I'm just trying to make an attempt to explain to my friends what I understand by STEEM, STEEM POWER (SP) AND STEEM DOLLARS (SBD). So many have been lost in the technical details. It is important to understand what it is all about. If you find yourself worrying about these things, just take a deep breath and read what I'm about to tell you.
STEEM Steem are essentially the bricks that make up two forms of money within the system which are steem power, and steem dollar. It has value which is determined on the open market but is highly volatile and has no practical use within the Steemit ecosystem. It is not designed to be used for commercial transactions. It's basically designed to be speculated on. You can also convert your bitcoin into steem or cash out by converting steem to any crypto currency and then to physical cash.
STEEM DOLLARS (SBD) - Steem dollar is the currency of the Steemit economy, just like the naira is to the Nigerian economy. It is the primary medium by which people send and receive value between one another. It has practical uses within the Steemit ecosystem.
It has a stable value because it is pegged to the US dollar. Which means it's value is proportional to the US dollar. In other words steem dollar is just an IOU. Which means if and when you choose to cash out, Steemit promises to pay you the equivalent of steem you amassed in US dollars. So that if you make $100 SBD from a post now, in 7 days you will be worth $100 USD from your steem account.
STEEM POWER(SP)
Steem power is a long term investment vehicle. It is like a bond, this is also a promise from Steemit, that for every unit of steem power you are awarded, you will receive 1 steem, which is also referred to as ** 'powering down'**
Powering down is like cashing out your steem power. Because you are giving up power within the system that's why it is called 'powering down'. And just like any long term investment vehicle you are given a high rate of interest because you are sacrificing the ability to withdraw the funds whenever you want. If you have 10,000SP, you are entitled to 10,000steem. But, if you decided to cash out of steem, what will happen is you won't be able to cash out at that moment. But, you will begin a long process where an equal proportion of your steem power will be cashed out in 104 weeks. Calculate your steem power and divide it by 104. That's the amount of weekly payouts you will receive until the full amount has been converted into steem. You may ask how much interest is paid? The steem money supply doubles every year. 10% goes to paying interest on steem dollars, the remaining 90% goes to paying interest on steem power. So, steem power should deliver an interest rate 9 higher than steem dollar. And that's to give you an incentive to commit long term to the platform. It's a long term investment and has high interest rates but you have restrictions as to when you can cash out. But, if you decide to fold up everything , just power down and cash out and if you decide to go long term, you should invest in steem power. This gives you more influence on the upvotes you make.
**THANKS FOR READING. UPVOTE, COMMENT AND RESTEEM.