3. STEEM, STEEM Power (SP), and STEEM-backed dollars (SBD)

# 3. STEEM, STEEM Power (SP), and STEEM-backed dollars (SBD) In the last installment, we discussed signing up for Steemit, securing your account keys, and getting familiar with the wallet page. Today's lesson is about the three currencies you'll find in the wallet. We'll talk about what they are used for, how they are different, and how to convert and transfer them between each other, as well as into other digital currencies. Since Steemit is built on the STEEM blockchain, we'll start with STEEM. # STEEM STEEM is the most recognizable digital currency. It is the bedrock of the STEEM blockchain and trades on several major exchanges such as Bittrex and Poloniex. You can consistently find STEEM among the top 30 currencies by market cap, and its value is increasing every day. STEEM is a versatile digital currency that does not carry any transaction fees and boasts instantaneous transfers. Unlike bitcoin, STEEM is a proof-of-stake coin. I won't take the time to explain the details of how they are different, but you are welcome to [read up on the differences between proof-of-stake and proof-of-worth coins here](https://blockgeeks.com/guides/proof-of-work-vs-proof-of-stake/) if you are interested in learning more. STEEM is a liquid currency, which means it may be exchanged instantly for other currencies using exchanges or services like [Blocktrades.](https://blocktrades.us). It may also be powered up into STEEM Power, or converted to STEEM-backed dollars via the Steemit internal market (we'll talk about all of these operations later). While you cannot obtain STEEM directly as as post reward on Steemit, there are several ways to obtain STEEM via the other two assets, SP and SBD. I'll discuss those in a moment. For now, it's important to understand that each user on the STEEM blockchain has a stake in the platform, meaning that now, as a Steemit user, this means you! Exciting, right? The best news is that your stake will grow as you use the platform. So just how is this stake measured? That's where STEEM Power comes in. # STEEM Power (SP) Your STEEM Power (SP) is the measure of influence that your account has on the STEEM blockchain. This means that as your SP increases, your account's value increases. SP are equivalent to STEEM in value, however they are not liquid, as they cannot be directly traded or exchanged for other digital currencies. The amount of SP your account possesses directly determines how much value your account will be able to reward other users with. Therefore, when we talk about voting in a later installment of this series, you'll notice quickly that the users who have more SP are able to give higher value votes dollar-wise as it appears in the payout section of each Steemit blog. When you click on your amount of SP on your Wallet page, you'll see the option to "Power Down." The process of powering down is how SP may be converted into STEEM. This process requires 13 weeks to reach completion, with a payout of STEEM occurring in regular intervals. Therefore, it's more difficult to access the liquid value of your SP tokens. Alternatively, the process of "Powering Up" is an option when you click on your amount of STEEM in your Wallet. Powering up is an instantaneous process that converts STEEM into SP, thus increasing your influence on the blockchain. Keep in mind that while powering up happens immediately, powering down will take 13 weeks, so this must be taken into consideration when deciding what to do with your STEEM. When you begin blogging on Steemit, it is usually a good idea to begin powering up all of your rewards so as to increase your influence on the platform. You'll be able to give higher value votes to others, as well as earn more of something called curation rewards, which we'll discuss in a later post. This is the first instance where you'll see that Steemit is not just about getting rich quickly, it's about using your profile to interact with others and provide value to content you believe to be excellent. I'm getting ahead of myself, but keep in mind that Steemit is a community, and you can think of your SP as a numerical representation of your involvement in the community. The higher it is, the more you'll be able to influence rewards for others. Finally, post rewards are paid out in STEEM power. When you receive rewards from a blog post, which we'll discuss in more detail later, at least 50% of the rewards will be directly added to your SP balance. This means as other users reward your posts, your own influence on the platform will increase no matter what. It may be a small amount at first, but growing your SP balance is one of the most important ways you can help contribute to Steemit. So what happens to the other 50% of rewards? That's where STEEM-backed dollars come in. # STEEM-backed Dollars (SBD) Generally, the other 50% of rewards from blog posts and comments are paid out as STEEM-backed dollars (SBD). SBDs are liquid tokens, like STEEM, which are listed on a few exchanges and may be converted directly to STEEM or other digital currencies using Blocktrades or another service. The goal of SBDs is to offer a more stable digital currency that is not subject to fluctuations like STEEM and Bitcoin. Each SBD is intended to have a value of 1 US dollar. This may not be the case as you read this post. If you are curious as to the value of [STEEM](https://coinmarketcap.com/currencies/steem/) and [STEEM-backed dollars](https://coinmarketcap.com/currencies/steem-dollars/) right now, you may check their current prices by clicking the links in this sentence. After receiving any amount of SBDs, one may choose to leave them in the wallet as SBD or convert them to STEEM. This may be done in two ways. One way is to use the "Convert to STEEM" option that you'll notice in your wallet. This takes an average exchange price over the next three days and uses it to convert your specified amount into STEEM. The other option is to use [Steemit's internal market](https://steemit.com/market) to exchange SBDs for STEEM right away. This is generally the better option, as it occurs instantly, and the prices on the internal market are generally consistent with those of outside exchanges. If you choose to convert your SBD to STEEM, you may then power up the STEEM you obtained to increase your influence on the platform. This may be advisable at the beginning of your Steemit journey in order to improve the value of your votes. However, you are free to do with the liquid SBD as you please, and that may involve sending them to another wallet to exchange them into USD or another fiat currency. The choice is yours, and it can all happen right in your wallet! SBDs may also be transferred to other users from within your wallet similar to how STEEM may be transferred. # Savings There is another section of your Wallet that I haven't mentioned yet. It's called Savings. You may transfer any amount of STEEM and SBD to your savings. In the past, these savings appreciated at a given interest rate. The rate is currently zero, so you may certainly move money in, but there is a withdrawal wait period of three days, so if you're looking to use your earnings or power them up, you might want to avoid the savings in order to make better use of your rewards. # Advice for New Steemians Often it's hard to know what to do having just learned so much new information. As we progress, we'll talk about sharing your first blog on Steemit. You won't receive a payout in SBD or SP until 7 days after you share your first post on Steemit. That goes for all posts and comments. The rewards pay out to your Wallet 7 days after a post has been shared. You will be able to claim these rewards as they come in. Later in the series, we'll look at some tools you can use to track these rewards. My advice to you will stay the same as we continue. I'll guide you through making your first post on Steemit, commenting on others' posts, and voting on others' posts. Throughout this process, I recommend using your knowledge of STEEM, SP, and SBDs to increase the value of your account. # What You Should Know * Review the information about the Wallet page from Lesson 1 * Know the difference between STEEM, SP, and SBDs * Know how to exchange each of the three currencies for each other * Understand that powering up STEEM will increase your influence on the platform * Understand that powering down SP will convert it to STEEM over the course of 13 weeks. # Final Thoughts Now that you understand the three currencies in use across Steemit, we only have one more lesson before you'll be ready to share your first blog on Steemit and start collecting rewards! So if you're getting anxious, don't worry. You'll be steeming along very soon. In the next lesson, we'll talk about the social functions of your account: voting, commenting, and sharing blogs. We'll discuss the terminology in detail, talk about rewards, and introduce the concepts of voting weight and voting power! Click here to move to Lesson 4!