As you already know by now, most cryptocurrency projects (if not all), have their own native currencies or tokens. These tokens enable users to perform transactions such as paying for a service on the platform. They also grant users decision-making rights on the network (more like buying the shares of a company).
While most networks have one currency, it is rather interesting that the Steemit platform has three different coins; Steem, Steem Dollars, and Steem Power.
If you have ever used Reddit, then it shouldn’t be hard to understand Steemit. Users can create and publish their content on the platform and get rewarded for doing so. But there’s a slight twist with Steemit, as with every other blockchain project is that it is decentralized. Put differently, there’s no central authority, no censorship, no downtime, and no data abuse or vulnerability. In comparison with centralized social platforms like Facebook and Twitter, this appears to be the solution we need.
The best part of all of these advantages is that users get rewarded for posting valuable content. Who has ever paid you for creating a post on Facebook? Yeah, right!
Now, let’s proceed to look at the three different cryptocurrencies on the Steemit blockchain:
Steem coin is the primary currency of the Steemit network and ther two other cryptocurrencies are dependent on it. The cryptocurrency does not rely solely on mining to create new coins.
By the structure of the network, Steemit creates new Steem coins every day. The coins are shared in the following percentage:
- 75% of new coins are shared between authors and curators
- 15% are awarded to owners of Steem Power
- 10% of the block rewards are awarded to miners
As a recommendation, considering the fact that Steem coins are created every day, it is no longer ideal to hold these coins for long periods of time. It is better to convert your Steem to either Steem Dollars or Steem Power.
Steem Dollars (SBD)
Steem Dollars is a more stable cryptocurrency with an intended value of 1:1 in comparison with US dollars. That is, 1 SBD is equivalent to 1 USD.
50% of payment transactions to creators and curators on the Steemit platform is processed in SBD to avoid fluctuations. Additionally, holders of Steem Dollars earn an interest of 10% annually.
Steam Power (SP)
This is the third crypto on the Steemit network, and it symbolizes the amount of power you have on the Steemit network. In essence, the more SP you have, the more power you have.
Holding SP gives you a voting power of 1:1. For example, if a post receives a vote from a user with 50 SP, it is 50 times more influential than a vote from someone with 1 SP. This is a very essential part of Steemit. Posts and comments that get upvoted by influential members receive more compensation. As a matter of fact, users cannot vote without SP on Steemit.
Other noteworthy features of Steem Power are that it can be considered a long-term investment (you can’t sell it until after 13 weeks). You can power up by buying more Steem Power, or power down by selling.