What is Steemit?

about 10 years ago (Edited)

Hello Steemians! Like so many new members of the community I have spent the past week diving headfirst into Steemit and discovering how incredible the platform is. Steemit is an unprecedented technological advancement that will have massive implications in media, advertising and personal finance on a global scale. This is my first Steemit post I would like to take the opportunity to share what I have learned about Steemit and the fundamental components that make it such revolutionary social experience.

A Community

Steemit is a community that rewards contribution with economic incentives. It is the first decentralized, peer-to-peer social media economy where members receive merit-based financial rewards for creating content and voting on content created by others (curating). Members get paid to post and vote; contributions are recognized in proportion to the value they add to the Steemit economy. The more value a community member creates, the more they are paid. Steemit utilizes state-of-the art blockchain technology to distribute and secure rewards without the complexity typically associated with holding and transacting in crypto-currencies. Steemit is the first functional crypto-economy accessible to the mainstream internet user regardless of age or ability and more importantly, makes earning and using cryptocurrency friendly, easy and fun.

With Smart Rewards

Contributions are valued by voting; more votes equates to higher value. Members that create higher value content are allocated proportionally greater rewards. Rewards are denominated in units of Steemit’s native crypto-tokens: Steem, Steem Power and Steem Dollars. Each token has very different properties and together they form a powerful set of tools with which to create meaningful wealth.

All Steemit tokens are secure blockchian-based crypto-tokens similar to Bitcoin, Ether, Bitshares etc. and ownership of the tokens is stored on a public ledger. Steemit tokens are used to determine the voting ‘power’ of community members. One token enables one vote; the more tokens controlled/held by a community member the greater the voting power they possess. Consequently, community members contributing greater value to the Steemit economy earn proportionally greater voting power.

And Smart Finances

The most revolutionary feature of the Steemit platform is the use of blockchain technology to distribute rewards and secure the wealth of the community. The Steemit blockchain is used to create, transfer and track ownership of reward tokens and does so with stunning speed and efficiency. There are three different types of Steemit reward tokens: Steem, Steem Power and Steem Dollars. Together they form a trinity that may be one of the most powerful wealth creation tools in modern financial history.

Steem (STEEM) is the primary token of the Steem blockchain and is comparable to bitcoin (BTC), ether (ETH) or bitshare (BTS) tokens. STEEM tokens can be purchased on external exchanges in the same way BTC/ETH/BTS are purchased, or can be earned directly by contributing to the Steemit economy. STEEM tokens are created continuously and the supply of STEEM increases at rate of 100% per year. STEEM is the most liquid of the Steemit tokens and is designed primarily for transactions into and out of the Steemit economy. STEEM is the token traded on external exchanges in currency pairs (ie. BTC/STEEM) and is used to determine the market capitalization of the Steemit economy (ie. Coin Market Cap ranking). Holding STEEM as an investment is not recommended due the high dilution rate (0.19% per day).

Steem Power (SP) is an investment token that enables community members to earn passive income. SP tokens cannot be purchased directly on an external exchange and generally are earned through contributing or curating content. However, members can purchase SP within the Steemit platform by converting STEEM tokens to SP tokens. Converting STEEM to SP is termed “Powering Up” and is a simple procedure involving two clicks of the mouse – there are no complicated order entries, stop limits or brokerage fees needed to invest in SP.

Income for SP investors is generated via the creation of new STEEM tokens. For every 10 new STEEM tokens created, 9 are converted to SP tokens and distributed to SP investors, similar to a dividend in conventional investing. The 9:10 conversion ratio is fixed and will not change – currently the yield on SP is incredibly lucrative. Dividends are paid out in real time and deposited directly to the member’s account – simply refreshing the wallet balance every minute will show an increase in the number SP tokens held in the account. I am guilty of refreshing my wallet frequently just to see my SP balance increase. It is the most inane of actions and yet incredibly satisfying. Community members will sleep well knowing that their SP is working around the clock to make them wealthier.

SP investors can choose to withdraw dividends or reinvest them. If a member chooses to withdraw (termed “Powering Down”) weekly payments are made to the member’s account over a two year period. Investors can redeem any amount of SP at any time, but the payout period is fixed at 104 equal weekly payments spread over two years. This is a crucial feature of the Steamit platform that stabilizes the economy by damping big movements of value and limits the effectiveness of market manipulation strategies that are rampant in conventional crypto (ie. BTC) and fiat (ie. SP 500) markets. The SP withdrawal mechanism encourages members to build a stable recurring income stream that can be used to pay the bills without having to grind it out at the office every day.

Should the investor choose not withdraw SP, all SP tokens received as dividend payments begin earning dividends as soon as they are deposited. This is similar to a Dividend Reinvestment Plan (DRIP), but automatic and in real time. The importance of this financial innovation cannot be understated: SP dividends are paid to investors continuously; all newly received SP tokens automatically begin earning dividends immediately upon deposit and continue earning dividends until withdrawn. Continuous real time compound interest is baked right in. This is an incredibly powerful yet simple financial tool that will change lives and create massive wealth for the Steemit community.

Steam Dollars (SMD) are a savings token that enable community members to hold wealth in a stable currency while earning interest. SMD tokens can be obtained through contributing, converting STEEM tokens to SMD tokens and via external exchange. Whereas the value of STEEM and SP are determined by market forces the value of SMD tokens is 'pegged' to the United States Dollar (USD) via a mechanism involving witnesses and price feeds. For all intents and purposes, 1 SMD = $1 USD. In addition to providing a price-stable store of wealth, SMD deposits earn interest and are liquid (ie. there is no requirement to tie up funds for months or years to receive interest, as is required by CDs or GICs). SMD is like a bank account that pays interest… minus the bank.

A Revolution

Steemit is poised to become a sweeping revolution in social media and personal finance. It is a dynamic and global community that rewards hard work and participation, but it is also a village with the tools and resources to provide income and financial security to its members. Steam Power is an awe-inspiring financial innovation that is the beating heart of the Steemit community, funding the freedom to pursue dreams, create change and… retire in comfort. I have never come across a technology that combines interaction, creation, contribution and reward as seamlessly and effectively as Steemit does. It is easy to forget Steemit is still a beta release and has only been around for a few months - it feels like an established and thriving community. Word is getting around quickly and the next few months are going to be very, very exciting. Steem on!

If you’ve made it this far, thank you for your time! Feel free to share this post with anyone you feel would benefit, and questions or comments are always welcome and appreciated.