Hello everyone Vaan here, in this article we're going talk about Steem for who is new and still confused about the difference between Steem, Steem dollars, and Steem power. The first thing you need to know is that Steemit rewards its users by leveraging a revolutionary cryptocurrency called Steem. The Steem blockchain created tokens out of thin air. It creates these tokens at a rate of 9.5% a year, 10% of these tokens go to a group of people called witnesses in exchange for maintaining the database, where the content is stored. 75% of these new tokens are distributed to users to reward them for uploading valuable content.
Steem is basically the bricks that make up the other two forms of money within the system which are Steem dollars and Steem power. It has Value which determined on an open market but it is highly volatile and has no practical use on the Steemit ecosystem. It's not designed to be used for commercial transactions. It's basically designed to be speculated on. This is the currency people looking to gamble. They play on the fact that it has a volatile price to buy low and sell high. If you're not looking to speculate, you really shouldn't be involved in Steem.
Steem dollars are the currency of the Steemit economy. Just like the US dollar is the currency of the US economy. It's the primary medium through which people send and receive a value between one another. It has practical uses within the Steemit ecosystems but unlike Steem it has no value in the real world. It has no use outside of the Steemit ecosystem. Just like the US dollar has no use in the European economy. There's no way to convert Steem dollars into US dollars, you have to convert it out into Steem and then convert the Steem into Bitcoin then US dollars. It has a stable value because it's designed to always be worth at least one US dollar that way if you make hundred dollars on a post you'll be able to immediately grasp how much value you earn. You can rest easy knowing that it'll be worth a hundred US dollars a year from now or 10 years from now. If and when you desire to cash out of your Steem dollars the system is promising to give you however many Steem it takes to give you the equivalent of a US dollars. For example, if Steem trading for 50 cents and you have one Steem dollar, the system will give you two Steem tokens in exchange for your one Steem dollar.
Steem power is a long-term investment train, it's like a bond. It's a promise that for every unit of steam power you are awarded you will receive one Steem, if and when you decide to cash out of it which is also referred to as powering down. Just like any long-term investment train. You are given a high rate of interest because you are sacrificing the ability to withdraw the funds whenever you want. If you have a ten thousand of Steem power. You are entitled to ten thousand Steem. If you want to cash out of Steem power right away, what will happen is you won't able to cash out in that moment but it will begin a long process, a one hundred and four-week process when an equal proportion of your Steem power will be cashed out. How much you have in Steem power divide that by a hundred and four and you will receive weekly payouts equal to that for one hundred and four weeks until the full amount has been converted into Steem. How much interest is paid, well the Steem money supply is doubled every year, 10% goes to paying interest on Steem dollars. The remaining 90% of Steem that's printed goes to paying interest on Steem power. Steem power should deliver an interest rate nine times higher than Steem dollars. That's to incentivize you to commit long-term investment to the platform.