Where DOES the money come from - Steemit

in #steemit3 years ago (edited)

So the herbal inclination of those who go to Steem is to wonder who is giving out the cash? is that this monopoly money? How does this all work? Many are certainly skeptical. some can also just dip their toes in the water. Others would possibly dive in and ask questions later. whatever the case, almost all of us likely wishes a better idea about the idea behind Steem bucks, so here's a brief clarification:

A blockchain-primarily based software community creates Steem greenbacks, for use as foreign money, from loans on the value of Steem virtual property. Steem digital assets constitute the possession of this software network and feature fee because they are beneficial and they may be scarce.


in preferred digital belongings can be used as money, act like business enterprise shares or be used to get entry to precise virtual assets. The greater humans use any particular digital asset, the extra they are really worth. The anticipated price for numerous virtual belongings can be determined on the internet site Coinmarketcap.com. The internet site lists virtual assets that are collectively worth over $12 billion and growing and a lot of these digital assets like Bitcoin have price because they're both beneficial and scarce. The query just turns into how beneficial and valuable are every of those belongings? the majority have a tough time know-how how something digital may have that tons price. isn't software program smooth to duplicate, corrupt or hack?

Digital Value? Beginning of Virtual Economies.

within the final decade, multi-participant video games with virtual economies have demonstrated that virtual goods have real international value. some might also treat video game gadgets like collectible baseball cards. Others might also discover online game gadgets beneficial to improve their virtual lives and satisfy a fabric, emotional or mental need. Scarce objects which includes powerful weapons in a medieval delusion recreation called Diablo or gold in international of Warcraft can take hours to locate, earn or acquire so they end up treasured. In truth a recreation object in Diablo 3 bought for as a good deal as $sixteen,000. Many people have offered and bought virtual gold and other game objects on international of Warcraft for dollars or exchanged them for actual global goods. In the game second existence, customers create virtual characters, stay in a digital world and purchase such things as virtual real estate. Linden bucks, the digital foreign money utilized in the game second lifestyles, also are traded for real dollars. One estimate of the secondary market of real cash converting for digital items became $2 Billion as early as 2007. This was just the start of digital economies.

Is it Secure and Who Owns It? From Video Games to Bitcoin in the Real World.

The established order of Bitcoin accompanied an independent direction from the online game enterprise, however the value of digital gadgets and currencies had already been tested. however with video video games, game creators in the end managed the deliver of these digital property. If a system were to be created for the public, the manage of the machine could must be extra decentralized. There were additionally some key technological problems that had to be addressed to create digital cash & asset systems which can be comfy & decentralized enough for wide public use as explained right here: “Bitcoin: What Took Ye so long? Bitcoin became the primary real world test with blockchain-based cash. Ever for the reason that Bitcoin currency started out in 2009 with unknown speculative fee, it's due to the fact grown in price from thousands and thousands to masses of hundreds of thousands and is presently estimated to be worth over $10+ billion. As mentioned earlier Bitcoin and opportunity digital assets in total are estimated to be around $12+ billion. All this value is stored digitally on a network of computers using software program. No banks or institutions are required! nowadays Bitcoin and other digital asset systems are nearly not possible to hack or corrupt due to the fact they use superior consensus mechanisms and navy-grade cryptography.

isn't software easy to copy? Intangible price

virtual belongings are clean to copy or mirror. The identical goes with software platforms. however, most of the price of Silicon Valley tech giants are intangible and rooted inside the community impact. The more humans that use a gadget the greater treasured it will become, and fee increases exponentially for each new person that is added. Take fb or Twitter for example. The cost to increase the core software for each platform is probably within the hundreds of thousands the use of the cutting-edge era. extra than in all likelihood fb & Twitter may be built with loads of thousands of greenbacks and honestly crude versions can be constructed for tens of thousands. Many software developers can build plenty more for less because of the advancements in software program technology, gear and open-source libraries. but even though a technological product have been smooth to replicate, would you anticipate copycats to be well worth $330 Billion like fb is now or $10 Billion like Twitter? The logo, network impact and the psychological attachment people need to a particular product are all large competitive blessings. those are the equal motives that Bitcoin and other digital property hold value even when the era is easy to copy.

furthermore developing sustainable business price isn't always just about the product. just because you could cook dinner a delectable burger would not suggest you may create a commercial enterprise and take over McDonalds in some years. If you could blend up a pleasant mixture of soda elements it would not suggest you may dominate over Coca-Cola. McDonalds has been round since the 1940's and is presently valued at over $100 Billion and Coca-Cola commenced within the 1880's and is now valued at over $200 Billion.

Digital Assets – Money? Commodities? Stocks?

Sea shells, beads, cows, actual estate, tobacco, gold and silver all have been used as money at a while or some other. The definition of money is subjective, but diverse commodities or property have been used as cash at unique instances in history, and in exceptional situations and geographies. we've one hundred eighty government or bank issued currencies getting used nowadays. a few commodities or property have higher traits as a medium of trade, keep of price or unit of account, however any network or atmosphere can in the long run select what they want to apply as cash.

a number of these new virtual property like Bitcoin can be seen as financial commodity belongings. other virtual belongings are required to access or use a system's sources. as an instance, Ether is required to execute smart contracts on the Ethereum network and Safecoins are used to get entry to storage on the Maidesafe network. some virtual property are similar to agency stocks consisting of the DAO or Bitshares.

Digital Assets & Money in the Steem Ecosystem

The Steem gadget is built on relaxed blockchain software that run on computers. There are three kinds of belongings in the Steem surroundings. each Steem and Steem power are analogous to company shares. a 3rd asset, Steem dollars, are created as a mortgage on Steem collateral and issued to contributers to the surroundings as forex.


Steem is just like publicly traded corporation stocks. the quantity of Steem doubles every year so there is signficant dilution for people who keep Steem, but like many speedy growing startups a fast increase in value may also outpace the dilution. much like corporation shares (ie. shares) these virtual belongings have cost as more humans use and contribute to the surroundings. The predicted fee of the overall terrific Steem belongings is currently approximately $20 million on Coinmarketcap.com.

Steem power

Steem energy is similar to non-public confined business enterprise shares and have negative aspects and blessings. One drawback is that holders can not promote Steem electricity immediately; as a result they're illiquid. The blessings of Steem energy is that holders:

  • may additionally earn greater Steem and Steem greenbacks as dividends to offset any dilution.

  • Have vote casting energy to decide the value of every put up.

Steem Dollar

Steem dollar are property that are constructed from loans the usage of Steem/Steem energy as collateral. If the Steem environment is really worth $20 million, the Steem software program can create one million in dollars as a loan on the community and difficulty it as currency for circulate. it is the same as in case you owned Apple inventory shares well worth $500,000 and created a $25,000 loan for your stocks and used that as money. you may use similar mechanics with real estate. In fact commercial banks create cash this way. simply think about home fairness loans after which reflect onconsideration on regular home loans and the way banks use actual estate as collateral to create fiat money.

The blockchain software program network executes the entire mortgage manner & interest provisions for Steem dollars and the issuance & allocation of latest Steem/Steem power.


A blockchain-primarily based software community creates Steem greenbacks, to be used as a forex, from loans on Steem digital assets. Steem virtual property have price because they're useful to a growing Steemit network and are scarce.

keep in mind we're nonetheless within the early ranges of this digital financial evolution and lots of this is experimental so it is accurate to keep your expectancies measured. That said, would possibly as nicely soar in and write approximately your pursuits, have amazing and enjoy the trip.

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I would explain it with growing fruits. The apples on the tree and the strawberries in the field cannot be exchanged into money. But when I harvest them I can sell them. I created value. I can produce marmalade or juice and the value becomes even higher. Isn't it the same with contributions such as photos and articles?

This is a great analogy -- but you are creating revenue by selling your fruits to the outside community and if there was not outside community you could sustain yourself on what you grow. Problem is words and pictures cannot be eaten, they must be sold. So outside revenue on Steemit is required.

Example I used elsewhere:

If 10 steemers are in a biospere and they have 300 meals, it will last 100 days at 3 meals a day.

If they let in 10 more steemers in and they do not bring any food in, it will last 50 days.

If they give some of their food away to advertise for more steemers on facebook and the steemers and they do not bring in any more food in -- there is real problem.

Steemit is working and will continue to work as long as the new users (and current users) bring in food from the outside (purchase steem power by continuing to power up), which may be plenty long but not infinite.

An outside revenue source must be developed -- perhaps FB will pay steem someday.

See @bycoleman for a pretty lively discussion on this.

Thank you for explaining this so clearly for an old girl trying to understand... @hidayat4u's article is really hard to comprehend for me. A vision with FB coming to buy in here is a bit disturbing. Sooner or later Steemit would be another FB again. And we just left it for more quality and freedom... Will visit your blog now.

Thanks for the great comment.
Yes, I agree with your -- one way or another we will see some type of advertisers - either display adds or possible the new SMT that is proposed. Both will change Steemit and possibly not for the better, yet they may have no choice.

A very nice post....worth reading it thanks for sharing your thoughts on steemit

ofcourse money comes from trees.

World is changed, and also money sources.

This actually is a very epic post, that I saved for future reference. Simply because some of your descriptions I have never read before and there are many basic articles about the Steem economy as you know. Especially your description of SBD is so totally different than anyone else (even witnesses and veterans) describe it. Huge insights! Thank you!

yeh exactly thank you for ur time

Great description and take on how the steem economy works. Took away quite a few things! Thanks! Resteemed for sure, this will hopefully help others!

u r always welcome

Nice post and a needed one at that, thank you brother.

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