A guide for beginners. Part 2. Steemit: How the hell does it work?
In this article, we tried a language that everyone understands, to talk about how Steemit works. What is Steem, Steem Power and Steem Dollar. Who and how to vote, from which the reward is formed, and why some votes are added at $ 100-500 to the post, and others do not add at all.
In this part we will highlight this topic.
Steem
We use analogies. Steem can be compared to gold. In the real world, gold has value, its price can vary with time and is determined by supply and demand. In the digital world, Steem is the same resource as gold, only digital. The Steem team has discovered its source of gold (Steem) and the diligent miners are working to supply more and more Steem every day.
Steem does not have servers or its data center. For this, a distributed database is used, which is called a block system. Miners are people who, with the help of their computers and software, maintain the Steem system and operate the data.
Some characteristics of Steem:
Emission of 100% per year of the total amount of Steem;
The commission for any transactions (transfers from person to person) is absent;
Steem can be sold on the stock exchange or converted into Steem Power;
Steem can be exchanged for Steem Dollar on the domestic exchange.
Steem Dollar (SD or SBD)
Now let's talk about Steem Dollar. What is a normal US dollar? At its core, it is a paper that is secured by certain obligations. Before the abolition of the gold standard, the US dollar was tightly tied to gold and you could always exchange dollars for gold at a rate of $ 35 per troy ounce.
Stim Dollar, this is the same obligation that is always exchanged for Steem within the system at a rate of 1 US dollar (1 SD = 1 USD inside the system). In a clever way, this is called a convertible loan. It greatly simplifies the lives of users, because you do not need to keep the Steem courses in your head to weigh your earned money against "reality." Everyone in his country knows what he can buy for a dollar, and therefore, to evaluate his work.
Steem Dollar is the same obligation. You can at any time exchange your Steem Dollar for Steem (the equivalent of gold). And you always get for your Steem Dollar such amount of Steem, how much is 1 American dollar.
What happens when you get from a system like 100 SD for your post? The system as though to you speaks - you have well worked, here to you the receipt, that you at any moment can receive from us so much Gold (Steem), how many it is possible to buy at this moment on a stock exchange for 100 $.
Let's give an example. For example, the Steem rate was $ 1. So by converting SD to Steem you will get 100 Steem. What if the Steem rate rises to $ 10. Then converting your SD to Steem you get 10 Steem.
By selling Steem at the current exchange rate, you will receive $ 100 in both cases. Such a system gives the system stability and allows ordinary users not to depend on the leaps of the Steem exchange rate.
There are additional SD features that exclude abuse and add interest to use:
SD can be exchanged for Steem on the domestic exchange;
SD can be brought to the exchange and exchanged for other crypto-currencies;
When converting SD to Steem - one week delay;
The exchange uses the average cost per week, not the instantaneous value;
Reverse conversion from Steem to SD is not possible;
If you store SD, you get 10% per annum;
Interest is not accrued on SD on the stock exchange.
Steem Power (SP)
If Steem is an analog of gold, and Steem Dollar is an analog of paper money, then what is Steem Power? Steem Power is a certain rating / karma in the system. The power of your voice depends on the amount of Steem Power. In addition, Steem Power is a kind of equivalent to the shares.
Let's start in order. Imagine that you are Alice in Wonderland. You have 2 cool things with you: the "Shrimshunka" and "Rusty-bun" mixtures. You drink a potion - you decrease, eat "Rusty-roll" - you grow.
In our country of miracles there is a daily fair. It is visited by sculptors, artists, artists from all over the country and they hope to conquer the tempted audience with their talents (the authors of posts and comments in Steemit).
The whole party has sponsors - mysterious miners (but everyone knows that!). Every day, miners bring to the exhibition 10% of gold (Steem), mined in the mines. And every day this gold is distributed among all participants of the fair. Why? Because everyone agreed.
Residents of Wonderland (Steemit users, including you in the image of Alice) who visit the exhibition on this day, walk on it and vote for the authors. The more you have eaten before "Rusty-rolls", the bigger your size, the more authoritative and stronger your voice. The voice of the small, beginning inhabitants of the Country of Miracles is almost not audible, but yours, the big voice - already has weight. All votes for each author are recorded on a non-erasable piece of paper, and every evening there is a distribution of money. How?
75% of the gold brought to the fair is shared among themselves by all the authors who exhibited their work today, 25% receive residents of the Wonderland who came to the fair and voted.
The attentive reader will notice and where 90% of the extracted gold go, which did not come to the fair? This gold (Steem) is transformed into "Rusty-rolls" (Steem Power) and "fed" to all the inhabitants of Wonderland.
Let me remind you that Steem Power is a certain equivalent of shares in the system. Therefore, 90% of Steem's products are distributed among all network participants as "dividends", in proportion to their "shareholding" (the amount of Steem Power).
Of course, you can turn your SP into Steem. To do this, you need to drink "Shrink" (press the Power Down button in your account). Each week your SP will be reduced in equal parts within 2 years (104 weeks). Accordingly, every week you will receive for this your own equivalent of Steem.
This is done because it would bring stability to the unstable crypto-currency world. Speculators change one crypto currency for another, based on expectations of short-term growth. Steemit wants to build a community that is owned and controlled by people who focus on the long term.
Steem Power Features
SP can not be moved to other participants;
Not traded on stock exchanges;
At any time, users can convert Steem to SP at a rate of 1 to 1.
Do not create significant inflation in the issuance process due to the SP's shared charge for all participants.
In the next part, we will discuss in detail how the voting and distribution system of awards is organized between authors and curators.
