What is Steem?
When I first signed up for Steem I logged in and was absolutely clueless as to what I was supposed to do from there. Therefore, I decided to compile some of the basics that I have come to understand from the platform. I hope this guide will help those who are in the same position that I was in at the start.
So what is Steemit?
Steemit is essentially a social media platform in which the users are compensated for creating and curating content. So these rewards given in a store of value called Steem. This can be bought or rewarded for contributions on the social media platform.
What do you do with this Steem?
There are three ways to hold the accrued value through the platform and those are Steem, Steem Power, and Steem Dollars. So Steem is the basic form of currency that is rewarded and can be bought. The major exchanges on which Steem can be bought is are Bittrex and Openledger. When you own Steem you can then convert it into Steem Power where those funds cannot be taken out for quite some time. So this route is more of a long term hedge on the success of the platform as a whole. However this comes with some perks where Steemit rewards its holders by distributing Steem Power as new Steem is created therefore giving somewhat of an interest rate to its holders. The Steem Power is also important when receiving rewards because the more power you have, the more influence your votes and posts have. Steem Dollars are a stable store of value that is equivalent to about a US dollar. This doesn’t reap the rewards of those holding in Steem Power but has far more liquidity.
What do you do with these?
So Steem is constantly being created in fact every year the amount of Steem is doubled. So why would you want to hold on to Steem? You really don’t want to hold on to Steem for any amount of time because with the supply doubling each year there will inevitably be a decrease in value barring a major spike in use. So when you have Steem you pretty much want to put it into Steem Power, or if you don’t want to make that two-year commitment you put it in Steem Dollars in order hold its value. So to sum that up the only reason to have Steem is to convert it to USD or to buy either Steem Power or Steem Dollars. The Steem Power gives you a return on your holding but can not be taken out for two years. Meanwhile, Steem Dollars are more stable and for people that don’t want to commit to the two year hold.
What makes this work?
Steem can easily be bought and traded as a cryptocurrency for ease of use. Meanwhile holding on to the currency is mutually beneficial due to rewards in the form Steem Power being distributed to holders while also keeping the value of Steem at a sufficient price level for a guaranteed period of time. The community is also constantly active because of the incentives for people to chime in and share ideas. I struggled with the concepts of Steem when I first started and had to research it for myself. I hope this quick beginner’s guide can help others avoid the difficulty of understanding how the system works.