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RE: Steemit Referral Program and Incentives.
Given he fact that Dan & Ned setup the network to begin with you can say that yes it came out of their pocket including all of the early miners & investors, then it took a life of it's own.
How do they make money? The same as everyone else...by selling steem.
The problem is that the general public does not understand that not only the government can create money (banks do it all the time but it would be a long and technical explanation on how they do it).
If they don't get the analogy about the credit card rewards then I am not quite sure what to say.
The piece about making currency from selling steem is the piece I was missing.
I can explain the benefits of buying crypto currencies as another form of storage for wealth. I just needed an easy way to explain how the founders are making currency from the platform.
The points are printed at a set and specific rate every day and then go into a 'rewards pool' that is distributed among authors and curators. For example 100 new Steem points are created on Christmas by the Steem blockchain and are then paid to Bob, Josie and Susanne. If they know Bitcoin, it's a lot like how bitcoin are created by Bitcoin to pay miners.