The prequel to The ultimate guide to Steemit. Yeah I'm the guy who wrote The ultimate guide to Steemit
Too long to read, you already know what Steemit is: just read the conclusion.
- Steem market cap: 343 million
- 3th biggest crytocurrency by market cap
- Launched in April 2016 (4 months ago)
- 1400%+ in the last 7 days
- 1 Steem is worth about 4USD, today, July 15
Teaser: Could $1000 worth of Steem be worth $1,000,000 in a couple of years or decades? That would be a 100,000% increase. Though it might seem improbable at first, each of us might want to get this right, after all bitcoin managed to go from 0.50$ on January 30, 2011, to more than $650 today or 120,000%, in less than 6 years...
After I've sent someone The ultimate guide to Steemit, he said: "I've been reading for 10 minutes and I don't know what Steemit is besides it has something to do with Bitcoin. «He understood what he was reading that wasn’t the problem, but what I wrote in TUGS wasn't trying to explain what Steemit is. The ultimate guide to Steemit is still up to now the best guide on how to use Steemit so I recommend it if you haven't read it. Even if you know how to use Steem, as you might want to share it with those who don't know how to use Steemit. In this post, instead of helping people on how to use Steemit, I will explain a bit what Steemit is, some of what it can do and where it leads us. A lot of this can be found in the Whitepaper in some other form.
What is Steemit?
Steemit is a lot like Reddit but one major difference between the 2 is, Steemit pays to post, comment and upvote. This is one pretty radical difference. As you read, you will realize Steemit is a lot more than Reddit can ever be. A lot of redditors use Reddit on their lunch break while on Steemit people are already earning their living out of it. For those who don’t know Reddit, Steemit could very well be compare as some sort of Facebook. But again, whoever use Steem is getting paid with shares of the “company.” I don’t know about you but this feels like Steemit is onto something, it feels pretty promising to say the less. I’ve expand a bit on this in the last paragraph
3 Tokens, 1 sophisticated monetary system
Steem uses 3 different money or tokens. They’re called Steem, Steem Power and Steem Dollars. All three money or tokens have their own separate properties. These 3 different tokens all have their purpose and have a symbiotic relation to one another. This 3 token monetary system is another important part of the whole genius behind Steemit. I’ll expand on these tokens and relations as I go.
Steem users get paid for their posts, comments or votes, every 24 hours or so. These pay are of 2 different, called Steem Power and Steem Dollars. Around 25% of the reward are received as Steem Dollars and 75% as Steem Power. Let’s concentrate on Steem Power first. Every year, except the first year, the number of Steem Power doubles. 90% of the new Steem Power are distributed proportionally to the holders of Steem Power. The 10% left is allocated to posts, votes and comments.
It could be seen as Steem Power holders paying around 10% of their shares as dividend to people who write, vote and comment. Anyone posts, comments or votes will receive a % of that 10%.
Whenever a Steem user vote for a post or a comment, the poster or the commenter is paid with a reward. The more Steem Power someone own, the more his or her votes are worth and thus the greater the reward to the poster, commenter, and voter. Here’s how rewards are distributed for each post or comment.
75% to posters or commenters
25% to curators (upvoters)
You can see the pending payout (reward) for each post and comments at the bottom of every post. The sooner someone vote on a post, the bigger his % of the 25% he/she will get of the curation reward relative to his Steem Power and voting power. Let’s not forget, the more Steem Power one has, the bigger the % of total curation reward. I clarify this, 2 paragraph below with a concrete example.
Vote! Vote! Vote!
People aren’t voting non-stop for everything because every time someone votes, his voting power goes down 0.5% and then it gets regenerated as time pass 0.5% every 36 minutes. So someone can vote around 40 times in a day wait 36 minutes in between each votes and be voting with 100% of his voting power each time. 100% voting power from someone who own 32 million Steem Power isn’t the same as 100% voting power from someone who own 1 million Steem Power.
The equations that govern the distribution of the curation rewards among who voted are a bit complex. I feel like looking at details of the payout for a post will give you the best understanding. You can also read this post How to Maximize Curation Rewards, more precisely, chapter 5 named: reward percentage increase in voting. The equations have changed but this give an idea.
Now if someone wanted to see the details of the curation payout for a post or comments, take any Steemit.com link and change it to Steemd.com. Here’s an example:
On this page, click on advanced mode right next to the post’s title. Scroll down. Under the first white rectangle is written, vote detail. Click on it. Displayed are everyone who voted for you, in the order they voted. Rshares are related to the voter’s Steem Power they hold and their voting power which is explain above. Weight % is the % of the total reward each voters will be getting. You can only see it if no payout for this post haven’t been made yet. You can find the authors % of curation reward on the last line of the white rectangle. The line’s called author curate reward.
Steem, Steem Dollars and Steem Power
Steem Dollars are Steem tokens worth 1 usd of Steem. If Steems are worth 50 cents usd and you have 1 Steem Dollar you can exchange your 1 Steem Dollar for 2 Steems. What are Steem? Steem are like Steem Power except they don’t double in number every year, they don't influence voting power and they aren’t locked like Steem Power are. Steem Power are locked and can only be change to Steem at a fix rate over 104 week. This is done automatically when you chose to so, it's called powering down. Steem Power are being change into Steem every 7 days. Changing Steem to Steem Power is called Powering up and the opposite, changing Steem Power to Steem is called powering down. If you have $2000 worth of Steem Power and wanted to sell. You would power down $2000. $2000/104=$19.2 every 7 days. If the price of Steem were to go up during the days you’re powering down, you would still benefit from the price rise. If Steem as gone up 100% one day you will be getting the same amount of Steem for your Steem Power but Steem you would be getting would be worth 100% more, or close to $38 in this case. Steem Dollars also have an interest rate paid in Steem Power of up to 10% a year. More on these tokens are available in the Steemit Whitepaper.
Steem Power double in number every year, like I said earlier. Steem don’t double every year. For this reason, Steem should only be held when someone wants to sell, otherwise holding Steem will penalize the holder. Let’s say, you have 100 Steems, one year later you would still have only 100 Steems. On the other hand if you have 100 Steem Power, 1 year later you would have approximatively 190 Steem Power, the other 10 Steem have gone to reward users. In effect, Steem Power qualities encourage Steem users to hold Steem Power rather than Steems. This result in people not being able to sell large quantities of Steem at once. This then leads to greater price’s stability.
By the way, post reward are paid 50% in Steem Dollars and 50% in Steem Power while curation (upvote) rewards are paid a 100% in Steem Power. This again assure greater price stability.
Steem and Steem Dollars can be sold or bought on exchanges. Steem Power on the other hand can never be sold or bought. They are always lock, until they are powered down to Steem, then some of them are unlock every 7days for 104 weeks as stated above. Finally Steem Dollars can be bought or sell for Steem or Bitcoin. To change your Steem Dollar to Steem Power you have to go through Steem. Steem Power can only be acquired through powering up and through post and curation rewards.
The relationship between these 3 tokens and the whole Steem’s ecosystem, the ecosysteem, are multiple. They are symbiotic and the details so vast, they will the subject of many posts to come.
Seemit has many similarities with Reddit, Facebook, any social media or news website, yet because Steemit rewards all of its users instead of only some shareholders, it is really enticing to conclude, Steemit will do better, will have a better growth, better content, better reach, a more positive repercussion on society, well you get the point. So while today, Facebook has a market cap of $332 billion and is the 6th most valuable company in America, in other word, Facebook is worth $332 billion, while Reddit is estimated to be worth between $500 million to possibly billions of dollars, it will be really interesting to see how the competition between Steemit and these different platform will play out. What about Twitter, Instagram, Vine, YouTube, Pinterest and all news websites, do they pay their users?
What we see on Steemit.com is only the beginning. Steem and Steemit.com's website have already had many improvements and will continue to do so. These improvements have already changed how Steem and Steemit are used and perceived. Steemit have only existed for less than 4 months. In comparison, Facebook didn’t even had a Facebook feed for at least a year, probably more than one.
Steem’s market cap today is worth more than $80 millions dollars. Could Steem be worth as much as Reddit in the future? Could it be worth more than Bitcoin? Or could it even be worth as much as Facebook or even more? Nobody knows but these are fun to muse about. Could $1000 worth of Steem be worth $1,000,000 in a couple of years or decades? That would be a 100,000% increase. Though it might seem improbable at first, each of us might want to get this right, after all bitcoin managed to go from 0.50$ on January 30, 2011, to more than $650 today or 120,000%, in less than 6 years...
- I used Steem and Steemit interchangeably, though Steem is the technology and Steemit is a company owning Steemit.com Steemit.io Steemd.com
- There are some factual inexactitudes throughout the text but these aren’t fundamental errors. I only simplify some parts for ease of reading and understanding.
- Dan Larimer, chief technology officer of Steemit, founder of Bitshares said Steem blockchain is already able to handle as many request as Reddit does today.
- TSS #1 Dan Larimer said one of the most inspiring thing I've ever heard (Dan Larimer is chief technology officer of Steemit, founder of Bitshares
- TSS #2 Bitcoin will be worth 1000$ in less than 15 days (I was wrong, here's why)(Read this post. Seriously read it)
- TSS #3 The ultimate guide to Steemit