The cryptocurrency market has grown tremendously during the last 2 years and currently stands at a market capitalization of $406 billion. As the market grew, many altcoins gained popularity — the Steem coin being one of them.
But, what makes the Steem cryptocurrency so popular? In this guide, I’ll give you a complete overview about Steem so that you can answer that question with confidence along with many others; regarding Steem, its purpose, its team, its history, and how well it is functioning.
I will be addressing Steemit, also — Steemit is a unique, Steem-based social media platform that is by far Steem’s most famous use case. In addition to that, I will cover the various cryptocurrencies associated with Steemit i.e. Steem coin, Steem Dollars and Steem Power.
Like all good guides, we’ll begin with the basics.
So, let’s get started!
Table of Contents
1 Steem Basics
1.1 Steem
1.2 Steem Dollars (SBD)
1.3 Steem Power (SP)
2 Steemit Community and Curation
3 Does Steem Really Work?
3.1 Voting Game
3.2 Driven by Cash
3.3 Plagiarism
4 Steem Coin Investment History
5 Final Words
Steem Basics
Steem coin is the cryptocurrency of Steemit — a blockchain-based social media platform founded in 2014 by Dan Larimer (the CEO of BitShares).
You can consider Steemit as similar to Reddit, where users can create and publish their content online and get rewarded for it. However, there is one major difference.
Unlike any other social network, Steemit is based on the blockchain, which allows it to be run in a decentralized manner. This means there is no censorship, no central authority, no downtime, no data vulnerability, and no data abuse. It solves a seemingly-endless list of problems seen in centralized social platforms (i.e. Facebook, Twitter etc.).
As well as the above unique advantages, it also rewards its users using cryptocurrency! So, rather than post to social media while the central party (Facebook, Twitter etc.) cash in on ad revenue, you can post to social media and be paid for it yourself.
The Steemit blockchain actually has three different cryptocurrencies on its blockchain!
Let’s try to understand the function of each one of them.
Steem
Steem coin is a fundamental cryptocurrency of the Steemit network, and the other two cryptocurrencies (Steem Dollars and Steem Power) are dependent on it.
Since Steem was released in 2016, the supply of Steem has automatically increased by 100% each year. This is what it’ll continue to do indefinitely.
In this aspect, Steem is different from other cryptocurrencies, as it doesn’t rely solely on mining to create new coins.
The Steemit network creates new Steem coins on an everyday basis.
75% of the new coins are divided between the authors and curators
15% of the coins are awarded to the holders of Steem Power
Only 10% of Steem block rewards are awarded to miners
Since more and more Steem is created every day, it is not recommended to hold it for long periods of time. It should instead be converted into Steem Dollars, Steem Power or some other cryptocurrency like Bitcoin or Litecoin.
Please note that the Steem crypto coin (Steem), like Bitcoin or Ether, can be bought and sold in the open market. So, you can either earn Steem through the Steemit platform, or you can buy it on an exchange like Poloniex or Binance.
What is Steem
Steem Dollars (SBD)
Steem Dollars, another cryptocurrency of the Steem blockchain, can be considered to be a more stable one. It is intended to be valued 1:1 with the US dollar, which means that 1 SBD should be equal to the amount of Steem that can be bought with 1 USD.
It held the $1 value rather well until around November 2017 when it rocketed in price to around $13 by the end of the 2017. It has since corrected itself, though, and is currently floating around the $2 mark.
As Steem Dollars are intended to be stable, 50% of the payment to creators and curators on Steemit is processed in SBD to protect them against the fluctuations of the Steem cryptocurrency. Steem Dollars can also be traded on several exchanges and it has a current market capitalization of $0.37 billion.
You can cash out your SBD by converting it to Steem or Bitcoin, and then converting it to fiat currency. You can also exchange SBD for Steem Power, another Steem currency which I will cover next.
Top tip: A key benefit to Steem Dollars is that, by holding them, you earn 10% annual interest.
Steem Power (SP)
Steem Power (SP), the third crypto on the Steemit network, is a token that symbolizes how much of an influence you have on the Steemit platform. The more SP you have, the power you have.
So, holding Steemit Power gives weight to your voting in a 1:1 ratio. For example, if a post receives vote from a user who holds 200 SP then it is 20 times more influential than a vote from someone who holds 10 SP.
It is a very important aspect of the Steemit platform because compensation is directly related to it. A post or a comment will receive more compensation when upvoted by some with more power (SPs).
As a matter of fact, you cannot vote at all if you don’t have any Steem Power. Here are a few other interesting aspects about SP:
Steem Power is considered a long-term investment. In fact, you can’t actually sell it until you’ve been holding it for at least 13 weeks.
50% of payments sent to contributors are made in SP.
Unlike the other two cryptocurrencies on Steemit, SP cannot be traded on exchanges.
You can “power up” by increasing your SP holding or “power down” by cashing it out (exchanging it for Steem coin).
Well, that’s it for Steem crypto — those are the 3 cryptocurrencies on the Steemit network! Now, let’s move on to see how Steemit, the social-media platform, actually works.