Steemit Review: How Does It Work and Can You Really Earn From It?

 The brain-child of Daniel Larimer, founder of BitShares, and Ned Scott, a former financial analyst, Steemit is a blockchain-based social media platform modeled loosely on Reddit.Anyone  who uses Reddit knows that content lives and dies with the sacred  upvote (or downvote). Upvotes bring “karma,” greater visibility, and  even the chance of landing on the front page. Similarly, Steemit users  are vying for upvotes, but this is because engagement and attention  lead to actual financial reward. Steemit rewards users for posting,  commenting, and even just upvoting other content. Rewards are paid in  the platform’s native cryptocurrency, STEEM. To describe it using their own words:

 Steemit has redefined social media by building a living, breathing, and  growing social economy – a community where users are rewarded for  sharing their voice. It’s a new kind of attention economy. 

Steemit has been around since July 2016, it has a significant number of users, and it’s currently the 27th biggest cryptocurrency by market cap. Yet  there doesn’t seem to be much of a verdict on this platform (at least  in a broad sense). In this article, we assess the platform on how it  works, how to use it and if you can really earn money from Steemit.
 

How Steemit Works

Steemit,  Inc. is a privately held company based in New York City. So behind this  blockchain platform is a private company, not a random group of  developers as is often the case. Compared to some of its blockchain  bretheren, Steemit is relatively simple. 

Here is a video overview: 

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Steemit Review: How Does It Work and Can You Really Earn From It?

March 20, 2018  By Colin Adams  

2The brain-child of Daniel Larimer, founder of BitShares, and Ned Scott, a former financial analyst, Steemit is a blockchain-based social media platform modeled loosely on Reddit.Anyone  who uses Reddit knows that content lives and dies with the sacred  upvote (or downvote). Upvotes bring “karma,” greater visibility, and  even the chance of landing on the front page. Similarly, Steemit users  are vying for upvotes, but this is because engagement and attention  lead to actual financial reward. Steemit rewards users for posting,  commenting, and even just upvoting other content. Rewards are paid in  the platform’s native cryptocurrency, STEEM. To describe it using their own words:

 Steemit has redefined social media by building a living, breathing, and  growing social economy – a community where users are rewarded for  sharing their voice. It’s a new kind of attention economy. 

Steemit has been around since July 2016, it has a significant number of users, and it’s currently the 27th biggest cryptocurrency by market cap. Yet  there doesn’t seem to be much of a verdict on this platform (at least  in a broad sense). In this article, we assess the platform on how it  works, how to use it and if you can really earn money from Steemit.
 

How Steemit Works

Steemit,  Inc. is a privately held company based in New York City. So behind this  blockchain platform is a private company, not a random group of  developers as is often the case. Compared to some of its blockchain  bretheren, Steemit is relatively simple. Here is a video overview:Steemit.com is only one platform for blogs and social media content that sits atop the Steem blockchain. There are other platforms that use the same blockchain and underlying economic mechanisms. An example of this is D.tube, a decentralized video platform based on the InterPlanetary File System  protocol. D.tube is YouTube without the advertisements (and user base) –  instead, it uses the built-in Steem currency to reward content  producers. D.sound is another example, in this case for audio streaming.The  entire Steem system is built on secure blockchain software that runs on  a network of computers. At the root of the platform is the currency  STEEM, which is your typical transferrable, fungible, freely moveable  token (similar to bitcoin). The currency comes in 3 variants. 

1. Steem (STEEM)  – Steem is the fundamental unit of account on the Steem blockchain. All  other tokens derive their value from the base value of STEEM. STEEM is  liquid and can be sought, sold, or exchanged in any way a holder sees  fit. STEEM can be converted to both Steem Power and Steem Dollars.  Turning STEEM into STEEM Power is referred to as “powering up.” The  current inflation rate of STEEM is 9%, and it will decrease by 0.5%  every year until the rate reaches 0.95%.
2. Steem Power (SP)  – STEEM that has been committed to a 13-week vesting schedule is  referred to as Steem Power (SP). SP has a 2-pronged intent; it creates  an incentive mechanism where holders take a long-term interest in the  project, and by having Steem Power it increases an account’s voting  weight (and by extension its ability to be further rewarded). A win–win  for both users and for the ecosystem as whole. SP is illiquid, and it  can be thought of as network equity. When a user decides to convert SP  back into STEEM, it is referred to as “powering down.”
3. Steem Dollars (SD)  – SD are a debt-like instrument, pegged to the US dollar, that promise  to distribute US$1 worth of STEEM per SD to the token holder at some  point in the future. You can trade Steem Dollars with STEEM, or transfer  them to other accounts for commerce or exchange. The aim here is to  provide a vehicle to lend the community money and, ultimately, to foster  growth. 

The Steem  blockchain is consistently minting new STEEM tokens and adding them to a  community “rewards pool.” The STEEM is then awarded to users for their  contributions, based on the votes that their content receives. Create  valuable content and get rewarded, so the theory goes. With  every new block, 15% of the new STEEM units are awarded to the people  who hold Steem Power, 75% are handed off to content creators, and 10% of  the new Steem units are paid to miners.When  you create content that actually earns money, 50% is paid to you in  Steem Dollars that can be exchanged for actual money right away. The  other 50% is paid in Steem Power. The Steem Power Units are locked in the vesting period mentioned above. The  phrase “minting” might have made you think of cryptocurrency mining or  forging processes, like ones found on many other blockchains. STEEM is a  mineable currency, but it’s not the primary way of earning tokens. Producing  or interacting with content on Steemit is the main way for users to get  STEEM. You can, of course, also purchase Steem on an exchange or earn  interest (a very small amount) by holding SP. The  Steemit platform has grown immensely since its inception. Here’s how  the traffic on Steem grew in the last year, according to Alexa’s web  ranking: 

 To delve deeper into Steemit’s technical details, you can read the whitepaper or browse their FAQ.

Can You Really Earn on Steemit?

 Now that we’ve understood the basics  of how Steemit functions, the next question is: does it work from a  content producer’s perspective? The short answer is yes, but there’s a  lot more to it than that. Before  we delve further into Steemit’s merit as a content platform or  investment vehicle, it’s worth noting there are some question marks  regarding Steem’s launch. One article alleges that the initial distribution process of tokens was rigged and that Steem is not truly a decentralized network (Dash, anyone?). Whether or not this is true remains debatable – read the article and draw your own conclusions.