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RE: Could someone explain Steem to me like I am a three year old?
You don't lose anything by voting or commenting. In fact, you earn a little steem power by doing these things. Steem power detetmines how influential your votes are. The steem & steem dollars in your account are liquid funds that you can use like money. They can be traded for national currencies like dollars or euros.
What's in your account is what you've earned by creating value for steemit.
Okay, that's interesting. So, by up-voting I wasn't giving people money when I did that?
So for example, should I seek to have more influence? Obviously I have no intention to cash out in any fiat currency, I want to let it ride.
Do I want to build up my steem power? How would I do that with the numbers above in my wallet for my best possible influence and participation?
Upvotes direct money from the reward pool toward posts. Essentially, the people that are producing steem coins (miners) divide them up between content creation pools and curation reward pools. When you upvote content, you're signalling to the system that it should direct some of that creation reward pool to that post. The same goes for curation. You don't actually pay out anything from what you have toward your upvotes; it's paid via the reward pools.
Steem power and influence are the same thing here. You can 'power up' your steem directly into steem power (which is instant), and convert your steem dollars into steem to use for powering up (once you click 'convert', it takes a week before the conversion is complete). Note that this will make these (re-invested) funds unavailable for withdraw.
And then what's the long term benefit in this?
It increases your reputation on Steemit, which makes your votes more powerful (including votes for yourself every time you post - so it makes your posts more visible and likely to earn more money).
Steem power is also a long term investment that is kind of like an equity position. It accrues interest rapidly (this is offset by value dilution due to the steem equivalent of inflation). It can't be taken out at a faster rate than 1% over the course of two years, so it really is a long term investment. If Steemit and the Steem token are successful, Steem Power may be worth quite a bit of money in the future. If they are unsuccessful, it will not be worth so much.