What exactly is steemit?

Steemit is a social news service which runs a blogging and social networking website on top of a blockchain database, known as Steem. The service produces STEEM and Steem Dollars which are tradeable tokens users obtain for posting, discovering, and commenting on interesting content.

The idea was described in a whitepaper released in March 2016.

The general concept is similar to other blogging websites or social news websites like Reddit, but the text content is saved in a blockchain. Using a blockchain enables rewarding comments and posts with secure tokens of value. Images can be uploaded and hosted on Steemit. Other multimedia content must be embedded from other web hosts. For formatting, there is a WYSIWYG editor. Users can also opt to use Markdown formatting with HTML elements.

User accounts can upvote posts and comments, and the authors who get upvoted can receive a monetary reward in a cryptocurrency token named STEEM and US dollar-pegged tokens called Steem Dollars. People are also rewarded for curating (discovering) popular content. Curating involves voting comments and post submissions. Vote strength and curation rewards are influenced by the amount of STEEM Power held by the voter.

Steemit has a reputation system, where new accounts start with a reputation of 25. An account's received votes can influence its reputation up and down, incentivizing online etiquette and interaction with the community.

STEEM
The STEEM token is the network's base token. It is traded on multiple cryptocurrency exchanges and markets. Its market value determines the value of the pool of rewards paid by Steem. Its value also backs the value of Steem Dollars.

STEEM Power
STEEM Power (commonly abbreviated SP) is STEEM that has been entered into a smart contract and represents the amount of influence an account has compared to the rest of the network. The more STEEM Power an account has, the higher influence its vote has on posts or comments. STEEM Power also determines an account's weight for witness approval voting.

Accounts are created with a small amount of deposited STEEM in the form of STEEM Power. Content creators have the option to choose post rewards of 100% STEEM Power instead of the default 50% liquid currency (a combination of STEEM and Steem Dollars) and 50% STEEM Power. Users and investors also have the option of converting liquid STEEM into STEEM Power, called powering up.

STEEM Power cannot be transferred or traded directly, but the account owner can choose to withdraw liquid STEEM in weekly payments at a rate of up to 1/13th of the account's total STEEM Power. This is called powering down. The account will lose its voting influence in proportion to the STEEM withdrawn.

Steem Dollars
The Steem Dollar or Steem Based Dollar (abbreviated SBD) is an asset intended to be pegged to the United States dollar. Steem Dollars can be traded at cryptocurrency exchanges, and used for payments for goods and services.

There is an internal market on the Steem blockchain and integrated in the Steemit website where STEEM can be traded with Steem Dollars and vice-versa. Steem Dollars can also be converted into an equivalent-value amount of STEEM in a process that takes 3.5 days.

Steem Dollars which are held receive an interest rate. This rate is set as a variable collectively by Steem witnesses. This rate is often 0%, but it may fluctuate. If Steem Dollars are being traded below parity with the US dollar and the supply of Steem Dollars is not too high relative to the liquid STEEM supply, the interest rate may rise.

While nominally "pegged" to the US Dollar, the Steem system along with the volatility of cryptocurrencies make this goal difficult to maintain. Witnesses are empowered to manipulate the value of the SBD currency to return it to the peg; however, dips above and below USD parity are common.

Wallet
The Wallet page on Steemit shows the tokens and the voting power belonging to an account. Unlike Bitcoin cryptocurrency wallets, every Steem wallet is publicly visible and tied explicitly to a particular account name. For the owner of a wallet, transactions of Steem Dollars and STEEM can be initiated from the Wallet page. Additionally, the owner controls powering up or down, transferring liquid tokens to and from savings balances, and conversion of Steem Dollars to STEEM. Savings balances are provided as a security measure and take 3 days for a withdrawal. Powering up is immediate, but powering down can take weeks. Buying or selling STEEM (converting to or from SBD) can be initiated using the Market by creating Buy or Sell orders.