How are we making (or losing) money on Steemit: How the money works

One of the more commonly discussed and most commonly mistaken topics about Steemit is in regard to its payout system. From my experience on the suite and some outside research this is what I have compiled on the subject.   

So Steem is essentially a decentralized business based on blockchain technology. Steem is the cryptocurrency that is generally earned through Steemit, which is a social media platform where users are compensated for creating and curating content. The platform pays out to its miners and more commonly to those who are posting and curating posts on the site. The users are paid out for their contributions in in Steem and Steem Power. Steem can be advantageous for those people who want more liquidity and maybe haven’t fully bought in to the platform yet. Meanwhile, Steem Power is more of an investment in the idea. Steem Power is pretty much untouchable for two years but yield a far higher interest rate. However, something that is discussed far less is the tax they take. Due to the luxury of liquidity, Steem is taxed at about 50% per year, while Steem Power is taxed at only about 5% per year. Therefore, people that have bought in to the long term plan are rewarded. The Steem Power is also important when receiving rewards because the more power you have, the more influence your votes and posts have.    

So now assuming that someone is holding only Steem Power, which would make sense because holding Steem isn’t all that beneficial, the market cap would only have to rise 5% to keep the same valuation in your account. While Steem is still in its early stages this seems to be very achievable.    

It is important to stay active on the site through writing or curating because Steem Power is what keeps your “voice” heard on the site. This because as more Steem Power is generated over time and yours stays the same your percentage of the total will decrease and therefore will mean less in terms of curating content.    

When talking about this tax it is important to note that the user must stay active. If a user has a certain amount allocated in the system they will inevitably lose some money unless they are generating more Steem Power into their accounts in some fashion. So some people may be willing to take a bit of a loss for the experience but generally you can base who is making money based on skill levels. People will clearly make money based on their writing level, cohesiveness, and appeal to the reader’s emotions. There are many factors that can help with exposure mainly in the tags and timing of the post but the big thing is always the content.      

  So what Steemit does that is genuinely ingenious is getting people to essentially pay for using the platform. So there is money in the idea without advertising to this point. This way many don’t even realize that they are really paying to use the site. This is a better system because people generally aren’t watching money disappear off their screens. There is also nothing like a monthly subscription which may lead people to use other free media outlets. However what will keep drawing interest is the inherent opportunity to make good money for quality writing.