Steem Review - Revolutionising Social Media

in steemit •  2 years ago  (edited)

Steem is one of the more controversial cryptocurrencies out there, with a mix of passionate supporters as well as a significant number of detractors and haters.

Here, I review Steem, looking at what it is, how it works, and the issues it's going to face in the future to help you decide whether its a good investment or not.

Don't want to watch? Here's a summary of the video:


What Is Steem?

Steem is the product of merging cryptocurrencies and social media. 

Steem was built around the idea that every meaningful contribution to the community should be recognised for the value it adds. The more valuable a piece of content is deemed to be, the greater the reward it’s creator will receive. 

The value of a piece is determined by the community, who cast votes on content they like or dislike. The more upvotes a piece of work receives, the greater the payout. 

Voting will be incentivised by rewarding content ‘curators’ for their votes.


Three Tokens

The Steem ecosystem features 3 tokens: STEEM, Steem Power (SP) and Steem Dollars (SBD).

STEEM is the primary currency on the platform. It is completely liquid, so it can be transacted between users, and it is STEEM that you would purchase on an exchange. 

All other tokens derive their value from STEEM.


STEEM can be 'powered up' into Steem Power.

'Powering Up' means the STEEM is entered into a smart contract that locks it up for at least 13 weeks, incentivising long-term commitment to the Steem Platform. 

The amount of Steem Power a user has determines their influence on the platform. Votes by users with a lot of Steem Power count for more than votes by users with very little. 

Steem Power also generates interest, with 15% of newly minted STEEM being paid out as interest to Steem Power holders each year. 


Steem Dollars act as 'convertible notes' that can be exchanged for an equally valued quantity of STEEM, and it takes 3.5 days to convert Steem Dollars into STEEM. 

Steem Dollars are designed to bring stability to the Steem platform, with a value that is tethered to the US dollar. 

They are completely liquid, so can be traded on exchanges or transacted. 


How Does Steem Work?

Steem was originally built on Graphene, the blockchain technology used by BitShares. 

Graphene is able to process tens of thousands of transactions per second. Steem say that this technology means they can handle more users than Reddit, so they should be able to easily cope as more and more users join the platform. 

STEEM is not mined in the same way as most other currencies. Creation of new blocks are scheduled to take place every 3 seconds. 

The accounts producing new blocks are called witnesses, and are voted on by the community. 

This system is called Delegated Proof of Stake. Whilst some have issues with DPoS, it is extremely efficient compared to other mining methods, allowing Steem to handle greater transaction volumes than most other currencies. 


Steem was designed to have no transaction fees, as they inhibit micropayments.

Normally, cryptocurrencies use transaction fees to prevent spam clogging the network and preventing legitimate transaction going through. Steem instead uses bandwidth throttling to prevent spam. 

The blockchain will automatically adjust the maximum bandwidth available to users when the network gets busy. 

In their white paper, the team behind Steem say this method reduces the impact of spammers more effectively than Bitcoin’s transaction fees. 

There's a lot more to this, so I highly recommend checking out the Steem white paper if you're interested. 


Token Distribution 

When new blocks are created, new STEEM is issued. They are allocated as follows:

  • 10% of STEEM goes to the witnesses powering the blockchain. 
  • 15% is award to Steem Power holders as interest. 
  • 75% go into the reward pool fund, and is then distributed among users who have created or curated contend. 


As new STEEM is constantly being created, it is an inflationary currency. 

Of course, inflationary currencies don't make ideal investments as they become devalued over time, and many have taken significant issue to Steem's inflationary nature. 

However, whilst previously the rate of inflation had been excessive, a new inflation model was brought into action in December 2016. 

Now, there is an annual inflation rate of 9.5%.

Inflation will decrease by 0.1% every 250,000 blocks, or about 0.5% per year. 

When overall inflation reaches 0.95%, the decrease will stop. This will happen around 20.5 years after this inflationary model began in December 2016. 


The Future

There are already several apps and websites built on top of the Steem blockchain, most notably Steemit and DTube, but there are several more sites in development. 

These in-production sites include Apple (a Twitter-esque microblogging site), Steemshot and a new app for iOS and Android. 

Further into the future, there will likely be many more sites built on Steem's blockchain, adding value to it. 


The team behind Steem are planning to release tutorials and walkthroughs will be produced to help new users better understand Steemit and the Steem platform. 

I see this as a good move from them, as Steemit is a relatively complex site to use and this could be off-putting to new users. Having content that explains everything should help ensure potential users get hooked on the site. 


Recently, Smart Media Tokens (SMT) were announced. 

These will allow any site to produce tokens on the Steem blockchain, letting them better monetise their sites.

It's still early days for this, and there's not a huge amount of information out about SMTs have been released, so I won't go into much detail here, though I'll likely make another video and article in the future as I gain a better understanding of SMTs. 


Issues

There are a number of issues that Steem will have to overcome in the future. 

Most notably, it will be extremely difficult achieving mass adoption of any of the sites built on Steem. Many large companies have tried and failed to make social media sites in the past, showing just how difficult it can be to succeed in this industry. 


One reason Steemit will find it particularly difficult to grow is its complexity, as I mentioned earlier. 

I like that the team are planning to release tutorials on how the site works, but I doubt many people would consider signing up to a platform where they need to watch videos to properly understand. Generally, it is the products that people find most intuitive to use that succeed, and Steemit is far from the most intuitive social media site out there. 


Steemit, and other Steem-based sites, will face competion from a number of players. 

Established social media sites won't go down without a fight, and there's also a number of similar sites offering payouts for user content, including Yours, Akasha, Syneroe, and potentially LBRY (if LBRY improves its game).


Another issue that could come about with a growing user base is that payouts may decrease. As more people join, the tokens in the reward pool will have to be spread among more and more users, reducing the amount any receives. 

Of course, this could be countered by increases in the value of the tokens, but there remains a risk that payouts will become too small to incentivise users. And without the possibility to earn good money, Steem's major USP will be gone, potentially prompting users to leave. 


Finally, Steem currently has a major problem with whales having too great an influence on the platform. 

Users with a lot of Steem Power are able to massively overpower those with little.This can lead to unfair payouts, as a post with just a handful of upvotes by STEEM hoarders receiving a larger payout than a post with dozens of likes from ‘regular’ users.

Users, both new and old, could be put off if the payout system is deemed to be unfair. 

So, whilst the idea of Steem Power is well intentioned (incentivising long-term investment in the platform), there may need to be some tweaks to the formula to ensure everyone remains satisfied. 


So, there's a lot of issues that Steem will face in the future, so do they have a team behind it that can help guide it through the hardship?


The Team

Unfortunately, there aren’t many details on exactly who is working on Steem.  

Primarily, Steem is developed by Steemit Inc., which is headed up by one of Steem's founders Ned Scott. Cofounder Dan Larimer, who also created Bitshares, notably left the team in March this year. 

Other than this, there isn't much I could find about the individuals working on Steem. 

Having said that, I don't really have concerns about the team. Looking through the Github, it seems to be quite active, with a number of different contributors working on the code. And there's a lot of plans in the pipeline, and a lot of plans that have come into fruition, showing there's hard work and dedication behind the scenes. 

Another positive for the team is that they seem willing to make changes to improve the overall experience, and they're pretty open in their blogs on Steemit in explaining what they're doing. 


Social Media

Steem has a pretty strong presence on most social media platforms, and they have a pretty good number of followers on each:

  • Facebook - 13,000+ Likes, 13,800+ Follows
  • Twitter - 1,650+ Followers
  • YouTube - 1,200+ Subscribers
  • Steemit - 7,150+ Followers
  • Reddit - 2,600+ Steemians 

As mentioned earlier, Steem also has a pretty large number of passionate supporters who sing its praises. 

But there's also a fairly large number of haters, and this is a pretty major negative. Articles containing mistrust and FUD tend to have a greater impact that ones looking at all the positives Steem brings, so there's a chance that potential users and investors will be put off by the large quantity of posts covering Steem in a negative light. 


Conclusion

Without a doubt, the idea at Steem’s core is brilliant, and the platform has vast potential. But Steem also has major issues, as discussed above. 

Overall, for me at least, it's a tough call to make on whether or not to invest in Steem. 

Its future is far from certain, but for some reason I just have a feeling that Steem, and particularly Steemit, is going to do well. And I certainly hope it does because I really love the platform. 

But you can't make investment decisions based on feelings, they should be made with logic and reason. And I can't quite convince myself that Steem is worth putting any significant money into. 

I'm just not convinced of the value that STEEM tokens will have. I don't realistically see people buying them to increase their Steem Power, and if there's no demand for them then, in the long term, they won't have any real value. 


Of course, this is just my opinion, and yours may differ. I'd love to hear your thoughts about Steem in the comments below, and I do hope that this post has been useful for you.

Thank you for reading / watching. 

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Obligatory Disclaimer:  Any statements I make in these videos and articles are just my opinion, and should not be taken as investment advice. Please do your own research in addition to watching these videos, make sure you are 100% happy with anything you choose to invest your money in, and never invest money you can't afford to loose.

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