Where does STEEM come from?

Its easy to get peoples attention when you tell them they can earn money by posting their content on Steemit. The next question invariable is, "Where does the money come from?"

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Printing Money

Central banks regularly manipulate the money supply by printing money or taking money out of circulation. If they print extra money they increase the money in circulation. They can use this to pay wages of state employees or to buy assets. Increasing the amount of currency in circulation has the affect of making that currency less valuable. In other words inflation increases.

Other Ways of Printing Money

Printing extra physical currency is just a small part of how modern economies print money. Governments/Central Banks can also increase the money supply by:

• Buying government debt
• Allowing banks to lower their deposit ratios
• Buying and selling currency on the open market

Manipulating the money supply is one of the tools that Central Banks and governments have to control the rate at which an economy is growing. If a country needs a boost, they might print extra money for a short term gain but this has to be balanced by the resulting devaluation of the currency in the long run.

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Steem

Steemit, just like a regular economy also prints money. It does this continually each day so that in a year the amount of Steem increases by 9.5%. This means that Steem will devalue over time (all other things being equal) but you do get a choice of how to store your Steem to counteract this inflation. In a related post, Where to keep your STEEM, I explain the difference between; STEEM, Steem Power and Steem Dollars and the choices you can to make when storing your STEEM.

Who gets this new STEEM?

At the time of writing new STEEM is created and distributed continually as follows:

• 75% to Authors and Curators This is where the money for posts comes from
• 15% to Steem power holder A reward for keeping your investment in the system as Steem Power
• 10% to Witnesses and Miners A reward to those who keep the system up and running

Printing of STEEM is no different in principle than how a traditional economy prints and distributes money, but it is much more transparently regulated.

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Where does Steem come from?

So when your friends ask "Where does the money come from?" you will be able to explain to them how the monetary policy of Steemit shares the Economic value of the platform among content creators in a transparent and fair way.

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Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.

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