Steemit is a new social media platform where you can get paid to write and upvote content. Steemit is powered by its value token Steem and all the payments are decentralized and blockchain based.
Steemit has three value tokens: Steem, Steem Backed Dollars (or Steem Dollars) and Steem Power.
Steem is the liquid value token that can be bought and sold at exchanges. Withdrawing Steem from Steemit is automatic.
Steem Backed Dollars are dollar pegged tokens that are worth around 1$ each. They exist to protect content writers from volatility and Steem's inflationary nature. Steem Dollars take 5 days to be converted into Steem.
It is also important to note that Steem has a yearly issuance rate of 103%, which makes it an extremely inflationary cryptocurrency. The Steemit platform itself is also very new and has already been hacked once,
though all the funds were reimbursed to the respective users. With any nascent technology there are many unknowns and so an extremely heavy dose of caution is advised.
Streem - Is the basic cryptocurrency used to power this whole system.
It’s like the bricks used to build Steem Dollars and Steem power (will be explained in a moment).
You can buy and sell Steem, speculate on it’s price or convert it to Steem dollars and Steem power.
But if you’re not looking to speculate on the price or if you’re not cashing out your Steemit earnings, you don’t need to deal with Steem directly.
Streem dollar - This is the currency of the Steemit platform and is also known as SMD. This is what people send to one another when they upvote posts on Steemit.
The reason it’s called Dollar is because 1 Steem dollar represents any amount of Steem required to reach 1 USD depending on the exchange rate at that time (more or less).
However unlike Steem, you can not use Steem dollars outside of the Steemit platform. You will first have to convert your Steem dollars into Steem and only then you will be able to convert that Steem into Bitcoin or USD.
The reason Steem dollars were created is because the founders wanted to peg the value of Steem in some way to the US dollar, so that people will be able to trade inside Steemit but not be afraid of exchange rate fluctuations.
This way if you trade, for example, 100 Steem dollars you know you’re giving away 100 USD worth of Steem.