Steemit is built on three basic principles that are very well described in his "Steem whitepaper". These principles are:
That every person who contributes in some way to the community should own a portion of the company's stock.
That every form of capital is equally valuable, whether your contribution is investing large amounts of cash, or investing your time to produce content and / or evaluating such content.
This is a closed community and all the content that is produced is for the consumption of its own members. Shares in the company Steemit
When a company is created, its owners are its shareholders or holders of shares. The ability to make decisions weighs on those who have the greatest number of actions. Likewise, the profits generated are distributed proportionally to the number of shares each one owns. Thus, the one with the largest number of shares of the company or company will have greater weight on the activities that are carried out and the economic benefits that those activities generate.
Those company shares in Steemit are called Steem Power or SP. The more SP a person owns, the more shares he owns in Steemit. Therefore, in order to guarantee the stability of Steemit in the long term, shares or Steem Power can not be sold immediately; It requires a long period of two years for these shares to be sold in full. This process of selling Steemit shares is called Power down, and once it is activated you start selling your shares in 104 consecutive weekly installments, that is, you take two (2) years to sell your shares of Steemit. You can buy more shares of Steemit at any time, this is called Power Up and you are credited immediately, and have the same Power down mechanism to sell them.
If you want to own a growing portion of this company called Steemit, and therefore a larger portion of the profits generated, you must constantly increase your Steem Power Profits of the company Steemit
Steemit has used a revolutionary tool to pay its shareholders and generate the profits of the company: it has invented a cryptocurrency called STEEM. Adopting the experience gained from the already established cryptocurrencies such as bitcoin, it begins to produce its own digital currency; Yes, literally out of nowhere, and that's what is shared out as profits among all the members of this company called Steemit. Initially STEEM had no monetary value but is currently traded (buying and selling) above three dollars per STEEM.
The price of STEEM is extremely volatile, it can cost 3 dollars in the morning and at the end of the afternoon it can cost 0.1 dollars or 100 dollars. The price basically depends on the confidence that the public has in the cryptocurrency and the number of transactions that are made with it.
Steemit generates from nothing through the process of mining typical of cryptocurrencies about 800 STEEM per minute, assuming a price of 3 dollars per STEEM is about 2400 dollars per minute. Of course, the equivalent in fiat (dollars) varies depending on the market. This money is the one that is distributed daily and that is not negligible since it comes to represent, at a rate of 3 dollars per STEEM, more than 3 million dollars per day.
As we see there is a problem associated with STEEM and market volatility, and that is that we can not know how many dollars we have at any given time since the price is constantly changing. For the people who prefer to enjoy the stability of the dollars in their profits generated in STEEM, the DOLAR STEEM or SMD has been created. The SMD will always be equivalent to 1 dollar. For example, if you transform your STEEM to SMD and the conversion rate that day and just at that time is $ 3.78 for STEEM, then you will receive 3.78 SMD.
That way if you decide to sell in a few months or years, for example 40 SMD you know that you will receive 40 dollars regardless of the value that STEEM has in the market at that moment. Steem, Steem Power and Steem Dolar
Now we can clearly differentiate these three elements of Steemit:
Steem
STEEM is the cryptocurrency that is mined and that can be exchanged in exchange (exchange houses) for other cryptocurrencies or dollars. The price is always fluctuating and the possession of the cryptocurrency can generate great profits if the price rises, or large losses if the price collapses.
The STEEM is the only thing that can be used to trade off the Steemit platform, that is, when we want to obtain dollars we must change our SMD to STEEM and then change our STEEM to dollars in the exchanges.
SMDs are switched to STEEM in an internal market that has the Steemit platform SMD or Steem Dolar
The SMD is the steem currency with a stable value in dollars. An SMD is always 1 dollar regardless of the value of STEEM in the market. When you receive payments for your activities either by posting content or voting content, you are paid in STEEM, but these are immediately converted to SMD at the value of the dollar-to-STEEM exchange rate right at the time the payment is made.
Steem Power or SP
SPs are the total number of shares that you own from the company Steemit. The more shares you own, the more revenue you are entitled to from Steemit's total earnings. Your goal is to own a bigger and bigger piece of cake, and transform yourself into a whale. The "whales" are those who own large amounts of SP and with a single vote can contribute tens of dollars to a publication. It is as if your boss will go to review your work and just receive a pat on your part you receive a great bonus. How profits are distributed by the company Steemit
As we see, what is done is to distribute the 1,152,000 STEEMs that are generated per day (which comes from 800 STEEM per minute x 60 minutes x 24 hours) among all the activities that are carried out daily in Steemit. The distribution is made between the miners who generate the STEEM, the authors who create the contents and, among the people who review the contents and make their evaluation by casting a vote.
But, if you have checked your wallet you will notice that what you receive is Steem Power and SMD. That is, all profits are automatically transformed into shares of the company (Steem Power) and currencies with nominal values in dollars (SMD) that can be changed back to STEEM in the domestic market to be sold in the exchanges.
The distribution that Steemit uses is that for each SMD equivalent to 1 dollar creates $ 19 in Steem Power or shares. That is, it is only possible to sell 5% of the money that is generated daily, the rest is transformed into Steemit shares that are distributed among all the members of the platform according to your activities. How profits are shared among all members of the platform
We already know that money flows every time votes are given among the various contents. In principle, if things were totally equitable, each vote should be exactly the same, that is, if 1000 dollars were to be distributed and 1000 votes were cast, each vote should contribute one dollar. But the reality is that our votes are not worth or weigh the same for all members of the community, but are proportional to the number of shares that Steemit owns, that is, is proportional to the Steem Power of each. For most of us that our Steem Power is very small, a vote does not have much effect on a publication or content compared to one of the "whales". But certainly hundreds of votes do make a difference. Therefore, it is important to constantly increase our Steem Power so that in the long run our votes weigh more and more in the evaluation of the contents. Conclusions
Steemit is an extraordinary platform that is generating and distributing cryptocurrencies every day among members who actively participate in the community, either by generating content or evaluating said contents. It all comes down to a simple action that is voting. The people who vote earn an amount proportional to the amount that has been paid to the person who created the content.
The distribution of the money generated daily is done in two ways; in Steem Power (shares of the company) and in SMD that are equivalent to convertible dollars. SPs can be sold through Power Down and transformed into SMD.
SMDs can be transformed into the internal market in STEEM which can then be traded at the market price in the exchanges.
The best strategy to generate large revenues in Steemit is to bet on the long term, constantly increasing your Steem Power and voting every day for quality content and that strengthen the social network.
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