I was searching through my normal crpto-currency news outlets when I ran across this Steemit featured article on Coindesk titled "Steemit Bridges Blockchain and Social Media, But How Does It Work".
I found the article to be quite informative and felt Coindesk did a thorough job explaining Steemit to the masses.
The following excerpt, taken from the article was quite informative because I never viewed these instruments as smart contracts.
One currency, two smart contracts
Part of the confusion with Steemit lies in the different ways that the currency is presented to users.
At the root is the currency Steem, which is the typical transferrable, fungible, freely moveable token akin to bitcoin, ethereum or any other cryptocurrency. But that same Steem can be put into two different types of smart contracts depending on the particular utility an individual wants.
The first is called Steem Power, which provides utility and leverage. Steem Power is the backbone of an account's voting-potential. In other words, the more Steem Power an individual has, the stronger their vote is on Steemit.
Scott explained that the team wanted to provide a mechanism by which individuals could take a long-term interest in the project, while allowing others to continue with their speculation. In the white paper, Steem Power is compared to long-term capital commitments, similar to what a venture capitalist might do.
While users can invest their money instantly, there is an expectation that it will take time to see a return on that investment.
In the case of Steem Power, should a user want to convert back to the base currency of Steem, it will need to occur in 104 weekly conversions.
The second smart contract is called Steem Dollars. This is a debt-like instrument that promises to distribute $1 worth of Steem to the token holder at some point in the future.
