Steem is a system that turns human creativity into currency without any commercial transaction. It’s a zero loss economy where people's expressions of value generate a tangible, tradable asset without having to buy or sell. It’s a free market without the market. It's simply revolutionary.
not a real book, for illustration purposes only :)
Being that there has been so many new users flooding in lately, I wanted to put together a comprehensive guide that demystifies the deep complexities of the system while remaining human readable. I also wanted to make this guide to help onboard all the friends and family that I've brought to Steem. It's an exciting and rewarding platform but can be difficult to find success without understanding the mechanics and the community driving it. I hope you find this guide useful. Feel free to skim through and find the information that's most relevant to you.
How Steem Works
No one has to pay the content creators for them to gain tradable value for their work. Every day, the payments are generated through the creation of new Steem and the Steemians (Steem users) themselves decide which authors receive the payouts through upvoting their content. The more vested shares of Steem (Steem Power) a user has the more that user's upvote is worth. In any other economic system, these methods would create unfair wealth distribution and devalue the currency, but there are some really intelligent mechanisms built into Steem that encourage fair distribution and prevent the inflation from devaluing the Steem token.
Immutable inflation plan that decreases every year
The inflation is built into the code. The code is agreed upon by concensus. It cannot be manipulated or changed by any centralized party. This is worlds away from our centralized, privatized, manipulated fiat systems. Right now the inflation rate is 9.5% annually. Every year the inflation rate decreases by 0.5%, and will continue to do so until it reaches 1%, which is substantially less than the USD. With the inflation rate shrinking every year, and the platform growing, Steem will increasingly be harder to acquire making it's value rise.
Incentivized long term holding
Inflation becomes a serious problem when people are encouraged to recirculate their money rather than hold. Steem Power is a long term holding solution that offers the benefits of increased influence on the Steem ecosystem and a buffer against inflation via interest. Steem Power represents your vested share in the Steem ecosystem and grants you higher upvotes and curation rewards. It also counteracts inflation by providing interest. 15% of the Steem generated goes to SP stake holders based on their proportional share of SP. Powering up your Steem into Steem Power is an investment in the Steem economy with great returns that removes the Steem from circulation. It’s the mechanism that creates a zero loss economy and allows inflation without the continued loss of value.
There is complete transparency on Steem. You can view everyone’s posts, replies, payouts and wallet. Unlike the FIAT system where the big bankers, corporations, and wealthy individuals can hide their shady dealings, the actions of every steemian are visible to every individual without exception. In theory this keeps the 1% accountable to the 99%. It’s what’s allowed the infamous @berniesander’s to call on the power of the masses, and regulate unfair distributions.
Power holders are Incentivized to support the growth of the platform and its users
Stake holders in Steem are incentivized to increase the quality and usefulness of the platform, as the value of Steem is tied to the success and growth of it’s users. If the whales were to game the system in order to fortify their controlling interest, the value of Steem would plummet as people would leave in droves finding it too difficult to succeed. The more stories people share of the great community, the great content and the large payouts of Steem, the more users will flock to the platform creating more demand for Steem and raising its value.
The curation rewards built into Steem prioritize the upvoting of great content from new and undiscovered authors. So the successful whales are those who help the minnows grow, creating a positive feedback loop for all.
The method for whales to make returns is not recirculating their money and building barriers for others to gain wealth but instead holding their Steem and increasing the rate of success and economic mobility for new minnows that are creating quality work. They can’t quickly cash out which prevents large dumps from decreasing the steem value. There are going to be those who find loopholes, and the system will continue to evolve, but the best path to success for the whales is one that benefits every member of Steem. With the numbers growing everyday, it’ll be interesting to see how this continues to play out.
Steem, Steem Power, Steem Dollar, Reputation
Perhaps the most baffling part of Steem for new users are all the numbers and meters one is presented with. At first it’s a bit confusing trying to track and make sense of them all. But once you understand them, things start to come together.
This is the backbone of the entire Steem ecosystem and the tradable token. It’s similar to any other crypto currency and can be traded, transferred, and moved around freely, instantly, and feelessly.
Steem Power (SP)
Steem power represents your vested shares in the Steem eco system and gives you proportional influence over payout distributions. The higher your Steem Power, the more reward your upvote is worth and the more curation rewards you are able to receive. You can increase your Steem Power by powering up (converting your Steem to Steem Power) or through curation and author rewards.
Steem Dollar (SBD)
These were designed to offer an easy way for authors to "cash out" their rewards. They are free to transfer, and were intended to be a stable currency useful for commerce and real world applications. If the market price drops below $1, all SBD becomes interest bearing. This encourages holding rather than trading, putting pressure on the liquid supply and raising the price back up to $1. However, it is completely free to rise above $1 if market demands dictate. In December, a large demand caused it to moon to almost $15 and it is currently trading around $8.
The inconsistency of it's value has caused a lot of debate within the Steemit community on it's utility. But for now, as long as it's value is above $1, be sure to choose the 50/50 payout on your posts to take full advantage of it's high trading price. It wasn't designed to hodl, so I would trade it for Steem on the internal market, or use blocktrades to convert it to another crypto coin that can be traded for fiat or invested into an exchange.
This is the number that appears next to your name. It isn’t tied to any currency per say. The more you post, interact, get upvoted and gain followers the higher your rep goes. If your posts get flagged, it drastically affects your reputation score. So avoid spamming and trolling. But I shouldn’t have to tell you that. I hope not.
Posts only have 7 days to gain upvotes after which the author and curators receive the payout and the posts cease to generate further rewards for the author or curators.
The payout amount you see on your post does not represent the value you will receive. The final payout is split 75/25 between author and curators. If you selected 50% SBD / 50% SP payout, you’ll receive half of the value in Steem Power and the other half in Steem Dollars.
I created the below infographic using real world numbers to help illustrate the payout mechanics.
Voting power is another thing that is obscured by the Steemit front end. You can view your voting power, along with all sorts of details of your account, and anyone else's at steemd.com. Here is the link to mine, https://steemd.com/@theferalone, just replace my username with yours to see your profile. Your voting power percentage affects how much reward your upvote will give. The lower your percentage, the less your upvote is worth. It’s a meter that is always replenishing.
- Upvotes extract 2% of your current voting power
- Voting power regenerates at a rate of 0.85% an hour, or 20% a day.
- When you reach 500 SP you can choose the Voting Strength for each upvote
(eg. 50% would cost 1% of your remaining voting power, 25% would cost 0.5% of your voting power)
You should strive to stay within the 80% range of your voting power. This will ensure those you upvote get the maximum reward you can offer. It’s best to upvote no more than 10 or so times a day and let your voting power regenerate back to 100%. Once you have 500 SP you’ll be able to spread your upvotes further by reducing the strength of each vote.
25% of the payout goes to the curators (that's anyone who upvoted the post). How this is distributed is a complex formula weighting the time of upvote, the position of upvote (how many people upvoted prior), the SP of curator, and the voting power used for the upvote.
You want to vote no less than 30 minutes after a post was created. There was a problem with users and bots upvoting content from popular authors as soon as it was published in order to get the max curation reward. So a time limit threshold was added to prevent gaming the curation system.
The number of votes before you is key to gaining the most rewards. You want to vote before the post gains traction, ideally within the first 10% of voters. But the earlier the better, as long as it's after the 30 minute mark.
Unless you have high Steem Power, you won't be pulling in much rewards. As of now, the most I've pulled in has been 0.01 SP for curation, and I've been in great positions on a few posts. So build up your Steem Power before you invest serious time in curation.
Voting Power and Weight:
The more weight you vote with the higher the rewards. As mentioned earlier keeping your Voting Power above 80% is key for your rewards and the authors you upvote.
For a more detailed explanation checkout @calamus056 and @liberosist great articles on the matter:
Curation Rewards Explained in Great Detail
Mind Your Votes! II - A guide to maximizing your curation rewards
Getting Fiat (cash)
If you want to turn your rewards into cash you can put in your bank, you’ll first need an account with an exchange where you can sell cryptocurrencies for fiat. I use coinbase, it is the most popular in the US and relatively secure. There are other exchanges, but I can’t vouch for them. I wouldn’t hold any coins long term on any centralized exchange, I use coinbase as a means of fiat/crypto conversion only, and suggest you do the same. If you are interested in trading cryptos, I would look into bitshares.
Once you have your account setup with your preferred exchange it’s as easy as going over to blocktrades and converting your SBD for a coin you can sell on the exchange. Litecoin is universally accepted, and my preferred coin for this purpose. All you will need is the address of the wallet on your exchange (all crypto currencies have wallets with an address string for accepting coin deposits/transfers). I would avoid Bitcoin and Ethereum. They have really high transfer fees and the networks are slow. I use Litecoin because it costs pennies to transfer and is verified within minutes.
Step by Step process for getting fiat via Blocktrades, Coinbase and Litecoin
- Create an account with coinbase.com
- Find your Litecoin wallet address on Coinbase: Account > LTC Wallet > Receive
- Open blocktrades.us in another tab and select Steem Dollar for send and Litecoin for Receive
- Paste the Litecoin wallet address from coinbase into the "Your receive address" field and click "Get a New Deposit Address"
- Take note of the "Account Name" and "Memo" fields
- Navigate to your Steemit wallet, and click the Steem Dollars dropdown arrow. Paste in the account name and memo you received from blocktrades in the previous step and submit
- Once the transaction goes through you will see the Litecoin in your coinbase account and will be able to exchange it for fiat
How to Survive your First 30 Days
When you first start out, you should expect the majority of your posts to pull in pennies. It’s a big ocean, and you're a little insignificant minnow. You can write the most amazing, well thought out post, and end up with no comments and pennies for a payout. If you are lucky—by some miracle—you may be found by a large curation account, or upvoted by a random whale. But in most cases this won’t happen. No one knows you exist, and your posts just sink into the void. The key to success is building up a network of followers and connecting with a community. Here are a few pointers that have helped me along my way from absolute obscurity to consistent growth.
1. Make an initial investment in Steem
Before I follow someone I want to know if they are here to stay, or just playing around. If someone drops $100 into the platform, it tells me they plan on sticking around for a while. No one takes you seriously when you have no Steem Power and your upvote is only worth a 10th of a cent. If you don't have the money, expect to grind for a little while to work your way up to a 1 cent upvote.
2. Make a kickass introduction post with the introduceyourself tag.
- Take a photo of yourself holding a hand written note with your steemit username and date, this will let everyone know that you are a real person and not a bot or scammer. This is a good example from @kokibyivana
- Make sure your post is not too long or too short, 3-8 paragraphs with a few photos is a great range
- Make your niche, angle, and voice as clear as possible, but don’t box yourself in
- Tell the Steem community how you found Steemit, why you're here, your skillsets, and what type of things you plan on writing about
3. Get on Discord and Join a Steemit community
Discord is a chatting app originally designed for gamers. But the Steem community has taken to it to meet the missing functionality gap of direct messaging and group chats of this platform. I would create an account with the same username you chose for Steemit to make it easier for people to find you.
Connect with like minded people, share your articles in the relevant channels, offer help where you can, ask for help where you need, and build relationships.
PAL (Peace, Abundance, Liberty) is the best place to start.
4. Install Steemify for IOS or use GINAbot for notifications
Steemit has no native app, and there is no notification system on the Steemit website. So if you want to know who's commenting, upvoting, following and otherwise interacting with you, you'll want to download the Steemify app. It currently is only available for ISO. So if you have an Android or other phone, checkout GINAbot, it's a Discord bot that sends notifications via private messages on Discord.
5. Comment, comment, comment, but engage with the author
Once you’ve done the previous, it's time to start engaging with authors. Commenting should be organic, find posts that inspire you, and interact. Ask questions, share similar experiences, complement, be yourself.
If you’re just going to write “nice post” don’t bother. Make sure you engage and express something of value. The author will most likely check out your blog, possibly upvote, and possibly follow. Author’s are being flooded with spam comments, they appreciate people who take the time to read and offer an intelligent response.
6. Use your resteems wisely
You want your blog to say something about who you are and what you are into. You also want your blog to maintain a consistent flow. Only resteem posts that are of high quality and add to the flow of your blog. Anything else looks spamalicious and users will have to work to find the content you authored.
7. Be intentional with who you follow
Your experience on Steem is will have a direct correlation with who you follow. Show some discretion and follow authors you really have a connection with and who write on subjects you are interested in. Avoid "Follow me I'll follow you" nonsense at all costs.
Keep your following to followers ratio around 2:1 or lower. Having more people you follow than follow you can look spammy, especially if it grows in the range of 10:1.
8. Condense your writing, and edit it heavily.
Use headings, people want to know if the content is worth their time before they invest in reading.
Be concise as possible. No one likes needlessly lengthy repetitive posts that take forever to get to the point.
9. Diversify your content
Subject matter: Write about a wide array of subjects but find a common thread or voice
Types: Tutorial, update, insight, resource, opinion, education, contest entry, question/feedback
Length: Use short posts and long posts to your advantage. Split giant posts into a series to take advantage of short attention spans and more payout opportunities
Moods: Casual, serious, funny, romantic, stoic
10. Be authentic
The internet is over saturated with people attempting to brand themselves. Don't cater to that demand. Shoe more than the best side of you, and you'll be rewarded. People appreciate honesty, and authenticity here more than other platforms.
11. Write at least 2 posts a week
Make it a goal to write a few times a week, 2 minimum. Don't post every day if you really don't have something to say or add. Make your content worthwhile and don't clutter your blog with subpar content. With that said, every post doesn't have to be your magnum opus. Aim for a few really high quality posts a month.
12. Don't let low payouts get you down
Maybe some of your friends told you they've made $100s or $1,000s of dollars on this platform. Meanwhile you have written 20 posts that failed to reach $1.00. If you go into this expecting instant results you may be disappointed and put in less effort or quit altogether. This isn't a get rich quick or leave your job tomorrow deal. It takes serious effort and time. You should expect roughly a $0.01 reward for each follower you have. So build a following, stay committed, set reachable goals for yourself, create quality content, focus on the community, and you'll rise from obscurity.
If your new and have any questions feel free to ask in the comments, Steem is flooded with great people looking to help. If you are a veteran Steemian, I would love to hear some of the keys to success that have helped you along your way.
I've done my best to be as accurate as possible and used the latest white paper as the prime reference. But if you notice any errors, please spot them out for me.
Cryptocurrencies are extremely volatile. The prices used for Steem and Steem Dollar in the article are for illustration purposes only. You can find up to date prices at https://www.coingecko.com.
All this information applies to Hardfork 19. Hardfork 20 is just around the corner and some of the information here may be outdated once it's released.