
When you create popular content, half of your pay will be in Steem Dollars, and half will be in Steem Power.
By blogging, commenting and upvoting content you earn 50% Steem Dollars and 50% Steem Power.
Steem Dollars
Half of the pay you receive for your content will be in Steem Dollars.
Steem Dollars are pegged 1-1 to the US Dollar.
As you can see the conversation rate is not always exactly 1-1, It fluctuates slightly.
Steem Dollars are not useful outside the Steem platform, but its good to have a currency that you intuitively know the value of. One Steem dollar is always about one dollar.
If you want to be sure your post reward retains its dollar value over time, you can choose to hold your balance in Steem Dollars.
Holding Steem Dollars pays 1,5% interest every year.
Steem Power:
Half of the pay you receive for your content will be in Steem Power.
You can also choose to be rewarded 100% in Steem Power when you post by selecting this:
Its called Steem Power because it gives you more power in the network - your votes sounds more important when upvoting content. And yes its perfectly fine to upvote your own posts.
If you believe in Steemit, you will want to hold most of your coins in Steem Power because it has an interest rate of 13,5% every year. You will be rewarded in newly minted Steem tokens.
The calculation is that of the new Steem tokens created every year, 15% goes to paying interest. 90% of that interest goes to holders of Steem Power and 10% to Steem Dollars.
Steem power is a long term investment because you sacrafice the ability to immediately cash out.
When you want to cash out your Steem power - a process called powering down - you receive payments in Steem for 13 weeks until 3 months are completed. Every week 1/13th of your Steem Power is converted into Steem - one Steem for every Steem Power. Steem tokens you can sell on open exchanges like Poloniex and Bittrex.
Steem
Steem is the speculative currency that can be bought and sold on exchanges. Its highly volatile and has no real purpose other than speculative investment.
The value of Steem fluctuates, so at the right time you can sell it for Bitcoin or US Dollars.
Will the value increase or decrease?
New users buy Steem to power up to Steem Power so they have more influence in the network, which make the value go up.
Existing users cash out their payments in Steem, making the value go down over time.
Then there are speculators who speculate on the success of the platform. Steemit is growing fast - it is #1,320 website now in the US according to Alexa. But we recently have seen a slump in new and active users, as well as in the price.
If you have no interest is speculation, you have no reason to hold Steem coins. You can better convert it into Steem Power or to Steem Dollars.
Summary
- The general lifeblood of steemit is the Steem token.
- Steem Dollars will always be 1:1 equivalent to one dollar.
- You can make a long term commitment - and earn more - by powering up to Steem Power.