When people ask me what's this new thing you have been tweeting about, I usually start with, "It's a mixture between Twitter, Facebook, Youtube and a Blogging platform."
I have their attention but then a barrage of questions follow.
How is Steemit different?
When you produce content, you get paid for the value that you have created instead of the likes of Facebooks shareholders getting paid.
Do you know how much value the like of Facebook extract from your account? The service they provide certainly isn't free. You give away your digital footprint, which is more valuable than you can imagine, and it becomes their property.
Do you get paid in real cash?
Yes, you get paid in a crypto currency called STEEM. This can be exchanged for cash or left in the system as an investment and converted to cash at a later date.
What is STEEM, is that like Bitcoin?
STEEM is a digital currency like Bitcoin. Think of it like a share in the value of the Steemit Economy.
To understand STEEM think of it like a share in a company. If the value of the company goes up your share will be worth more. So if Steemit does well, the value you have earned will increase even more, but you can also covert it to cash right now if you like.
How will the value of STEEM go up?
The reason anything has value is because people want it and are willing to exchange something for it. At the moment Steemit has value because its "shares" are traded on exchanges where people are willing to pay for them and give you cash or other goods.
- I recently paid for a private verification of my account from @steemverify for 3 SBD.
- @silviabeneforti has also offered signature design in exchange for STEEM
This type of trading activity helps to increase the value of STEEM just like a regular economy. The value of the economy is growing.
Please note throughout this post I use the term "shares". STEEM are not shares in Steemit Inc, but I am referring to shares in the Steemit Ecoysystem, the STEEM digital token. I conceptualise this as shares in a company, but they are not shares in the traditional sense.
Where does new STEEM come from?
One of the great things about Steemit is you're not encouraged to put money in to get started. It's not a ponzy scheme. Each day there is a redistribution of the total value of the Steemit Economy which means when you post, comment or vote you can get a share of this redistribution. Don't forget if the value of the whole Steemit Economy is growing your also benefiting from that.
- Some more details can be found here, Where does STEEM come from?
Here is where the conversation usually takes a turn...
Whats STEEM, Steem Power and Steem dollars
To store your Steem you have a choice to make of how you want to store it, where to keep your money.
There are three different forms of STEEM. You can choose to:
- keep cash in your pocket (STEEM)
- use it to buy shares in a company (Steem Power)
- put it in a bank account to keep it safe and earn interest (Steem Dollars)
STEEM (Like Cash)
If you keep it in its raw form you have an investment in the Steemit Economy just like having cash, Euros or Dollars. If the value of the economy goes up the value of your shares goes up too. This form of STEEM is liquid.
But
As more STEEM is created each day the value you hold in STEEM is effectively redistributed. It operates in a very similar way to a stock split in a company where your shares become worth less as new ones are created and given to other people.
Steem Power (Like Shares in a Company)
When you hold your investment in the Steem Power you're committing long term to Steemit so you get some benefits:
- Your voting power is increased so when you vote your vote carries more weight
- You get some of the continuous share split, in this past this was more significant but not anymore.
There is a downside
- The "shares" in the company cannot be sold quickly, you have to power down/convert to STEEM which happens over a period of time. This form of STEEM is not liquid.
Steem Dollars (Like a Bank Account)
If you invest in Steem Dollars your investment is basically pegged to the dollar so your value should stay the same in Dollar terms. You get paid a little interest for keeping your money in the Steemit economy but you don't benefit from the stock split, you also don't benefit from increases in the value of the economy as your share is just pegged to the dollar.
This post is not intended as financial advice, if you're thinking of investing money in STEEM do your own research first.
Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.
Image Credits https://pixabay.com/ and special thanks to @benjojo for the Steemit Logo