Introduction
There is a lot of buzz around Steemit right now. There's people that love it, and there's people who don't understand it.
It's hard for people to understand how they can be paid for posting on social media - it all sounds very pyramid scheme-ish. Steemit is very unique, there's no denying that - so I will attempt to briefly explain what Steemit is, who owns Steemit (and why they're paying you!), and how to earn rewards.
What is Steemit?
Steemit is a social network that functions a bit like Reddit, but with one HUGE difference:
Steemit pays users when their posts get upvoted. Steemit also pays the people who 'curate' the best content on the site by upvoting other posts. And it’s completely free to get started.
Who owns Steemit?
You do!
Steemit is the first in a new paradigm in online apps called dApps. dApps are 'Decentralized Applications', meaning that the code to run these apps lives on every computer who participates. It's like when you download something (legal) on Bittorrent - while you are downloading pieces of the database, you're sending small pieces to others.
It's all very computer sciencey - but it works! It's how it's possible to create a website that is owned by everybody and by nobody.
Steem, Steem Power, and Steem Dollars
I want to take most of this article to explain the part that everyone wants to know about - the money.
A big part of the confusion with Steemit lies in the different ways that assets are presented to users, so let's understand a few concepts behind Steemit's economy. Imagine Steemit's economy as 'paper money' being backed by 'gold'.
Let me explain:
Steem - Steem is 'gold'. Well, Steem is a fungible & tradeable digital asset who's value goes up and down based on market forces, just like digital gold! Steem can be exchanged for real money on a digital currency exchange in a few button clicks.
Steem Dollars - Steem Dollars is 'paper money'. Well, it's a redeemable receipt that promises to be $1 worth of Steem. It can be redeemed for Steem ('gold'!), or spent as paper currency anywhere that accepts Steem Dollars.
There are advantages to holding either asset:
If you hold Steem, your value goes up (and down) with the market, but holding Steem Dollars keeps your value stable. So, you could miss out on the price increases in Steem if you hold Steem Dollars, but if Steem goes down then your value is still safe.
There's a 3rd asset.
- Steem Power - Steem Power is like 'ownership'. The more Steem Power an individual has, the stronger their vote is on Steemit (and it's worth more money too!). Steem power is kind of like investing into Steemit. While you can invest money instantly, there is an expectation that it will take time to see a return on that investment. In the case of Steem Power, if you want to convert to Steem, it will need to occur in 104 weekly conversions. This is called 'powering down'.
The awesome thing about Steem Power is:
The more you hold, the higher percentage of weekly rewards you get. (Because you're part owner!)
How do I get rewards?
There are two methods of earning money on Steemit.
Posting - As your blog post gains votes, the amount of Steem that will be distributed to you increases. But! Not every vote is worth the same amount of money. The amount that your post earns is based on both the number of votes that you receive and the amount of Steem Power behind those votes.
Voting - There is also the curation reward paid out in the form of Steem Power. If upvote a post and it does well you earn more Steem Power than if a post doesn’t do well (So you should only vote for content that you believe is high quality.) Also, upvoting multiple posts reduces the strength of each of your votes depending on how much time passes between each vote. (You have to put some thought into votes because you don’t want to waste your voting power.)
Conclusion
Well, that about does it! If there are any questions please don't hesitate to post them in the comments below.