Principles behind the design of steem
There are some key principles that have been used to guide the design of Steem. The most important principle is that everyone who contributes to a venture should receive pro-rata ownership, payment or debt from the venture. The second principle is that all forms of capital are equally valuable. This means that those who contribute their scarce time and attention toward producing and curating content for others are just as valuable as those who contribute their scarce cash. This is the sweat equity principle and is a concept that prior cryptocurrencies have often had trouble providing to more than a few dozen individuals. The third principle is that the community produces products to serve its members. This principle is exemplified by credit unions, food co-ops, and health sharing plans, which serve the members of their community rather than sell products or services to people outside the community. The Steem community provides the following services to its members:

A source of curated news and commentary.
A means to get high quality answers to personalized questions.
A stable cryptocurrency pegged to the U.S. dollar.
Free payments.
Jobs providing above services to other members.
Capital Contributions
There are two items a community can offer to attract capital: debt and ownership. Those who buy ownership profit when the community grows but lose if the community shrinks. Those who buy debt are guaranteed a certain amount of interest but do not get to participate in any profits realized by the growth of the community. Both types of capital contributions are valuable to the growth of the community and value of its currency. Additionally there are two ways ownership can be held: liquid and vesting. Vesting ownership makes a long-term commitment and cannot be sold for a minimum period of time. The Steem network calls these different asset classes Steem (STEEM), Steem Power (SP), and Steem Dollars (SBD).

Steem (STEEM)
Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. STEEM is a liquid currency, and therefore can be bought or sold on exchanges, as well as transferred to other users as a form of payment.

Steem Power (SP)
Start up companies require long-term capital commitment. Steem wants to build a community that is mostly owned and entirely controlled by those with a long-term perspective. Users are able to commit their STEEM to a thirteen week vesting schedule, providing them with additional benefits within the platform. STEEM that has been committed to a thirteen week vesting schedule is called Steem Power (SP). SP balances are non-transferrable and non-divisible except via the automatically recurring conversion requests. This means that SP cannot be easily traded on cryptocurrency exchanges. When users vote on content, their influence over the distribution of the rewards pool is directly proportional to the amount of SP that they have. Users with more SP have more influence on the distribution of rewards. This means that SP is an access token that grants its holders exclusive powers within the Steem platform. SP holders are also paid interest on the balance of SP that remains vested. 15% of the yearly inflation is paid to SP holders as interest. The amount of the interest that they receive is directly proportional to the amount of SP they hold relative to the total amount of vested SP across all users.
Transferring from STEEM to SP is referred to as ͞powering up͟, while transferring from SP to STEEM is referred to as ͞powering down.͟ SP that is powered down is returned to the user over a period of thirteen weeks, via 13 equal weekly payments, starting one week after the power down is initiated.

Steem Dollars (SBD)
Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network. Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the fair market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for token holders. Steem Dollars are referred to with the symbol SBD, an acronym for Steem Blockchain Dollars.
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