Hello my fellow steemians, the problem as I see it with Steemit, is that the concept is just too hard to understand. There are too many confusing concepts. For example, you have Steemit which is the platform, Steem – the digital currency, Steem power, Steem dollars which at the end becomes one big and badly organized mixture of unexplained terms. In the end the average user who wants to get started with Steemit is left confused and leaves the platform.
Steem, Steem Dollars and Steem Power explained
#Steem
Is the basic cryptocurrency used to power this whole system. It’s like the bricks used to build Steem Dollars and Steem power (will be explained in a moment). You can buy and sell Steem, speculate on it’s price or convert it to Steem dollars and Steem power. But if you’re not looking to speculate on the price or if you’re not cashing out your Steemit earnings, you don’t need to deal with Steem directly.
#Steem dollars
This is the currency of the Steemit platform and is also known as SMD. This is what people send to one another when they upvote posts on Steemit. The reason it’s called Steem Dollar is because 1 Steem dollar represents any amount of Steem required to reach 1 USD depending on the exchange rate at that time (more or less).
However unlike Steem, you can not use Steem dollars outside of the Steemit platform. You will first have to convert your Steem dollars into Steem and only then you will be able to convert that Steem into Bitcoin or USD.
#Steem power
Also known as SP in short, is basically a token symbolizing how much influence you have inside the Steemit platform. If you have a lot of SP your upvotes will count more and will award different authors SP and Steem dollars as well.
#Powering up
means getting more SP either by upvotes or by buying it via Steem.
#Powering down
means liquidating your SP into Steem.
Why is steem’s price going down?
One explanation that comes to mine is that price changes reflect the supply and demand for a specific currency. When price goes down,there are more buyers than sellers, when it goes up, there are more sellers then buyers. So before Steem was live there were no sellers at all since the platform was in Beta. People could only buy Steem but not cash out on it. So people “bought into the dream of Steem”, investing money and time to create awesome content. These people were getting paid for their content but they couldn’t cash out on the money.
Once Steem became fully operational there was a rush of Steem users to cash out their Steem Dollars into Steem, and then cash out Steem into Bitcoin or their local currency. That’s why in my opinion the price has been falling ever since the launch. People don’t have any actual use for Steem since it’s not accepted anywhere, so once they get some Steem in their hands they quickly trade it. Combine that with the fact that there’s no real incentive to invest in Steem other than speculation and you get a larger amount of sellers that drive the price down.
One of the main reasons that Steem didn’t fully collapse after launch in my opinion is due to the fact that not all of your Steem can be traded at once. Steem power has a limitation of 104 weeks until you can cash it all out, so this stopped the steep decent of the price and made it a bit more manageable.
in conclusion i hope you find my pice of writing a little bit informative.
please your upvote and comment.
