D is for Digital Currency
A new arrival on the Steemit platform may be confused about the different digital currencies in use on the blockchain.
Simply put, there are three.
- Steem
- Steem Power (SP)
- Steem Backed Dollars (SBD)
The FAQ’s on Steemit explain the three different currencies as follows:
STEEM - STEEM is the base liquid currency token in the platform. STEEM can be powered up into STEEM Power, traded for Steem Dollars, and transferred to other accounts. It is a cryptocurrency token, similar to bitcoin.
STEEM Power - STEEM Power (abbreviated SP) is a measurement of how much influence a user has in the Steem network. The more STEEM Power a user holds, the more they can influence the value of posts and comments. STEEM Power is less liquid. If a user wishes to “Power Down” SP, they will receive equal distributions of the STEEM weekly, over a 13 week period.
Steem Dollars - Steem Dollars (commonly abbreviated SBD) are liquid stable-value currency tokens designed to be pegged to $1 USD. Steem Dollars can be traded with STEEM, and transferred to other accounts for commerce or exchange. Steem Dollars may also be converted into STEEM in a process that takes 3.5 days. Steem Dollars can be used to buy things in marketplaces, such as PeerHub.com.
So What?
Here is the short and simple. STEEM is a cryptocurrency. It is very similar to Bitcoin, Ethereum, and LiteCoin. You can buy it, store it, sell it, or pretty much do whatever you want on outside exchanges like Bittrex. STEEM can currently be traded on Bittrex, UpBit, Poloniex, and Binance to name just a few exchanges.
If you tranfer STEEM into your Steemit account it will show up in your wallet on the first line marked STEEM.
From here, you can do several things with your STEEM. You can Power Up. You can hold. You can sell it for SBD on the market.
If you decide to Power Up, your STEEM will immediately be moved into the next line in your wallet marked as STEEM POWER.
This Steem Power, or SP as it is commonly referred to, is quite simply a measurement of how much influence you can have on the Steem Network. Higher SP means your votes are worth more. If you want to move STEEM Power back to STEEM it takes a total of 13 weeks. This means you want to be careful what how much you decide to Power Up because it is going to take some time to get it all back out.
If you decide to “Power Down” you will get 1/13 of your total Power Down STEEM every 7 days for the next 13 weeks. We will talk a bit more about Power Down in another article.
STEEM Dollars, also known as SBD, are a totally separate currency. You receive a portion of your rewards in the form of SBD. These can be exchanged for STEEM on the open market, on the internal STEEM Network market, or they can be held. The idea behind SBD is that they will always equal about $1.00 USD. This fluctuates from time to time. As I am writing this, the SBD is currently worth $5.23.
TL;DR
If you didn't catch it yet, here is the most important thing you can remember about the letter D is there are three different currencies in play on the STEEM Network. They are STEEM, STEEM Power, and STEEM Backed Dollars. Each one has a place on the network and contributes to its overall health and success.
Get comfortable with each one of these and how they interact. This will help you grow your blog and share your message more effectively on the STEEM Network.
The ABC’s of Steemit
This series of articles is dedicated to explaining the basics of Steemit for new users and anyone else who wants to brush up on Steemit basics.
Here are the other posts in this series:
A is for Always Protect Your Password
C is for Create Quality Content
**All pictures used are labeled for reuse. They come from Pixabay