When you write a post on Steemit.com, you’ll see that there are three options for the rewards:
- Power Up 100%
- Default (50% / 50%)
- Decline Payout
If you choose to power up 100%, you’ll receive all rewards of the post as Steem Power (SP). This means it will go straight into your SP account and you will have to power it down over 13 weeks if you want to withdraw it.
If you choose the default option (50% / 50%) you’ll receive half of the rewards as SP, and the other half as Steem Dollars (SBD). If you watched my previous video, you know that Steem Dollars are supposed to be pegged to the US dollar, but aren’t currently worth more than that. As a result, the 50% / 50% payout option is by far the best option.
To better understand this, lets imagine you’ve earned 10 STEEM worth of author rewards for a post. If you choose the power up 100% option, those 10 STEEM will show up in your account as SP. If you choose the 50% / 50% option, 5 of those STEEM will show up as SP, and the other 5 will be converted to SBD based on the current market price of STEEM. So if the market price of STEEM is $5, which means 5 STEEM are worth $25, you’ll receive 25 SBD.
Note: Please see the comments from @sambillingham below, which explain this from a different angle and give some really helpful examples!
But here’s the thing! Because SBD are worth more than a dollar, you can convert them into STEEM and in the end you’ll get an extra bonus of STEEM compared to if you had taken the power up 100% option for your rewards. There’s a great illustration of the breakdown in this post from @sndbox if you want a more visual representation.
I know that this is probably pretty confusing still, but it’s an important thing to keep in mind considering the current value of SBD.
I hope I was able to explain this well — please let me know if you have any questions!
Thanks for watching. 😀
Music by Chillhop: http://youtube.com/chillhopdotcom
Globuldub - Foreign Exchange: https://soundcloud.com/globuldub/foreign-exchange
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