The great thing about Steem is that it constantly challenges our thoughts and encourages discussion and healthy debate. One area which I have had a huge change in thinking recently is my strategy around powering up to Steem Power.
I have been following @tarazkp who speaks alot about the benefits of powering up. Powering up is not for everyone, as we are all here for different reasons and have different goals - today I thought id share some of the pros and cons of powering up.
Liquid versus illiquid funds
Although there are three different currencies on Steem, for simplicity we can narrow them down to liquid, i.e easily turned into cash and illiquid, i.e. less easily turned into cash. With this in mind:
- Steem and SBD are liquid funds
- Steem power is illiquid
Steem and SBD have different values on the market but can easily be traded for Bitcoin and then for FIAT. Steem Power is 'vested' and takes 13 weeks to power down to liquid Steem.
Benefits of holding liquid currencies
Because of the transparent nature of Steem, from time to time I get nosy and check in people's wallets. Some have a massive amount of liquid funds and the minimum amount of Steem Power. Some of this comes down to miseducation - why would you want to lock away your money, and not be able to withdrawal it for 13 weeks??! I know until being on here 2 months I had nearly 40 SBD sitting there not being used - now I have around 2 - 5!
I have read stories on here about how people live on the money they make on Steem - in this case it seems that having liquid funds is necessary.
One of old saying around investment is to ‘spread your risk’ - so one possible reason for holding liquid funds could be to trade some on the open market and become invested in a wider range of cryptos (of you aren't in the position to invest your own FIAT).
The only reason I hold liquid funds currently is to purchase upvotes/resteems - I don't spend alot on these! I also alway keep a bit spare incase I want to run any competitions (such as giving away @steembasicincome shares).
Benefits of powering up
I essentially see powering up similar to investing money - when you invest money you get extra benefits (in the form of higher interest rates). Similarly, when you power up and ‘invest’ in Steem Power, your upvote becomes worth more, and you can also earn greater curation rewards. If you power up and want a chance to earn some passive income you also have the option of delegating your Steem power to a bot or a project.
Powering up takes a bit of a ‘leap of faith’, and also a change of mindset - you need to think about Steems long term future. If, like me, you see real value and success for the future of Steem, then powering up might be a good option.
Also, for me I don't need any of the money I make on here so if I power up and Steem crashes then it isn't the end of the world for me
I would love to hear everyone's thoughts on this - are you powering up or holding liquid funds?
