|Creation Date||July 2016|
What is Steemit?
Steemit is a large and well-used social content sharing platform with more than 450 million live accounts. Is well known and used, both within and outside of the crypto community. So far, positive articles about the platform (and its reward system) have been published in respected resources such as the Rolling Stones and Wired. Steemit rewards users for posting content on the platform, and allows many bloggers to earn a real world income just from their posts on Steem alone. Each new contribution (whether it is a new post or a comment) can get rewarded with Steem.
Steem has its own blockchain and a platform. The platform (steemit.com) has been active for over 2 years and anybody can sign up and become a member for free. After becoming a member, you can create a new post about any topic and/or vote other users posts.
The goal in Steemit is to create a social media platform for bloggers and content creator with a voting system, whereby users can upvote or downvote content. All users have the ability to ‘upvote’ or ‘downvote’ content they like or dislike – with their voting weight linked to how much Steem Power (one of the Steem tokens) they hold. This has caused some resentment within the Steem community, as a small number of early adoptors have the vast majority of all Steem Power and can thus almost control what is seen on the platform.
The platform was created by Ned Scott and Dan Larimer, the power team behind Bitshares and EOS, who are well respected within the crypto community and whilst Steemit has its share of problems, have, in Steemit, brought the most decentralized blogging and social platform into a real-world reach far beyond crypto. The Steem team is active in the real world and regularly organizes events worldwide.
Whilst Steemit is still a great platform, the promotion or censorship of content is heavily controlled by the large token holders, and for anyone looking to buy into the tokens now, they are either inflationary, or you have to lock them up for 2 years, which isn’t ideal for most investors.
How the Steemit platform works:
- You create a post abouthave cute kittens, for example.
- Other users are able to vote your post: Upvote (positive) or downvote (negative)
- Each positive vote can award you Steem Dollars (SBD)- depending on how much the voter chooses to send. One can earn Steem Dollars for comments as well as posts.
- You can convert SBD into STEEM and trade them on an exchange to get “real” fiat $dollars. In other words, you really get paid for your contribution whether it is a post or a vote or a comment.
Steemit Tokens – Steem, Steem Power and Steem Dollars
The platform has three different crypto-tokens. Unlike with most cryptocurrencies where many positions are held short term with the aim of achieving short term growth, Steem is designed to reward those with a long-term perspective. However, there are some issues with the various Steemit tokens:
- STEEM: This is the main crypto-token of the platform. It is the only crypto-token that is sold in exchanges. You cannot win STEEM by creating content. STEEM has a high inflation rate and unless you convert it to SP or SBD, it starts to lose its value (approximately 0.19% per day)- however, converting to Steem Power or Steem Dollars loses you the ability to convert it into Bitcoin. Steem Dollar and Steem power derive their value from Steem
- Steem Power (SP): Steem Power is used to fund growth on Steemit and an investment into the platform. While all users can vote, the vote of SP holders has more influence because they have made an “investment” in the platform. STEEM can be converted into SP. By doing this, you are “locking” those coins for 2 years. In other words, once you convert STEEM into SP; you can’t use them and/or convert back to STEEM for 2 years, which is paid back to you over 104 equal weekly payments., Steem Power balances can’t be traded on crypto currency exchanges or taken out of Steemit- and because of the 2 year lock up period, SP holders have to rely on the platform still being around in 2 years time. 90% of STEEM is distributed among SP holders. (For every unit of SP; you get 9 STEEM over the course of a year.
- Steem Dollars (SBD): This is the only crypto-currency that users of the platform can earn by creating content. Basically, you create a content and hope for gaining the upvote of SP holders. Each SBD is worth 1 USD. It is not sold in exchanges. If you want to cash out, you must convert them into STEEM first. Then, you can convert to other crypto-currencies and/or Fiat currencies via exchange sites. The amount of STEEM you get depends on the value of STEEM. Let’s say you have 1 SBD. You should be able to get 1 USD, right? If the value of STEEM is, let say, 10 cents at the time of the conversion, you get 10 STEEM for 1 SBD. People earn interest from holding SBD (Steem Dollars)
Voting Power on Steemit
Your “voting power” and “reward amount” on Steemit changes according to the amount of Steem or Steem Power you are holding. The more Steem/SP you hold, the more valuable your post and/or comment – vote is. The influence of your vote/post corresponds to the amount of STEEM you convert on your account. This system is open to abuse and we will discuss in detail below.
Problems with Steemit
Centralization: Steemit is still a private company and is heavily centralized. The top 10 account holders have roughly 60% of all the tokens and power on the platform, and currently, 87.50% of the total supply belongs to top 247 accounts on Steemit – mostly the developers and early adaptors. This means that most users will never have any serious influence on the platform. Steemit probably still is the most decentralized social network out there though.
Unequal Voting and false promotion of content: All users have the right to vote, but some users’ votes are count for more than others, due to the amount of Steem Power they hold. Voting Power is directly proportional to how much Steem Power one holds. This means that one can effectively buy the ability to influence what people see on the platform. Powerful voters can easily downvote or censor content they don’t like or disagree with, or, can use their voting power to promote content of products they wish to push. This could make it look like a product – an ICO or anything else they were wishing to promote – were more popular than it is – when on any other platform, the only way to get such promotion would be through a sponsored content or advertisement. This means that the powerful voters control the content- what is upvoted to peoples attention, and what is downvoted so that people don’t see it, and there are no moderators or other means to regulated this. This could be misleading to consumers.
Copyright and lack of moderation: Steemit relies on witnesses but has no moderators, so there is no one to stop illegal or copyright content from being posted on the platform.
The tokens: Steem is inflationary, and thus, other than fluctuations in the market, would decrease in value by holding it. Steem Dollars are pegged to the US$ Dollar and thus are also inflationary- so would likely go down in value compared to other assets. Steem Power tokens have to be locked up for 2 years – and there are no guarantees that the platform will still be around then or that the tokens would be worth anything then. Given the large percentages of the tokens owned by early adoptors, if even one of these were to sell their Steem tokens, it could cause a significant drop or crash in the market.
It is possible to mine STEEM. It is actually a PoW coin on its own blockchain. However, it is meaningless to mine. The developers already mined more than 75% of the total coin supply.
|Coin/Token Name||STEEM / SP / SBD|
|ICO Date / ICO Price||No ICO|
|Is The Coin/Token Live?||Yes|
|Current Value (Total)||$ 994.440.195|
|Available In||Can be used on its own platform only / can be traded into other crypto-currencies and Fiat currencies via exchanges|
|Can Be Traded In||UpBit, Bittrex, Binance, Poloniex, Open Ledger DEX, HitBTC|
|Can You Buy It With Fiat Money?||Yes|
It has the potential to become a major Ponzi scandal. Fun, right?