It is important to understand that Steem dollars and Steem power derive all of their value and power from the value of Steem which is the fundamental unit of the Steem blockchain. Steem is only intended to be held for the purposes of liquidity. Unless immediate liquidity is needed, Steem should always be converted to either Steem power or Steem dollars. The value of Steem is less likely to be affected by dilution once it has been converted to Steem dollars or Steem power. The value of Steem is constantly being diluted since there is an automatic 100% supply increase of Steem per year. For this reason, you will want to convert your Steem to Steem dollars or Steem power.
Steem Power: What is Steem Power?
Steem power is a unique system that is used to inspire long term growth and commitment. The cryptocurrency world is known for investors jumping from one cryptocurrency to another depending on the trend of the moment. Bitcoin is perhaps the most well known cryptocurrency. While Bitcoin has maintained its value, many crypto currencies fluctuate wildly. I have personally been involved in Dogecoin which has seen wild fluctuations due to investors jumping from one currency to another.
Steem power encourages long term commitment by allocating 9 Steem to Steem power for every Steem it creates. This helps create a community of investors that will be around for the long term.
Steem power is required for voting on content on the Steem platform. You will see references to Steem whales which are users who have acquired a large amount of Steem power and have therefore gained a huge influence over the Steem platform. Getting an upvote or a comment from a Steem whale can have a huge affect on your earnings. This system encourages good content creation as well as platform participation.
Steem Dollars: What are Steem Dollars
Steem dollars are tokens which are more price stable. They represent an approximate value of about $1 each. You can hold Steem dollars and get a ten percent return on your money or you can convert them to Bitcoin and other currencies. I use Coinbase which makes it easy to send and receive Bitcoin. They even have a special wallet where you can automatically convert your Bitcoin to dollars and hold them in your Coinbase wallet. This is nice if you have concerns over the fluctuation in Bitcoin price. You can check the current value of Steem Dollars by checking the Steem Dollar ticker
You can also use your Steem Dollars to power up which is in essence investing in the future of Steemit.
The multiple options available to Steemit users are a huge advantage for posters of content. The Steemit platform has enabled an entire community to create cash flow from content, invest in a startup with little to no capital, and earn influence by offering valuable content to a receptive and supportive community. I have been amazed at the support offered by other Steemit users. This is an amazing community.