this is the 2nd short video series I've created and posted on youtube to help people understand the steem blockchain. the idea is to create easy to watch videos to get a quick sense of how the platform works. over the next several weeks i'll be posting 1 new video a week that breaks down the steem blockchain into easy to understand basic videos. hopefully this will serve as a platform for future users who want to get a quick idea of what steem is about! if you have an idea of what i should talk about in the next video, post up and LET ME KNOW IN THE COMMENTS BELOW! all videos are intended to be in the 2-3 minute range!

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HOW DOES CRYPTOCURRENCY WORK IN THE STEEM ENVIRONMENT?

The steem blockchain has three types of cryptocurrencies built into it. This might seem a bit awkward and crazy, but there is a tremendous amount of usefulness by having this setup. The three tokens are

• Steem Blockchain Dollars or SBD
• STEEM
• Steem Power

Each token carries a different and unique function, but all three have value relative to each other.

STEEM BLOCKCHAIN DOLLARS (SBD)

SBD is a token that is used as currency in the steem environment. You can use it to interact with the users within the steem community just like US dollars in a real US community. It is roughly pegged to the US dollar so it's relatively price stable. That means 1 SBD is roughly equal to 1 US Dollar at any given moment. This helps you price things in the steem environment just as you would in the real world. You can earn SBD by creating content and being upvoted, or by exchanging USD for SBD and depositing it into your steem wallet.

The reason you want SBD, is the same reason why you want real US Dollars, to pay for goods and services within the steem environment since it can be used as money to finalize transactions.

STEEM

STEEM is the main token that's used to speculate on by investors. You could use this to complete transactions just like bitcoin, but it's value is dependent on market demand, just like the change in price of stocks or bitcoin. If a stock is going up in demand, the price will rise with it. And the reason why people want to buy it, is because they feel they can sell it for more later. So if you think STEEM is more valuable in the future than it is today, then you'll want to invest in STEEM.

Today, on November 20, 2017, STEEM sells for $0.91 USD. If the demand for STEEM increases due to higher demand, to say $8.50, you can sell your STEEM in the future for 8.50 SBD which will always be roughly worth its equal in USD.

The main reason you want STEEM is the same reason why you would of bought google stock in 2003, you thought it would be worth more later. You can use SBD and also STEEM to exchange for the third type of token:

STEEM POWER

Steem power is the trickiest coin within the steem environment because it has very limited use, but it is the most powerful tool in the Steem environment. Steem power is used to determine how influential you are in the community. It's like having "The Force". The more Steem Power you have, the better your Force is. You can also buy Steem Power with SBD or STEEM. This action is refered to as Powering Up.

While this sounds like a rather annoying thing to allow, it actually works quite well because the only reason someone would invest in Steem Power, would be to increase their visibility and influence to other members of the community. Steem power also allows you to earn a return on your money much like keeping money in a savings account.

So for the sake of self preservation, a user with a large amount of SP, is highly interested in being a productive member of the steem environment.

Steem power is NOT liquid and in order to sell your Steem Power for STEEM or SBD, you have to allocate a certain amount to be paid out in 13 equal weeks. This is necessary to keep only those who are most vested in the system to store steem power.

RECAP

If you want to use the block chain to send and receive money for goods and services, you'll want to trade your USD for SBD and use it like a checking account.

If you want to invest in the platform because you think it has greater future value, buy STEEM Tokens as if it were stock.

Personally, if you think your content has real value and you really think you can build an audience who wants to listen, read or watch what you have to say, then you should invest as much as you can into Steem power and then create content.