Incentivising social media: How STEEM is powering a new platform

Steem (STEEM) is a cryptocurrency used to power the social media platform Steemit

Steem cryptocurrency is used to power the blockchain social media platform Steemit. It is known as the first cryptocurrency to attempt to monetise online content. They do this by rewarding individuals who make contributions towards Steemit.

An overview 

Steemit is a social media platform. Like Facebook and Reddit, it encourages users to share and post content. However, Steemit rewards its users by providing them with their own smart media tokens, Steem. These tokens are rewarded based on the user’s performance within the social media community. Tokens can eventually be cashed out for fiat currency.

Users can also use their Steem cryptocurrency to buy Steem Power or Steem Dollars for the platform, or convert the Steem into Bitcoins.

Users are also able to cast votes to create a hierarchy of content. The more upvotes a user gets, the more Steem they will be rewarded with. Steemit also offers downvotes, meaning users are able to have better flexibility when rating content. Finally, the users that hold more currency (Steem) are able to cast more votes with higher influence.

Many social media platforms use voting polls and shares or likes to prioritise content. However, Steem incorporates all these concepts to create its unique blockchain-based platform.

Steem Dollars

Steem Dollars are the units used to reward Steemit’s users for posting and sharing content. Every Steem Dollar is worth the equivalent of $1 USD of Steem. They were created so users wouldn’t be affected by the shifting exchange rate of Steem. These Steem Dollars earn an interest of 10% annually, which may influence users to keep them for longer.

Steem Power

Steem Power is the token that symbolises how much power a user has within the Steemit platform. It is impossible for a user to vote without Steem Power (SP), but the more SP a user has, the more their votes count in the system. This means they have more chance of earning more Steem. This process is played out over a period of two years in order to guarantee a user doesn’t cash out too soon and result in the Steemit economy shattering.

History

Steem was created in 2016 by Daniel Larimer and Ned Scott. Larimer is the developer of the Delegated Proof-of-Stake consensus algorithm and is the founder of the EOS blockchain and Invictus Innovations. When Steem first rolled out, it had a market capitalisation of $350m. The currency then saw an increase of 1,800% in price, going from $0.24 to $4.63.  The platform now has over 70,000 users, but the number of active users is much lower.

In November 2018, Steemit laid off 70% of its team. In a post addressed to ‘Steemians’, CEO of Steemit Ned Scott announced that they have “been forced to lay off close to 70% of the team”.

The main reason for this structural reorganisation was a weakness in the cryptocurrency market that resulted in low fiat returns.

Not just on Steemit

Posting on Steemit isn’t the only way you can gain Steem. You can buy Steem on several different cryptocurrency exchanges including Bittrex and ShapeShift.

If you are looking to own Steem, buying it is the quickest way. Earning it through the social media platform can often take time, and new users should understand it is rare for an individual to go viral with their first post. This means they won’t reap the benefits and earn huge rewards until they have posted and shared content more than once.

Criticism

As with nearly all cryptocurrencies, Steem has its downfalls. Market observers express their continuous concerns that Steem could be a pump and dump scheme, with predictions that the digital currency could collapse quickly if and when it runs out of users.

Another large criticism of the blockchain-powered platform is that it is a centralised consensus, meaning that the large holders are able to vote for the same people. This makes it an unfair process. There is also a big activation period for user accounts. A user will often have to wait up to two weeks before they can post and share on the platform. If a user wants immediate access, they have to pay an additional premium cost.

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