#beyondthewhitepaper This series of articles aim to 1. Explain in yet another way the concepts of the Steem white paper; in a hope that stating in different words might help someone understand the concept 2. Go a step beyond the whitepaper in some particular aspects of the system 3. Explain the practical consequences of the design. Hope you enjoy it. If so vote up the article both during the first 24h and any time after that!

Blogging and Curation Rewards Fund

Every block (i.e. every 3 sec.) the Steem it block chain puts 2 new STEEM in the “Blogging and Curation Rewards Fund”. That is 60sec/3sec = 20 times per minute or 2 steem x 20 = 40 steem every minute. That is: 40 x 60min x 24h = 57600 STEEM / day
Min 75% of those 57,600 Steem go toward blogging rewards and up to 25% toward the curation rewards. The whole of this amount goes toward the reward anyway. The reason it is “min 75%” is that because of how curation reward works votes in the firs 30min- depending on the time passed after the blog is posted some of the curation reward goes to the blogger account[1]
When the time comes for the post to get its blogging reward, the net Steem Power voting to this post is compared to the Steem Power voting for all unpaid posts and proportional part[2] of the” Blogging and Curation Rewards Fund” is dedicated to rewards for this post. So if we have 10 unpaid post currently each with 10Mil Steem Power voting for each post, our post in question will get 1/10 of the 57600 new steem or 5,760 Steem will go toward that post.
To simplify, we will assume that all votes were cast 30+ min after the blog was posted. 75% of the 5,760 Steem will go toward blog rewards or about 75% x 5760 = 4320 steem. 25 % of the 5,760 Steem will go toward curation rewards or about 25% x 5760 = 1440 steem.
Those 1440 Steem will be divided between the accounts that voted for this blog as Steem Power

[1] The formula is : (time past / 30 min) ^ 2. That is to say if the upvote is 12 min after the post the curation reward will be (12/30)^2 = 0.4 ^ 2 = 0. 16 = 16 % of the max reward the curator can get.
[UPDATE: The formula is now linear The formula is : time past / 30 min i.e. voting in min 10 the curator gets 10/30 or 33.33% of the reward, for vote in min 15 50% and so on till min 30

Steem Backed Dollars Creation

If you follow the example above, for this particular blog post we have 4320 steem (more correctly worth of steem, as no actual steem will be created or rewarded )blogging reward. 50% of those 4320 steem is rewarded as Steem Power.
50% of those 4320 steem (value) is rewarded as Steem (Backed) Dollars (SD or SBD). That is to say the current steem price in dollrs is used to calculate how many SD to be rewarded. Let’s say the price currently was 3.50 $/steem. 4320 worth of steem value x 3.5 = $15,120. So the creator of the post will receive 15,120 SD in his account.
And that is how each and every new Steem dollar comes into existence! [correction: SD can also be created as an interest on the existing SDs; the interest rate is determined by the witnesses and is 10% annually as of now]

#steemit #steemhelp #steemithelp #howsteemworks #beyondthewhitepaper

*This article was originally published by me on Steem(it) more than 30 days ago. I find it still has the same value as 30 days ago. Re-posting is the only way currently in Steem for a content to continue reciving benefits when fellow users find the content useful.
**The only differences to the original are the changes in Steem(it) since then that I am aware of.