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What is Steem and Steemit?

up vote8down votefavoriteI recently came across Steemit, a Reddit-esque platform which seems to be running on the Steem blockchain. It looks like it is paying its users to post and curate content. However, it looks rather leery that essentially a lengthy blog post could have a pending payout of over $3900. Even taking into account the exchange rate of about 0.25 USD/Steem, that is a good pay for writing articles.So I wonder - what's the catch? What is Steem and Steemit all about? Is the platform really paying people hundreds of dollars to post articles, or is there something fishy going on?altcoin steemshareimprove this questionasked Jun 17 at 22:45ThePiachu27.6k971253add a comment

2 Answers

activeoldestvotesup vote6down voteSteem content is rewarded based on a voting system, described well here:https://steemit.com/steem/@smooth/voting-is-a-popularity-contestNot that payment is made in Steem not fiat and Steem value will fluctuate over time.The developers were able to mine a huge portion of the total Steem supply due to the relative complexity if the mining process at launch. The fairness of the process has been a matter of debate:"First, they did a typical instamine/flashmine/freemine scam (yes scam) where they released(1) no compiled wallets (2) no instructions to build (3) incomplete and inaccurate instructions to mineThis wasn't bad enough. After the first 12 or so hours of mining, all their miners crashed, exposing that they were mining to 100 different witnesses to hide the fact that they (he) was one entity. The devs wouldn't have been caught except that their mining instructions were wrong, and no one else was mining because, even if they couldn't get the client to build, they entered mining commands that caused them to get no blocks. The devs will claim this isn't on purpose, but check the original thread. You'll see that no one mined a block when the dev's miners were down.Then, as I have stated many times, when their miners crashed again, I mined a significant amount of steem that night in their absence. To prevent my vesting that and driving the price of vests up on them, they relaunched to ensure COMPLETE CONTROL AND CENTRALIZATION.After the relaunch, no one would challenge them on mining because if they did, the devs would just relaunch this scamcoin again. So, no one who pays attention (and the people who have the means to procure whatever hashes they want are also the people who are paying attention), would challenge them on the hashes. As they hoped, no one did and they completely dominated the hashes for 1 week."https://bitcointalk.org/index.php?topic=1427230.0The "stealth" mining by developers raised a lot of Steem which are now being deployed in part to attract new users."At the conclusion of the pure-PoW mining phase, all of the coins from the developer mining accounts were merged into the transparent 'steemit' account, with a stated plan to sell them off to pay for development and distribute them for free to new users (each new account requires 10 STEEM funding). These actions have occurred and are transparent on the blockchain."https://bitcointalk.org/index.php?topic=1513252.msg15232327#msg15232327shareimprove this answeranswered Jun 18 at 2:08Rudolf Harrison3214  For an explanation of this approach to mining, see the founder's blog post here: How to Launch a Crypto Currency Legally while Raising Funds – Tim Jun 19 at 22:31 add a commentup vote1down vote

About the reward model

One of the core principles of Steem is the idea that micropayments are inefficient. Even for a small tips of, say, $0.05, there is a conscious calculation that occurs as you weigh the option. This is a detriment to engagement.Instead, Steem uses a steady stream of new tokens to reward content producers. Users do not have to think about how much to tip -- just what to tip. In addition, transactions are free on the Steem blockchain. This makes it very easy to participate by removing any cognitive load.

Why are the payouts so high?

Since Steem is a very young platform, there is less competition for rewards. Basically, this means early adopters are getting a bonus. As more users come onboard (view charts), there will be more competition for this same reward stream.Consider the first Bitcoin miners. It was fun and easy for anyone to jump on and get a good chunk of coins as long as you had the know-how.Steem applies the exact same idea through subjective Proof of Work: Instead of allocating stake to miners, Steem allocates stake to those who post captivating content, as measured by upvotes.For a full explanation, see the whitepaper. It explains the motivations behind the platform as well as the economic model in depth. Disclaimer: I contribute to this project, and run a chain explorer.