Learning the fundamentals of Steem

Steemit is not as straightforward as facebook or reddit. There are so much to learn and some concepts are really hard to grasp. We spent a long time figuring what each of the terminology means.

Here, I will try to explain some of the below to help you understand.

STEEM

Steem is the cryptocurrency used in the Steem blockchain. It can be

  • Earn – by creating contents on the steemit.com
  • Bought – from crypto exchanges like binance.com
  • Converted – from Steem Backed Dollars or Steem power

For now, just understand that STEEM is a currency within the cryptocurrency market.

STEEM Backed Dollar

The purpose of STEEM Backed Dollar (or SBD) is meant to provide a stable currency so that it is suitable to be used for everyday transactions, like buying things on the internet. According to the Steem whitepaper, the SBD is supposed to be pegged to USD$1 for stableness. However, this was not the case recently, as market dictation moved the SBD to as high as USD$3.

The SBD can be

  • Earn – by creating contents on the steemit.com
  • Bought – from crypto exchanges like binace.com
  • Converted – from Steem

For now, just understand that SBD is another currency that you can earn and sell

STEEM Power

Steem Power (SP) is probably the most important attribute of your steemit account. First, let’s see how to acquire Steem Power.

SP can be

  • Earn – by creating contents on the steemit.com
  • Converted – from Steem

SP cannot be bought from the market as it is not a tradable currency. However, you can buy some Steem and convert them (known as Power Up) to SP.

The amount of SP you have determines how much your upvote is worth. An upvote is similar to a ‘Like’ in Facebook. When you come across a steemit post that you like, you can Upvote the post and the author will be rewarded. The amount of reward depends on how much SP you have. Example, 1000sp will have a vote value of around $0.30. This amount awarded to the author does not come from your own pocket. Instead, it is from the Daily Reward Pool that the steem blockchain is creating everyday.

Similarly, the post that you create on steemit will get Upvotes from other users. And the more SP your supporters have, the more you will earn.

Voting Power

Then can I go around and Upvote as many posts as I like and reward all other authors? Yes and No. There is a built-in mechanism in the steem blockchain using Voting Power (VP) to prevent abuse of Upvotes. Here is an example of how it works, again, let’s use the example of 1000sp.

  • Upvote at VP of 100% = $0.30
  • Upvote at VP of 98% = $0.29
  • Upvote at VP of 90% = $0.25
  • Upvote at VP of 50% = $0.15
  • Upvote at VP of 10% = $0.01

Voting Power is like a energy level for a steemit user. Each Upvote diminished the VP by 2%. And it is generated automatically at 1% every 1.2 Hours. As seen in the above, your Upvote has the most value when your VP is at 100%. The next upvote (done at 98%) will be slightly lesser.

For now, don’t be too concerned with VP. As a newbie, we can just upvote as much as we like.

That’s all for now! Let us explore other steemit features in future posts! Stay tuned!

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