steemit life story in my own words

Collectively, user-generated content has created billions of dollars worth of valuefortheshareholdersof social media companies, such as Reddit, Facebook, and Twitter.​In 2014, Reddit hypothesized that its platform would be improved if everyone who contributed to reddit.com by posting stories, adding comments or voting were rewarded with a fair share in Reddit, Inc . Steem aims to support social 1 media and online communities by returning much of its value to the people who provide valuable contributions by rewarding them with cryptocurrency, and through this process create a currencythatis able to reach a broad market, including people who have yet to participate in any cryptocurrency economy.
There are some key principles that have been used to guide the design of Steem. The most important principle is that everyone who contributes to a venture should receive pro-rata ownership, payment or debt from the venture. This principle is the same principle that is applied to all startups as they allocate shares​ ​at​ ​founding​ ​and​ ​during​ ​subsequent​ ​funding​ ​rounds. The second principle is that all forms of capital are equally valuable. This means that those who contribute their scarce time and attention toward producing and curating content for others are just as valuable as thosewhocontributetheirscarcecash.Thisisthesweatequityprinciple andisaconceptthat 2 prior​ ​cryptocurrencies​ ​have​ ​often​ ​had​ ​trouble​ ​providing​ ​​ ​to​ ​more​ ​than​ ​a​ ​few​ ​dozen​ ​individuals. The third principle is that the community produces products to serve its members. This principle is exemplified by credit unions, food co-ops, and health sharing plans, which serve the members of their community​ ​rather​ ​than​ ​sell​ ​products​ ​or​ ​services​ ​to​ ​people​ ​outside​ ​the​ ​community. The​ ​Steem​ ​community​ ​provides​ ​the​ ​following​ ​services​ ​to​ ​its​ ​members: 1. A​ ​source​ ​of​ ​curated​ ​news​ ​and​ ​commentary. 2. A​ ​means​ ​to​ ​get​ ​high​ ​quality​ ​answers​ ​to​ ​personalized​ ​questions. 3. A​ ​stable​ ​cryptocurrency​ ​pegged​ ​to​ ​the​ ​U.S.​ ​dollar. 4. Free​ ​payments. 5. Jobs​ ​providing​ ​above​ ​services​ ​to​ ​other​ ​members. Steem’s purposeful realignment of economic incentives has the potential to produce fairer and more inclusive results foreveryoneinvolvedthanthesocialmediaandcryptocurrencyplatformsthathavegone before it. This paper will explore the existing economic incentives and demonstrate how Steem’s incentives​ ​may​ ​result​ ​in​ ​better​ ​outcomes​ ​for​ ​most​ ​participants. 1​ ​Reddit’s​ ​Cryptocurrency,​ ​Forbes,​ ​Erika​ ​Morphy,​ ​October​ ​2014, http://www.forbes.com/sites/erikamorphy/2014/10/01/reddits-cryptocurrency-could-have-many-uses/#4e07b05332b 9 2​ ​Sweat​ ​Equity,​ ​Investopedia, http://www.investopedia.com/terms/s/sweatequity.asp 5​ ​of​ ​32

Recognizing​ ​Contribution Steem is designed from the ground up to address the major barriers to adoption and monetization of a social media based economy. Our thesis is that the same techniques used to grow major social media platforms can be used to bootstrap a successful cryptocurrency. Economic incentives enabled by cryptocurrency can dramatically facilitate the growth of a new social media platform. It is the synergy between cryptocurrency and social media that we believe may give Steem a powerful advantage in the market.
The challenge faced by Steem is deriving an algorithm for scoring individual contributions that most community members consider to be a fair assessment of the subjective value of each contribution. In a perfect world, community members would cooperate to rate each other's contribution and derive a fair compensation. In the real world, algorithms must be designed in such a manner that they areresistantto intentional manipulation for profit. Any widespread abuse of the scoring system couldcausecommunity members​ ​to​ ​lose​ ​faith​ ​in​ ​the​ ​perceived​ ​fairness​ ​of​ ​the​ ​economic​ ​system. Existing platforms operate on aone-user,one-voteprinciple.Thiscreatesanenvironmentwhererankings can be manipulated by sybil attacks and the service providers must pro-actively identify and block abusers. People alreadyattempttomanipulatetheReddit,Facebook,andTwitterscoringalgorithmswhen the​ ​only​ ​reward​ ​is​ ​web​ ​traffic​ ​or​ ​censorship. The​ ​fundamental​ ​unit​ ​of​ ​account​ ​on​ ​the​ ​Steem​ ​platform​ ​is​ ​STEEM,​ ​a​ ​crypto​ ​currency​ ​token. Steem operates on the basis of one-STEEM, one-vote. Under this model, individuals who have contributed the most to the platform, as measured by their accountbalance,havethemostinfluenceover how contributions are scored. Furthermore, Steem only allows members to vote with STEEM when itis committed to a vesting schedule. Under this model, members have a financial incentive tovoteinaway that​ ​maximises​ ​the​ ​long​ ​term​ ​value​ ​of​ ​their​ ​STEEM. Steem is designed around a relatively simple concept: ​everyone’s meaningful contribution to the community should be recognized for the value it adds ​ . Whenpeoplearerecognizedfortheirmeaningful contributions, they continue contributing and the community grows. Any imbalance in the give andtake within a community is unsustainable. Eventually the givers grow tired of supporting the takers and disengage​ ​from​ ​the​ ​community. The challenge is creating a system capable ofidentifyingwhatcontributionsareneededandtheirrelative worth​ ​in​ ​a​ ​way​ ​that​ ​can​ ​scale​ ​to​ ​an​ ​unbounded​ ​number​ ​of​ ​people. A proven system for evaluating and rewarding contributions is the free market. The free market can be viewed asasinglecommunitywhereeveryonetradeswithoneanotherandrewardsareallocatedbyprofit and loss. Themarketsystemrewardsthosewhoprovidevaluetoothersandpunishesthosewhoconsume more value than they produce. Thefreemarketsupportsmanydifferentcurrenciesandmoneyissimplya commodity​ ​that​ ​everyone​ ​finds​ ​easy​ ​to​ ​exchange. 6​ ​of​ ​32

Sincethefreemarketisaprovensystem,itistemptingtotrytocreateafree-marketsystemwherecontent consumers directly pay content producers. However, direct payment is inefficient and not really viable for content creation and curation. The value ofmostcontentissolowrelativetothecognitive,financial, and opportunity costs associated withmakingapaymentthatfewreaderschoosetotip.Theabundanceof free alternatives means that enforcing a ‘paywall’ will drive readers elsewhere. Therehavebeenseveral attempts to implement per-article micropayments from readers to authors, but none have become widespread.
Steem is designed to enable effective micropayments for all kinds of contribution by changing the economic equation. Readersnolongerhavetodecidewhetherornottheywanttopaysomeonefromtheir own pocket, instead they can vote content up or down and Steem will use their votes to determine individual rewards. This means that people are given a familiar and widely used interface and nolonger face the cognitive, financial, and opportunity costs associated traditional micropayment and tipping platforms.
Voting input from community members is critical for Steem to accurately allocate payments to contributors. Voting can therefore be viewed as a crucial contribution and worthyofrewardsonitsown. Some platforms, such as Slashdot, use meta-moderation as awaytorankandrewardhonestmoderators. 3 Steem chooses to reward those who contribute the most to the total promotion of a piece of content and rewards​ ​the​ ​voters​ ​proportional​ ​to​ ​the​ ​ultimate​ ​reward​ ​paid​ ​to​ ​the​ ​content​ ​creator. Ways​ ​to​ ​Contribute This section outlines the ideas behind Steem and its rewards for people who provide meaningful and measurable​ ​contributions​ ​to​ ​the​ ​Steem​ ​community. Capital​ ​Contributions There are two items a community can offer to attract capital: debt and ownership. Those who buy ownership profit when the community grows but lose if the community shrinks.Thosewhobuydebtare guaranteed a certain amount of interest but do not get to participate in anyprofitsrealizedbythegrowth of the community. Both types of capital contributions are valuable to the growth of the community and value of its currency. Additionallytherearetwowaysownershipcanbeheld:liquidandvesting. Vesting ownership​ ​makes​ ​a​ ​long-term​ ​commitment​ ​and​ ​cannot​ ​be​ ​sold​ ​for​ ​a​ ​minimum​ ​period​ ​of​ ​time. The Steem network calls these different asset classes Steem (STEEM), Steem Power (SP), and Steem Dollars​ ​(SBD).
3Meta-moderation​ ​is​ ​a​ ​second​ ​level​ ​of​ ​comment​ ​moderation.​ ​Users​ ​are​ ​invited​ ​to​ ​rate​ ​a​ ​moderator's​ ​decision​ ​in​ ​order to​ ​improve​ ​moderation. https://en.wikipedia.org/wiki/Meta-moderation_system 7​ ​of​ ​32

Steem​ ​(STEEM) Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. STEEM is a liquid currency, and therefore can be bought or sold on exchanges,​ ​as​ ​well​ ​as​ ​transferred​ ​to​ ​other​ ​users​ ​as​ ​a​ ​form​ ​of​ ​payment. Steem​ ​Power​ ​(SP) Start up companies require long-term capital commitment. Those who invest their money in a startup expect to wait years before they can sell their shares and realize their profits. Without long-term commitment, a startup seeking to raise additional capital through the sale of additional shares would be competing with existing shareholders looking to exit. Savvy investorswanttheircapitalcontributionsto grow​ ​the​ ​company,​ ​but​ ​growth​ ​cannot​ ​happen​ ​if​ ​the​ ​new​ ​capital​ ​is​ ​given​ ​away​ ​to​ ​those​ ​looking​ ​to​ ​exit. There is significant value to having long-term commitment because it enables communities to make long-term plans. Long term commitment of stakeholders also causes them to vote for long-term growth rather​ ​than​ ​short-term​ ​pumps. In the cryptocurrency space, speculators jump from cryptocurrency to cryptocurrency based mostly on which oneisexpectedtohaveshort-termgrowth.Steemwantstobuildacommunitythatismostlyowned and​ ​entirely​ ​controlled​ ​by​ ​those​ ​with​ ​a​ ​long-term​ ​perspective. Users are able to commit their STEEM to a thirteen week vesting schedule, providing them with additional benefits within the platform. STEEM that has been committed to a thirteen week vesting schedule is called Steem Power (SP). SP balances are non-transferrable and non-divisible except via the automatically recurring conversion requests. This means that SP cannot be easily traded on cryptocurrency​ ​exchanges. When users vote on content, their influence over the distribution of the rewards pool is directly proportional to the amount of SP that they have. Users with more SP have more influence on the distribution of rewards. This means that SP is an access token that grants its holders exclusive powers within​ ​the​ ​Steem​ ​platform. SP holders are also paid interest on the balance of SP that remains vested. 15% of theyearlyinflationis paid to SP holders as interest. The amount of the interest that they receive is directly proportional tothe amount​ ​of​ ​SP​ ​they​ ​hold​ ​relative​ ​to​ ​the​ ​total​ ​amount​ ​of​ ​vested​ ​SP​ ​across​ ​all​ ​users. Transferring from STEEMtoSPisreferredtoas“poweringup”,whiletransferringfromSPtoSTEEMis referred to as “powering down.” SP that is powered downisreturnedtotheuseroveraperiodofthirteen weeks,​ ​via​ ​13​ ​equal​ ​weekly​ ​payments,​ ​starting​ ​one​ ​week​ ​after​ ​the​ ​power​ ​down​ ​is​ ​initiated.

Steem​ ​Dollars​ ​(SBD) Stability is an important feature of successful globaleconomies. Withoutstability,individualsacrossthe world could not have low cognitive costs while engaging in commerce and savings. Becausestabilityis an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability​ ​to​ ​the​ ​world​ ​of​ ​cryptocurrency​ ​and​ ​to​ ​the​ ​individuals​ ​who​ ​use​ ​the​ ​Steem​ ​network. Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typicallyduringafuturefundinground.Ablockchainbased token can be viewed as ownership in the community whereas a convertible note canbeviewedasadebt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the fair market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for​ ​token​ ​holders. Steem Dollars are referred to with the symbol SBD, an acronym forSteemBlockchainDollars.Creating SBD requires a combination of areliablepricefeed,andrulestopreventabuse.Providingareliableprice feed involves three factors: minimizing theimpactofanincorrectfeed,maximizingthecostofproducing an​ ​incorrect​ ​feed,​ ​and​ ​minimizing​ ​the​ ​importance​ ​of​ ​timing. Minimizing​ ​Fraudulent​ ​Feeds SP holders elect individuals, called witnesses, to publish price feeds. The elected witnesses are presumablytrustedbythosewhohaveavestedinterestinthequalityofthefeed.Bypayingthosewhoare elected, Steem createsmarketcompetitiontoearntherighttoproducefeeds.Themorethefeedproducers are​ ​paid​ ​the​ ​more​ ​they​ ​have​ ​to​ ​lose​ ​by​ ​publishing​ ​false​ ​information. Given a set of trusted and elected feed producers, the actual priceusedforconversionscanbederivedas the median of the feeds. In this way if any minority of individual feed producers produce outliers they

have​ ​minimal​ ​impact​ ​on​ ​the​ ​actual​ ​median​ ​while​ ​still​ ​having​ ​the​ ​ability​ ​impact​ ​their​ ​reputation. Even if all feed producers are honest, it is possible for the majority of feed producers to be impactedby events beyond their control. The Steem network is designed to tolerate short-term corruption of the median price feed while the community actively works to correct theissue.Oneexampleofanissuethat may take some time to correct is short-term market manipulation. Market manipulation is difficult and expensive to maintain for long periods of time. Another example would be the failure of a centralized exchange​ ​or​ ​the​ ​corruption​ ​of​ ​the​ ​data​ ​published​ ​by​ ​the​ ​exchange. Steem factors out short-term pricefluctuationsbyusingthemedianpriceoveraperiodofthreeandahalf days.​ ​The​ ​median​ ​published​ ​feed​ ​is​ ​sampled​ ​every​ ​hour​ ​on​ ​the​ ​hour.
9​ ​of​ ​32

As long as the price feed corruption lasts for less than half the moving median timewindowitwillhave minimal impact on the conversion price. In the event the feed does get corrupted, network participants will have an opportunity to vote-out corrupt feed producers before the corrupted feed can impact the actual conversion price. Perhaps more importantly, it gives feed producers an opportunity to detect and correct​ ​issues​ ​before​ ​their​ ​feeds​ ​start​ ​impacting​ ​the​ ​price. With a three and a half day window, community members have approximately one and a half days to respond​ ​to​ ​any​ ​issues​ ​that​ ​come​ ​up. Mitigating​ ​Timing​ ​Attacks Market participants have access to information faster than the blockchain’s three and a half day moving median conversion price can react. This information could be used to benefitoftradersattheexpenseof the community. If there is a sudden increase in the value ofSTEEMtraderscouldrequestconversionof their SBD at the old, lower price, and then sell the STEEM they receive a the new higher price with minimal​ ​risk. Steem levels the playing fieldbyrequiringallconversionrequeststobedelayedforthreeandahalfdays. This means that neither the traders nor the blockchain has anyinformationadvantageregardingtheprice at​ ​the​ ​time​ ​the​ ​conversion​ ​is​ ​executed. Minimizing​ ​Abuse​ ​of​ ​Conversions If people could freely convert in both directions then traders could take advantage of the blockchains conversion rates by trading large volumes without changing the price. Traders who seeamassiverunup in price would convert to SBD at the high price (when it is most risky) and then convert back after the correction. The Steem protocol protects the community from this kindofabusebyonlyallowingpeople to​ ​convert​ ​from​ ​SBD​ ​to​ ​STEEM​ ​and​ ​not​ ​the​ ​other​ ​way​ ​around. The blockchain decides how and when to create SBD and who shouldgetit. ThiskeepstherateofSBD creation​ ​stable​ ​and​ ​removes​ ​most​ ​avenues​ ​of​ ​abuse. Sustainable​ ​Debt​ ​to​ ​Ownership​ ​Ratios If a token is viewed as ownership in the whole supply of tokens, then a token-convertible-dollar can be viewed as debt. If thedebttoownershipratiogetstoohightheentirecurrencycanbecomeunstable.Debt conversions can dramatically increase the token supply, which in turn is sold on the market suppressing the price. Subsequent conversions require the issuance of even more tokens. Left unchecked the system can collapse leaving worthless ownership backing a mountain of debt. The higher the debt to ownership ratio​ ​becomes​ ​the​ ​less​ ​willing​ ​new​ ​investors​ ​are​ ​to​ ​bring​ ​capital​ ​to​ ​the​ ​table. A rapid change in the value of STEEM can dramatically change the debt-to-ownership ratio. The blockchainpreventsthedebt-to-ownershipratiofromgettingtoohigh,byreducingtheamountofSTEEM awarded through SBD conversions if the debt level were toexceed10%.IftheamountofSBDdebtever 10​ ​of​ ​32

exceeds 10% of the total STEEM market cap, the blockchain will automatically reduce the amount of STEEM generated through conversions to a maximum of 10% of the market cap. This ensures that the blockchain​ ​will​ ​never​ ​have​ ​higher​ ​than​ ​a​ ​10%​ ​debt-to-ownership​ ​ratio. The percentage floors used to compute STEEM creation are based on the supply including the STEEM value​ ​of​ ​all​ ​outstanding​ ​SBD​ ​and​ ​SP​ ​(as​ ​determined​ ​by​ ​the​ ​current​ ​rate​ ​/​ ​feed). Interest SBD pays holders interest. The interestrateissetbythesamepeoplewhopublishthepricefeedsothatit can adapt to changing market conditions. All debt carries risk to the lender. Someone who holds SBD without redeeming it is effectively lending the community the value of a dollar. They aretrustingthatat some point in the future someone will be willing tobuytheSBDfromthemforadollarorthattherewill be​ ​speculators​ ​and​ ​investors​ ​willing​ ​to​ ​buy​ ​the​ ​STEEM​ ​they​ ​convert​ ​it​ ​into. STEEM and SP holders gain leverage when members of the community are willing to hold SBD. This leverage amplifies the gains from growth while also contributing to growth. STEEM holders do suffer from increased dilution if the price falls. Cryptocurrency projects have shown that the gains from increasing the user basewillingtotrustthenetworkwithcapitalultimatelyaddmorevaluetothenetwork than​ ​any​ ​dilution​ ​that​ ​may​ ​occur​ ​during​ ​a​ ​downturn. Setting​ ​Price​ ​Feeds Astute readers will recognize that an interest bearing asset of limited supply may trade higher or lower than the underlying asset depending upon other opportunities to earn interest on the same asset. With a high interest rate paid on an asset pegged to the US dollar many people willbidupthelimitedsupplyof Steem Dollars until they are no longer valued at $1. In economics there is a principle known as the Impossible​ ​Trinity​ ​which​ ​states​ ​that​ ​it​ ​is​ ​impossible​ ​to​ ​have​ ​all​ ​three​ ​of​ ​the​ ​following​ ​at​ ​the​ ​same​ ​time: 4 1. A​ ​stable​ ​exchange​ ​rate 2. Free​ ​capital​ ​movement 3. An​ ​independent​ ​monetary​ ​policy If Steem feed producers aim to have an independent monetary policy allowing it to create and destroy Steem Dollars while simultaneously having full control over the interest rate then they will encounter problems. The Impossible Trinity says that Steem Dollars either need to restrict capital movement, have an​ ​unstable​ ​exchange​ ​rate​ ​with​ ​the​ ​dollar,​ ​or​ ​have​ ​limited​ ​control​ ​over​ ​the​ ​interest​ ​rate. The primary concern ofSteemfeedproducersistomaintainastableone-to-oneconversionbetweenSBD and the U.S. Dollar (USD). Any time SBD is consistently trading above $1.00 USD interest payments must be stopped. In a market where 0% interest on debt still demands a premium, it is safe to say the
4​ ​The​ ​Impossible​ ​Trinity,​ ​economic​ ​theory https://en.wikipedia.org/wiki/Impossible_trinity
11​ ​of​ ​32

marketiswillingtoextendmorecreditthanthedebtthecommunityiswillingtotakeon.Ifthishappensa SBD will bevaluedatmorethan$1.00andthereislittlethecommunitycandowithoutchargingnegative interest​ ​rates. If the debt-to-ownership ratio is low and SBD is trading for less than $1.00, then theinterestrateshould be​ ​increased.​ ​This​ ​will​ ​encourage​ ​more​ ​people​ ​to​ ​hold​ ​their​ ​SBD​ ​and​ ​support​ ​the​ ​price. If SBD trades for less than $1.00 USD and the debt-to-ownership ratio is high, then the feeds should be adjustedupwardgivemoreSTEEMperSBD. ThiswillincreasedemandforSBDwhilealsoreducingthe debt-to-ownership​ ​ratio​ ​and​ ​returning​ ​SBD​ ​to​ ​parity​ ​with​ ​USD. Assuming the value of STEEM is growing fasterthanSteemiscreatingnewSBD,thedebt-to-ownership ratio should remain under the target ratio and the interest offered benefits everyone. If the value of the network​ ​is​ ​flat​ ​or​ ​falling,​ ​then​ ​any​ ​interest​ ​offered​ ​will​ ​only​ ​make​ ​the​ ​debt-to-ownership​ ​ratio​ ​worse. Ineffect,feedproducersareentrustedwiththeresponsibilityofsettingmonetarypolicyforthepurposeof maintaining a stable peg to the USD. Abuse of this power can harm the value of STEEM so SP holders are wise to vote for witnesses that can be counted on to adjust thepricefeedandinterestratesaccording to​ ​the​ ​rules​ ​outlined​ ​above. If the debt-to-ownership ratio gets dangerously high and market participants choose to avoid conversion requests,​ ​then​ ​the​ ​feed​ ​should​ ​be​ ​adjusted​ ​to​ ​increase​ ​the​ ​rate​ ​at​ ​which​ ​STEEM​ ​paid​ ​for​ ​converting​ ​SBD. Changes to the interest rate policy and/or any premiums/discounts on the STEEM/SBD conversion rate should be a slow and measured response to long-term average deviations rather than attempting to respond​ ​to​ ​short-term​ ​market​ ​conditions. It is our belief that these rules will give market participants confidencethattheyareunlikelylosemoney byholdingSBDpurchasedatapriceof$1.00.Wefullyexpecttheretobeanarrowtradingrangebetween $0.95​ ​and​ ​$1.05​ ​for​ ​SBD​ ​under​ ​normal​ ​market​ ​conditions. Subjective​ ​Contributions Subjective Proof of Work presents an alternative approach to distributing a currency thatimprovesupon fully ​objective Proof of Work systems such as mining. The applications of a currency implementing subjective proof of work are far wider than any ​objective proof of work system because they can be applied to build a community around any concept that has a sufficiently defined purpose. When individuals join a community they buy into a particular set of beliefs and can vote to reinforce the community​ ​values​ ​or​ ​purpose. In effect, the criteria by which work is evaluated is completely subjective and itsdefinitionlivesoutside the source code itself. One community may wishtorewardartists,anotherpoets,andanothercomedians. Other​ ​communities​ ​may​ ​choose​ ​to​ ​reward​ ​charitable​ ​causes​ ​or​ ​help​ ​advance​ ​political​ ​agendas. 12

sourse: https://steemit.com/steemit/@primus/steem-top-27-articles-every-new-steemians-should-read