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What is Steemit? | Simply Explained

By March 16, 2018 September 20th, 2018 No Comments

What is Steem Simply Explained?

Steem-it is a social network that utilises the blockchain to pay both content creators when their work gets upvoted (much like Reddit), as well as the users who curate the best content on the site by upvoting others work. It’s been dubbed an ‘attention economy’ platform, where posts that get the most attention are rewarded through the application’s digital currency called Steem.

Steemit was founded in early 2016 by Ned Scott and Daniel Larimer (who has most recently moved onto the EOS project). If you’ve ever used Reddit, you’ll know that upvotes are king and a form of ‘currency’ (karma) on the site. With Steemit, however, users are rewarded in cryptocurrency for their shares and upvotes as the cryptocurrency powers the platform.

Similar to other social network giants such as Facebook, Reddit and Instagram, Steemit has a familiar look and feel to it – there’s nothing particularly new it brings to the table in terms of user-experience or interface. There’s the standard-issue upvote, downvote and share buttons, as well as popular social tags such as photography, travel and art that would be familiar as subreddits on Reddit or hashtags on Instagram for their users. But where it differs to the current main players is its use of the blockchain and the level of transparency that provides to its content. Everything users do on the site is logged on the blockchain—meaning every vote, post, currency transfer, and even the amount of Steem sitting in someone’s digital wallet, is public and viewable.

Image of community representing Steem for Steem Simply Explained

Three’s a crowd?

Other projects like NEO and SPECTRE, have two tokens to their respective platforms but Steem Cryptocurrency it trumps that with a total of three tokens. One, called Steem, is the base token of the platform. It can be turned into two other versions of the digital currency. Steem Power (SP), is essentially a measurement of weight a user has on the site. The more Steem Power a user holds the more they can influence how much recognition other posts get. It’s like being a highly revered critic or a long-standing and respected Reddit user. Steem tokens can be turned into into STEEM Power (SP), but it’s at the cost of trading liquidity for influence over the site.

The third token, Steem Dollars (SBD), are pegged to $1 USD. They can be traded back and forth with STEEM or transferred to other accounts for exchange. For posts a user is rewarded for, they will receive 50% SP and 50% SBD, or they can opt to receive all in Steem Power.

All content on Steemit is stored on the blockchain and each day new Steem tokens are minted and added to a community ‘reward pool’. These tokens are then distributed to users for their contributions, based on the votes that their content receives. Users who hold more tokens in their account as ‘Steem Power’ will get to decide where a larger portion of the rewards pool is distributed.

Image of money bag representing payouts to users for Steem Simply Explained

Where’s the money come from?

So, great, you say…we finally have a social network platform that will pay us for our content, and pay others when we upvote and like a post. But you may be asking…where does the money come from? Who’s paying? After all, someone has to pay, right? Well, essentially, it comes from people buying Steem. Investors buy because they speculate that the cryptocurrency will eventually become profitable, so as long as the demand for Steem rises, the value and rewards are assured by people buying and selling the currency. If the speculation value of Steem was to lose momentum, the platform would need to look to creating an income stream such as a traditional advertising revenue model.

Main Platform Features

  • A free-to-use social media platform where content creators and curators are paid in cryptocurrency.
  • To prevent gaming the system, accounts must be manually approved on the platform and provide verification that they are a real user.
  • Each user has a wallet on the platform and payouts are made 7 days after a post/comment is created.
  • Headquartered in Austin, Texas with staff worldwide continuing ongoing development and features.
  • A circulating supply of Steem (ticker: STEEM) currently at a little over 250,000,000.
  • Also offers third-party applications, such as the popular decentralised video platform, d.tube. D.tube is similar to YouTube, but without advertisements where content creators get paid.

Positives

  • Over 500K members (Dec 2017) with huge growth potential.
  • Platform is open-sourced and decentralised.
  • Ad-free platform.
  • Since October 2017, $30 million in rewards have been paid out to over 50,000 users.
  • Your wallet address is your username 🙂
  • First to market for a rewards-based content platform; Facebook, Instagram etc may need to play catch-up.

Negatives

  • Some payouts have been quite high for low quality content; for example, memes where a user did not even create the content themselves but simply reposted.
  • Early adopters of Steem have much of the power on the platform.
  • Some users claim it’s too hard to get new content noticed and the platform is somewhat likened to a play-to-win game.
  • Being a platform running on the blockchain, there is no way to recover your account if you lose your password/key.
  • Bots are in use on the platform, removing the democracy of a free market content system, e.g. high quality content that is making no money and low-quality content making a lot of money.

Issues

In 2016 Steem Cryptocurrency it was hacked and approximately 250 accounts were compromised with US$ 85,000 worth of Steem Dollars and Steem stolen by the hackers. Critics of Steem have also argued that the digital currency does not have any real economic benefit and will only succeed if the platform itself is a success and continues to grow in audience.

Image of man with question marks wondering where Steem money comes from for Steem Simply Explained

Summary

As a social network, Steemit does nothing particularly new or even better than the other major players in the marketplace that we all know and love. The one novelty and drawcard it has is it pays content creators and curators in their use and support of the platform in cryptocurrency. It’s another advancement towards the gamification of society, whereby scores and rewards are distributed among users who invest the most time and effort into unique and original content. However, whether that time and effort is worth the reward is debatable. It’s also particularly hard to build momentum when there’s other major players in the social media space with enormous userbases, vying for attention. Take Reddit, for example, which boosts a user base of roughly 250 million users and over 800,000 different subreddits. Steemit may find it an uphill battle to win over a user base like this, not to mention try to tackle the likes of Facebook and Instagram. Paying users is a great idea in theory but time equals money and the question is does the reward equal the time spent posting content?

Steem in some ways could be deemed a social network experiment, and perhaps the future of content is to pay its creators, much like the Basic Attention Token project will pay its users to watch advertisements on the web. These types of projects may well spur on the major players to start rewarding their own users in some form, but the verdict is still to be determined whether Steemit can knock the giants of their perch.

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