SBD vs. Steem - Why knowing the difference can save you money

As I have recently recruited a lot of my friends onto Steemit, the main question, and one that seems to be the most confusing to new users, is the difference between SBD and Steem (and also Steem Power). In order to not have to continuously answer this question, I am going to do my best job of explaining the difference in this post, and also why knowing the difference is so important to understand.

Difference between Steem, SBD (Steem Dollar), and Steem Power:

Steem Power: I like to think of this as investing in the future of Steem. Steem Power determines the value of your upvote. The more SP you have the higher the amount of SBD/Steem you can create and thus earn over time. When you are paid out from a post, comment, or curation (your upvotes on other peoples stuff) you will be paid out partially in Steem power. You can also "Power Up" your Steem into Steem power. Steem Power is NON TRADEABLE. If you want to get back your tradeable Steem, you must "Power Down," a process which pays you out weekly in 13 equal payments.

Steem: A liquid, transferable, exchangeable, or power up-able crypto currency. As the market cap of Steem increase, so does its value, and Steemit users are rewarded for selling it to the market. If you don't want to sell it, you can power it up and earn more through your higher valued upvotes. Currently Steem is worth about six dollars a piece and some thing it could go much higher due to the appeal of having Steem Power and the low amount that is available to be bought on the market (and not locked up in Steem Power).

SBD: Here's the explanation why they made SBD rather than just having Steem:

"Merchants give users a way to quickly convert their cryptocurrency into tangible goods and services. Merchants need a currency pegged to their unit of account, normally dollars. Accepting a volatile currency introduces significant accounting overhead.

Merchants will accept any currency if it increases their sales. Having a large user base with a stable currency such as SBD lowers the barrier to entry for merchants. The presence of merchants improves the system by creating an off-ramp for users to exit the system without going to the trouble of using an exchange."

However, this hasn't gone quite as planned because a lot of people are speculating on its price currently. It is currently priced at about eight dollars so you should currently set your payout rewards to 50/50 and I think unless SBD goes back to $1 you shouldn't ever convert it to Steem because it is not a 1 for 1 exchange and you will lose in total dollar value. This is why it is so crucial to learn the difference. Now you don't have to make the mistake I made of converting Steem to SBD. If you want to convert your Steem to SBD, send SBD to an exchange such as bittrex and sell it for bicoin, then buy Steem or vise versa if you want Steem back.

Also, if you're confused the estimated USD worth of your wallet, it takes into account the Steem market value but not SBD, it estimates it at $1 which is why it may look a bit lower than it should be at the moment.

TLDR:

SBD can be converted to Steem. Steem cannot be converted back to SBD. Steem can be converted to Steem power and Steem power can be slowly powered down back to steem, takes 13 weeks. DON'T CONVERT SBD TO STEEM, USE AN EXCHANGE.