So, you have been on Steemit a while and have some Steem Power and some Steem Dollars in your wallet. What are you going to do with it???
This article is an expansion on @donkeypong's excellent artitcle:
https://steemit.com/steemit/@donkeypong/come-for-the-steem-stay-for-the-steem-power-this-is-getting-unfair-for-bitcoin-ethereum-reddit-and-facebook
Steem Power is valuable to the community and to members who hold it. Steem Power powers your posting, commenting and voting. The more you have, the more you earn for yourself and the more you provide to those whose articles you up vote.
But should you get MORE of it now?
What will you do with it, eventually?
Here are some thoughts. Please comment below if you find anything here that is Not Accurate, or if you have other opinions. THANKS!
You have Steem Power and Steem Dollars in your wallet. What are you going to do with it???
If you need money Right Now, you can cash out your Steem Dollars to Bitcoin (Convert Steem Dollars to Steem, then Steem to Bitcoin) and convert that to US Dollars or whatever currency you want.
If you DO NOT need money right now, your main choice is whether to turn your Steem Dollars into Steem Power, by Converting Steem Dollars to Steem then Powering UP the Steem to Steem Power.
Why would you convert Steem Dollars to Steem Power? If you think the price of Steem will be Higher in the future, you want to do this.
First, let's look at keeping your Steem Dollars.
Your Steem Dollars are "only" earning you 10% interest per year, paid monthly I believe. There is very little chance of your Steem Dollars being worth anything other than One US Dollar. The price of Steem would have to drop below $0.05 for the value of Steem Dollars to go down. It is now worth over $3. So, if you want as close to a sure thing as possible here, and if you are worried about the price of Steem going to less than $1 in the next 2 years, Steem Dollars are a better bet for you.
Now, what happens if you convert your Steem Dollars to Steem Power?
First, you will not be able to get at it, to use to pay bills, for a longer period of time. You could Power Down, and that will get you about 1% of your Steem Power converted to Steem each week, which you can convert to Bitcoin and then the currency of your choice.
If you decide to lock it up this way, because you expect the price of Steem to rise, meaning you will get more payout in the long run, then you have to think about how much it will go up, and when.
@donkeypong's article mentions that
you are not heavily exposed to dilution
but you are exposed to 10% dilution, which, all other things being the same, will make the value of your Steem Power 10% less per year. Steem is created at a rate that doubles the number of Steem in existance each year. 90% of that new Steem will come back to Steem Power holders, but 10% will not. His article also mentions that
Effectively, you are paid 10% interest for holding
but I don't see how that statement is supported. You do get 10% interest for holding Steem Dollars however.
It looks like Steem will be worth more than $1, maybe much much more than $1 in the future. This is what you hope for, if you hold Steem Power. You expect Steem to be worth more than $1 and you expect it to continue to be worth more than $1 for two years longer than when you expect to Power Down and use the money. If you plan to "retire" in 3 years and use your Steem Power as a 2 year annuity, you expect Steem to be worth more than $1 for the next 5 years.
WHEN should you convert Steem Dollars to Steem Power?
The answer to this question affects the numbers in the last paragraph! Steem is currently worth $3. If you convert your Steem Dollars to Steem Power today, and the price of each Steem Power is equal to the price of Steem, you are hoping that the price of Steem goes UP from here, and is UP when you eventually Power Down.
You may think that the price of Steem has soared a little too high and and a little too fast. Maybe it will come down before it goes up. If you think that, then wait a little and see if you are right, so you can get more Steem Power for your Steem Dollars.
If you think that Steem will be worth more in the future, then waiting for it to come down a little might not be a good choice. It may never go down or be as low as it is today! So get in immediately or miss some of the appreciation.
One other thing to consider. When you Power Down your Steem Power to Steem, I believe the amount of Steem you get each week is based on the average price of Steem that week. I do not know what the conversion rate is, if you are converting Steem Dollars to Steem. If you do this through an exchange, you do it at the current price. But if you internally convert Steem Dollars into Steem, is it at the current rate or averaged over time? If it is averaged over time, then it makes sense to convert now, because since the price of Steem has shot up over the last few days, the average price will be lower than the current price so you immediately gain value!
Thank you for reading this article! Please let me know what you plan to do with YOUR Steem Dollars and Steem Power, in the Comments. If you have written a similar article, please feel free to LINK to it in a comment.
LINKS:
This post started out as a reply to @donkeypong's excellent article, but it became too long for a reply so I made it into this article. Here is @donkeypong's original article. Please red it!
https://steemit.com/steemit/@donkeypong/come-for-the-steem-stay-for-the-steem-power-this-is-getting-unfair-for-bitcoin-ethereum-reddit-and-facebook
Dan's comments (in the comments of the article I am linking to) about STEEM and STEEM POWER inflationary and deflationary pressures: https://steemit.com/steemit/@maniac/steemit-what-am-i-missing#@dantheman/re-dantheman-re-maniac-steemit-what-am-i-missing-20160713t214911691z
This is where you can see the current and historic price of Steem:
http://coinmarketcap.com/currencies/steem/
Thanks for the informative article! I've currently got 10 Steem, I'll trade those in for Steem Power. Since I can power down anyway, that seems like the best option.
YW! You can power down but you get 1/13 of your locked up steem power converted back to liquid steem each week for 13 weeks, so it's not an immediate conversion. The price of steem may be higher or lower than it is now, when you get some of your steem power converted back to steem each week. Steemit Inc does have many good things coming next year, so it is possible that the steem you get back from a power down may be worth a lot more than it is now. But steem already had a very nice increase in value this year, so no one knows!
But the benefit of locked up steem power is, it powers your votes. The more steem power you have, the more of the daily reward pool you will be able to allocate to those you vote for, and the more curation rewards you will make for yourself when you vote. If you plan on being here a while and think Steemit will be here a while, then build up that steem power and you'll have your own business producing a steady income stream as you vote daily for others, in addition to any reward you may get from posts and comments up voted by others. Steemit has been a life changer for many people, and it may help many more in the future.
Best wishes to you!
Thank you, this cleared a few things up for me
So I'll put all my steem dollars into steem power. Thanks
Excellent article. Very thorough and informative.
Thanks for the effort and the usefull information mate ;)
I am putting each steem dollar into steempower, like you said I think it as a much bigger growth potential just like the early days of bitcoin That is still booming by the way! cheers
@kenny-crane there's just one question I need answered. All I've been seeing all over the place is steem dollar to steem or to steem power. Can steem or steem power be converted to steem dollars?
It can't be converted but you can trade Steem for SBD (Steem Dollars) on the internal market at
https://steemit.com/market
or you could move Steem to Bittrex or another exchange, sell it for Bitcoin, then buy SBD.
SBD is quite inflated lately. It was designed to stay near $1 but it has done well n the marketplace the last several weeks hitting a high of around $15. The supply is being increased in order to bring Down the price to move it back toward $1 so I'm not sure if I would be buying SBD now.
Steem Power is locked up Steem. You can't do anything with it until you power it down to Steem. If you Power Down, you will get 1/13 of your Steem Power converted to Steem each week for 13 weeks, starting one week after you initiate it. But it's good to accumulate Steem Power because it determines your votes' value. You will make good curation rewards for your votes when you have a good amount of Steem Power and this provides easy fun residual income as you engage and vote for people's posts here on Steemit.
Welcome to Steemit; it's a great place to be!
Thanks. That perfectly answered my question.
appcreciate these kind of guides for beginners. As you mentioned in the long run Steem power seems the best option for the future. Thanks
Very informative article for steemit newbies like me. Thanks
Thank you for your post.
I understood more.
I will follow you.
Commenting to save post. I still don't understand fully but this seems like the best article explaining what's what
If you have any questions, please feel free to ask. Some of this is out dated now, and I should do a new version of this someday!
Hey, thanks a lot. I look forward to figuring this all out one day. Appreciate your service t the steemians
Very good blog. Same mindset here. You read this stories about people selling their cars to buy cryptos and I think to myself, the basic rule of investment is: Only invest money you're willing to loose I found this amazing platform: https://www.coincheckup.com This site is really helpful in my coin research. I don't know any other sites with so much indepth analysis.
thank you for this article ,now i understood properly.
Question: How long do I have to wait to convert Steem Power to Steem Dollars. I read somewhere that the Steem Power is held for 2 years? Is this correct or can I start removing my Steem Power before that? (Not that I want to do that now as I am just starting to build it up).
I know this article is a year old but I am hoping you/someone will see this.
Thanks.
You can "Power Down" Steem Power into Steem, not Steem Dollars. It used to be done over 2 years but it is now done over 13 weeks. If you start a Power Down, then each week thereafter, you will see 1/13 of your Steem Power converted to Steem. For example, if you decide to Power Down 130 Steem Power, then each week you will turn 10 Steem Power into 10 Steem.
The effect of this: You will have less power in your vote, because your voting power is affected by your level of Steem Power (as well as your vote slider setting and your vote power which decreases with each vote but goes back up 20% of your max a day). That's the down side. The up side is you now have liquid Steem which you can then trade for Steem Dollars in the internal marketplace or you can move it to an exchange like Bittrex or TradeQwik for example, and trade the Steem for other cryptocurrencies.
I hope this helps you!
Thank you. This is a big help.
I wouldn't consider "powering down" until I built up a big cushion of Steem Power and I was continuing to acquire Steem Power so it would continue to grow.
great post @kenny-crane
its like a years old but people are still finding it veru useful. well done :)
Thanks for this post @kenny-crane - it helped me understand the relation between steem power and steem dollars - really useful!
Thank you so much for this.
Thanks for sharing the info. I did convert some to steem power after reading your article. Cheers
This must be joke of an article... the 99.99999 % of the public, ie practically everyone who was not an inventor / direct contributor to the Steem project on an ideological level, will not be comfortable playing these dilution / interest games... It looks like deliberately convoluted way of robbing outside investors of their equity.
The only way to make money on Steem consistently is to play these ping pong games of power up / power down, which exposes the mildly interested outside investor to very unfair risk, that he may not even be aware of at the time of buying into the Steem project. Very promising project, poor execution.
This was so helpful i don't even know how to thank you for this post. I know, by upvoting this :D I finally understand steem, steem power and steem dollars. It took me several weeks to fully understand the whole thing. You the best!
Great article it really cleared up alot of confusion i was having between the the 3 forms of assets inside the Steemit engine..
I'm glad my article was helpful!
Now this is great info for me a newbie,this words have always been hard for me to understand,i.e Power up,Power Down,thanks for this definitions and explanations
Because of this info i Powered Up(i can now use this word with ease) for the first time after learning from you,thanks.
Thanks for the article.
Have to give credit where credit is due! thanks bro, I had to use to this to freshen up!
Hey I remade the Steem dollar tonight and I'll send it to you shortly! where have you been?
Great, thanks!
I'm here for hours, every single day. :) I've been spending my time reading about 20 - 30 posts a day, up voting many of them.
I haven't written a new article, but I do write a few comments every day. I'm reading the technical articles very closely, since i am actually a tech guy, and I'm learning a lot. I read this post closely, and my comment there paid me very well: https://steemit.com/academia/@complexring/confessions-of-an-academic-postdoc -- thanks to some whales!
Thanks for working on the Steem Dollar; I know you're very busy! I'm busy here too, just less visible lately. :)
Thanks, I joined today and i think I will have to re-read this to make my self understand the idea behind this earning system .
Thanks for sharing those information with us ^^
YW! I like your article on Steem Power too!
How do we convert STEEM to BTC?
There are a bunch of articles on steemit that talk about different ways to do that. You can use the Steemit custom Google search (click the magnifying glass in the header to get to the search function), or just use Google. I searched here, and found this article which may be helpful: https://steemit.com/steemit/@ratel/instructions-for-those-who-want-to-withdraw-their-steem-to-bitcoin Look at step 3.
Bittrex
Great post, clarified a lot of moments. Thank you!
I feel lack of official manuals at the steemit main page
YW! I do think more "Help" pages will be added. The development team is busy with many other things right now. But if you have other questions, please ask here and I'll try to answer.
Great article, Kenny! I've been pitching Steemit to so many people the past couple of days and this will be a useful resource for some of their questions. Thanks!
YW, and if you have more questions, please ask here and I'll try my best to provide a helpful answer!
very informative
Thank you!
My strategy is to trade Steem externally, buying dips and exiting when the price spikes to build up a larger amount, also taking advantage of arbirtage opportunities. Then when it becomes more beneficial to power up (during this point I'm losing 0.3% per day ish in lost interest by holding steem, plus additional curation rewards) then I'll convert the majority to Steem Power and leave the rest to allocate to other investments.
But we'll see :O
Thanks for your reply, and that sounds like a good plan, if you can correctly identify the dips and spikes. :-) I wish you only profitable trades!
It's mainly the arbitrage strategies as the markets aren't completely stable at the moment. Thats going to become much tougher if the price keeps going up. I could do it more effectively earlier on when I had much smaller size. It will soon be more profitable to just get into steem power, maybe even in the next couple of days.
Thanks for your great post. With all the questions we get about Steem Power, more people clearly need to understand it well and be able to make the right decisions!
Regarding the 10% "interest": I used the word "effectively" in my article, meaning that the extra money is not literally interest but can be seen that way. The extra money paid to Steem Power holders is meant to combat dilution of their relative share. As I understand it, both Steem Power and Steem Dollars confer this benefit, while Steem holders are subject to dilution (which is why you want to sell your Steem soon or Power Up).
Thanks for your reply! I almost feel like I should put a disclaimer of "I am not a financial advisor" on a post like this! I think my point, and your point too, is that people need to really understand all the angles when it comes to making decisions on their newly acquired digital assets.
I still think that Steem Power will Decrease by almost 10%, all other things being equal, due to the 100% yearly creation of Steem, since only 90% of that Steem comes back to Steem Power holders as additional Steem Power. See Dan's comments today here, for the complete explanation: https://steemit.com/steemit/@maniac/steemit-what-am-i-missing#@dantheman/re-dantheman-re-maniac-steemit-what-am-i-missing-20160713t214911691z
Very informative, I appreciate the post. Answered most of my questions.
Thanks, I'm glad you found it helpful!
Thank! Perfect for a new member like me... what I will do with mine - well it seems I missed the whole train already again, damn :-)
YW! I think you will continually get Steem Power and Steem Dollars as you post more articles, so this may be something to think about again soon, for you.
I'm interested in 3D Printing so I will check out your articles!
Yeah would be nice - I just started yesterday and planned to write 2 articles a day the next 2 weeks. :-)
Here you can see the overview page where I link all:
https://steemit.com/technology/@hastla/3d-printing-guide-1-0-overview
Thanks this answered a few things I was still unsure of. Mainly why to convert my SD to STEEM. I did recently with about $70 and have been taking bits and doing this regularly now but wasn't totally sure why other than reading it was a good idea to invest this way. Now, I am more clear. And I do think the value will rise so I do not regret my decision to keep investing some % back into steem instead of converting to BC. :)
Thanks for commenting, Laura! I think once people get a basic grasp on Steem, Steem power and Steem Dollars, they might want to research a little further to see how best to hold their flavors of Steem to achieve whatever their goals are.
I think Steem will rise too! It's already at $4 and we're just getting started!
Hmm..I'm actually new here and I still didn't get it, like after 7 days when you get the payment of your post, what happens? The payment is in steem power or steem dollars? After 7 days from your post pass what happens and what should I do? :/
At the moment, you get about 75% of the reward in Steem Dollars (SBD) and the rest in Steem Power. Steem Power powers your votes so build that up. Its like leveling up in a game! You can go to the Market and trade your SBD for Steem and Power that UP. Or sell the SBD for Bitcoin using Blocktrades or an exchange like Bittrex. Then you can move the Bitcoin to CoinBase and sell it for money that goes right into your checking account. Good luck here!
So, where can you get the information on steem to steem dollar values? Is that in the market? I'm a words and story guy, numbers confuse the hell out of me, unless it's geometry, I'm also a carpenter.
Never mind,answered my own question. Sometimes I am just thinking out loud,HA, continue, nothing to see here, move along, just a crazy writer talking to himself.
https://steemit.com/new/@unkabird/how-to-convert-steem-dolaars-to-steem-power