Where does the money come from on Steemit??!
So you heard about this revolutionary new platform called Steemit where you can blog and share content and get paid for what you contribute. Awesome, sign me up you say! I may swell make a few extra bucks for doing what I would be doing on Reddit, Twitter or Facebook right?
Although some newbies are really interested in crypto and do their research about Steemit if your like me you jumped in without having a real understanding of how it all works. One thing I have had little understanding of is where the rewards come from - I see no advertising and the site is completely free to use.
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For those of you who are familiar with how Bitcoin is created this will be fairly easy to follow. Bitcoin is essentially created ‘out of thin air’. Bitcoin in created and allocated to the Bitcoin miners as incentive for the to allocate their computer power to managing the Bitcoin blockchain. Similarly new Steem in created (minted) daily and added to the reward pool and then a located to members of Steemit for commenting, curating and upvoting content. So while Bitcoin pays it's miners Steemit pays it's content creators and curators (anyone using Steemit!). So although it seems like you are getting money for free you are essentially getting paid by the Steem network for creating and curating good content. As they mention in the video below you could think of holding Steem like being a shareholder in a company. The video below provides a basic summary of where Steem comes from:
According to Steens FAQ page:
When new tokens (Steem) are created
‘75% goes to the reward pool, which is split between authors and curators.
15% of the new tokens are awarded to holders of STEEM Power.
The remaining 10% pays for the witnesses to power the blockchain’
For content creators and curators the most important is the reward pool, which allocates rewards to content creators for commenting and curating content.
You might also noticed that your rewards and also the balance in your wallet fluctuates. This is because everything on Steemit is pegged to the price of Steem on the market - if the price of Steem goes down then your rewards and wallet will decrease and vice versa.
I have created a few article's aimed at newbies to Steemit. For more advances articles I suggest checking @ilyastarar.
Things I wish I knew when I joined Steemit
The complete newbies guide to curation rewards
Should you be using upvote bots - an introduction for minows
References - Steem FAQ page
Youtube - note the video above is not me its just a video I thought would be helpful as it explains this topic in an eawy way!
Rad Post @conradt! Is that you in the video?
Good to understand the "creation" of the reward pool. I don't think explaining it as "out of thin air" is a great way for new people to invest and believe haha, but pretty much what shares and stock markets do too, you buy into a "concept" they decide how much of the concept-supply is available, the shareholders and markets of trade then decide how much the concept is worth. Interesting, the more someone wants, needs and uses the platform the more it will grow as the demand is higher but because the currency can also be compared and traded with other crypto's right now means that it is also taking a hit against other less stable crypto-coins because other coins do not have a "Community/Shareholder" system in between which means in a way there is less room to Pump and Dump, most people investing in crypto only do it so they can pull out a good ROI, Steemit ensures that you are more of a long-term shareholder and the initial investment is more time based, but since you are putting time into other social media on the daily why not put some into a platform & community that pays you back?
Totally worth it to me :) What do you guys think?
Thanks. Nah its a video i found that i thought was helpful and easy to follow.. sorry forgot to reference! (I will go back an edit so others dont make the same mistake. Yeah i can see where your coming from saying it comes out of thin air might have some people abit sceptical! !
Yeah i think that's what the big appeal of Steemit is. Most people spend time on social media amyway as you said so why not earn a few extra bucks. And because its curated in theory you should get better content!
Great informative article thanx @conradt.
Upvoted and resteemed.
Thanks glad its helpful 😄😄
Interesting ! I am still a newbie after 6 months here and learn everyday !
Thanks 😃😃 were all learning here