❓Answering Common Questions: Steem, Steem Power, Steem Dollars and What Should I do with them? 💲
A number of newer users have had questions about the differences between Steem, Steem Power and Steem Dollars, usually followed with "What should I do with them once I've got them?" So let's break these down a bit to make them less confusing.
As always, feel free to ask any questions, even if they aren't relevant to the post. I'm here to help!
Q: What is the difference between Steem, Steem Dollars and Steem Power?
Steem:
Steem is the currency itself, much like Bitcoin, the US Dollar, the Euro, etc. The exchange markets determine it's value which can fluctuate. I've seen it as low at about 7 cents and as high as $4 USD. Everything we're going to talk about regarding currencies here on Steemit (and other applications), are rooted on the Steem Currency.
Steem can be spent, traded, transferred or anything else you want to do with it. It's good to know the Steem hold in your wallet does not collect any interest.
As a brief side note here: Steemit is the website we are on, which is hooked into the Steem Blockchain. Other sites like Busy.org, the [eSteem App], @steepshot and soon @zappl also connect to the Steem Blockchain. Things like the creating/distributing Steem, voting, post earnings, wallets, even storing all of our posts and comments, are all done on the blockchain itself. There are many different applications outside of Steemit that make use of the Steem Currency.
Steem Power:
Steem Power is Steem that has been powered up. This can be done by clicking the down arrow next to the Steem in your wallet and selecting power up. These are always one to one, meaning that 1 Steem = 1 Steem Power when powered up.
So what does powering my Steem up do for me?
Steem Power is what gives you influence here on Steemit. The more you have, the more money you give to authors with an upvote as well as the greater the curation rewards you can earn. There is a very small 'interest' rate earned by holding Steem Power.Can I Spend or Withdraw my Steem Power?
Steem Power is locked in, meaning it can't be immediately withdrawn to spend. To unlock it you have to start a "Power Down" which moves 1/13th of your Steem Power per week back into Steem (which is spendable) over 13 weeks. So for example, if you have 1300 Steem Power and power down, you will have 100 Steem a week unlocked into something you can spend, trade, transfer or withdraw.
Steem Dollar(SD):
The Steem Dollar (aka Steem Backed Dollar or SBD) is a 'token' that is meant to be worth about $1 USD, making it's value much more stable compared to Steem. (Lately it's been a bit out of whack being closer to $2 USD.) To be a bit more technical, a Steem Dollar is a promise to pay one dollars worth of Steem when it's redeemed.
- So if Steem is at 10 cents, one Steem Dollar could be redeemed for 10 Steem. When Steem is at 2 US dollars, a Steem Dollar would redeem for 0.5 Steem.
To try to keep the SD around the $1 mark, Steemit's Witnesses can change the interest rate paid (quarterly) for holding them in your wallet. Lately this interest rate has been 0% with the SD price being higher than desired. When it get near or under the value of $1 USD, you will start seeing the interest rate increase.
The benefit of Steem Dollars is that business can accept them more comfortably since they have a more stable value. Can you imagine being a shop owner and trying to sell your $50 product for Steem which a couple months ago would have been for 500 Steem compared to today being less than 50. Pricing their products are services are much easier when using a stable value, as well as knowing that what they've already been paid, won't loose value.
Q: What should I do with my Steemit earnings?
The short answer here is WHATEVER YOU WANT!! When you are paid for a post, half the earnings are given to you as Steem Power (which remember is locked in and can be withdrawn over time) with the other half being liquid (i.e. unlocked) as Steem Dollars.
However, I do recommend that every new Steemit user to at least withdraw a small amount of what you've earned and buy yourself something. Not only does this reinforce that it's real, but you will also have everything setup should you want to withdraw it again in the future.
How can I spend my earnings?
While there are some things you can buy directly with Steem or Steem Dollars from other users, websites like Peerhub, etc...you may want something outside of those...or pay a bill. For most of us will need to exchange our earnings on Steemit into Bitcoin, to then either be loaded on to a prepaid card, debit card or have it moved to your local bank account (in your local currency.)
[NOTE: There are multiple options for Bitcoin prepaid and debit cards. What I'm listing are just examples. Lookup which ones serve your area and make the most sense for you.]
How do I get earnings into my bank account?
This is essentially a two step process....
- Convert your Steem and/or Steem Dollars into bitcoin and put into a wallet that can transfer to your bank account.
- Send the funds from your wallet to your bank.
There are more than one options for both of these steps, but personally I use @blocktrades for step 1 to deposit into my bitcoin wallet. Here is a an excellent guide by @thecryptofiend that walks you through the blocktrades.us site.
Click Here for the Blocktrades Guide
There are many Bitcoin wallets out there so you'll have to choose which you're most comfortable with and can withdraw into your local currency. I'm solely using Coinbase as an example with this guide by @mctiller showing the steps. Often it takes 2-3 days (only) first time to get your bank account verified with the wallet, and after that the wire transfer usually takes 2-3 days.
Should I trade my earnings for other cryptocurrencies?
First I need to say that I have to be careful to NOT give trading advice. When I started on Steemit I'd never dealt with cryptocurrency and was more comfortable either leaving my earnings here on Steemit or cashing out. I just started dabbling on the crypto exchanges a couple months ago. While there is the chance of making money there, you can also loose money there. So do be careful and be willing to lose what you put in there.
With that said, there are multiple crypto exchanges out there: Poloniex, Bittrex, Shapeshift, Tradeqwik and others. Each one has pros and cons.
Just for an example, here is a guide by @ninjace on transferring from Steemit to Poloniex. For most exchanges, the steps are pretty similar.
[Be careful to send funds to the right account names! Double check this before hitting send!]
There are many users on here that have made content about their crypto trading, @craig-grant being a prime example.
While it doesn't take much to get started here on Steemit, there is a TON that you can learn over time. Don't let all of these things overwhelm you! You'll figure a little bit more out each day and find what activities (like trading) you are comfortable with. As always, feel free to ask any questions in the comments...even if it doesn't pertain to this post.
I'm Here to Help!
Previous Helpful Posts for Newbies
What's this Slider Bar and Vote Power Percentage? What's the Difference?
Why Newbies Should be Excited about the next Hardfork
Answering Common Questions about Voting and Curation
Don't Miss the Show! Follow the Steemit Talk Podcast (STP) Account
New STP Website!!
Are you new to Steemit and Looking for Answers? - Try https://www.steemithelp.net.
Image Sources:
Money
Thank you for taking the time to help us newbies .
Thanks louiscpt just what I was looking for.
You're definitely welcome! I've enjoyed helping out newbies in particular for a long while! I know there's a flurry of things to learn once people get their feet wet...been there myself.
Thank for the gorgeous flowers!
Great article. Definitely a good read. Appreciate the tutorial very much. Upvoted, Follwing and resteem.
Thank you!
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
Awesome. Thank you.
Thanks for this post - helped me a lot. Joined just a few days ago and try to figure out how everything works - really nice addition to the official help section!
Thank you!
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
I can talk with @timcliff about getting it added in the official help section..see if it's 'deemed worthy.' Lol
I've added it to the steem.center wiki under the Steem Tokens article. I'm hoping we can use some of it in the main body of the article.
Follow and upvote. Thanks for the guide that was great!
You're very welcome! :)
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
Thatnk you again! This community is very receptive to brining people into it. You are a great example of that!
Thank you for the excellent guide. I'm still new to Steem and this has been extremely helpful.
Thank you!
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
Thanks for all the helpful advice. I am sure I will refer to this quite often as time passes.
Thank you!
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
Here's what I've been waiting for in every post steemit. This article is very helpful to me, so far I do not understand all the problems that occur as described above. Once again I am very-very grateful to you @sykochica who has helped me through the articles you post here.
I'm very happy to have been helpful for you! That's a biggest part of why I enjoy writing these. I know first hand how daunting it can be when being new here...so many different things to learn.
Feel free to ask me any questions that come to mind...love to continue helping out! :)
Very informative, my friend. This will be helpful to so many people especially newbies.
wow really good guide resteeming just to reread when's i have a chance. Please
follow
Thank you!
Feel free to ask any questions that may come to mind...even if not on the topic of this in particular post.
Hi sykochica if I buy steem does it fluctuate in my account as the value of steem changes? I also see it takes a few days for the conversion to take place - do I get the price that I see on the day of buying steem or a few days later when the conversion is completed. I hope he questions aren't to confusing.
Short answer: Yes, the estimated account value shown in your wallet uses the current market price of steem. So Steem you hold in your account has the same benefits of it increasing in price as would steem held elsewhere, such as an exchange like bittrex, poloniex, etc.
More technical answer: The estimated account value shown in your wallet isn't an up to the second valuation, but instead uses an average price over the last 3.5 days.
When you use the 'convert to Steem' option in your wallet, it uses the 3.5 day price average as the exchange rate. Sometimes this can be beneficial, other times (like when the price has been going up for a few days) you can get a better rate by moving the SD's to an exchange to get an up to the second rate. (Remember though, there are fees charged on exchanges where the 'convert to steem' option has zero fees. Each exchange has their own fees, but for example on poloniex, the fees are 0.25% Takers and 0.15% for Makers as well as the 0.01 Steem fee when doing the withdrawal back to Steemit.)
The questions are great. I feel like I'm following what you're asking just fine. :)
Thanks for going to all that trouble. It was well explained with a bit extra added in. Much appreciated.
Absolutely no problem. Anytime. :)