Steem is going to be the new Bitcoin. Who agrees?
Steem
While steem recently became the third-largest digital currency as measured by market capitalization, surpassing $400 million this month, some market experts are skeptical of steem and have expressed doubts about its economics.
The digital currency’s market capitalization surged in July, rising more than 2,000% from $17.9M to $411.9M between 04:14 UTC on 6th July and the same time on 20th July, CoinMarketCap figures reveal. The digital currency’s price climbed more than 1,800% during this period, increasing from $0.24 to $4.63.
For those new to the digital currency, users can obtain steem by posting content on social media platform named Steemit. When users publish popular content, as measured by upvotes, they receive steem tokens. By developing such a platform, Steemit’s creators have stated that they want to allow users to receive a reward for the content they create.
"The concept itself is interesting, it is a Reddit and Quora mashup with a strong monetary incentive to produce good quality content," Joe Lee, co-founder and CIO of digital currency trading platform Magnr, told CoinDesk. "Whether steem succeeds as a digital currency will be more a reflection of Steemit’s success as a platform as opposed to the economics of the coin itself. This is a good example of a digital currency whose value will be closely affiliated to its utilitarian value as a social networking and sharing platform."
Steem Blockchain
Steemit runs on top of a decentralized network named Steem. Like Bitcoin, Steem is a blockchain with transferable tokens. In addition to moving tokens from one place to another, Steem is also a text content and metadata database that applications or websites can connect to. Through these apps, Steem accounts can transact and interact with the Steem database. Instead of using cryptographic hashes as addresses like many blockchains do, user-chosen alphanumeric account names are used. With human readable account names, transactions can be made directly from an identity to an identity, making them easier to understand than hashes.
Steem also reaches decentralized consensus differently than Bitcoin. It uses a method called delegated proof of stake where block-creating accounts, called witnesses, are elected by Steem stakeholders. Instead of relying on proof of work to find blocks, the Steem network actively schedules these accounts to improve the time between blocks to 3 seconds. Block producers are given a small part of the rewards created in each block; the rest is paid to authors and curators.
Steem has no transaction fees for rate limiting or to pay its block producers. Instead, accounts use bandwidth, which replenishes fast enough that a typical user is not affected or limited.
While steemit.com is the first and reference front-end website interface for the blockchain content of Steem, the network's open and permissionless nature allows third-party websites and apps to connect and interact with the Steem database. Several have been created by third parties. These offer alternative interface designs or features such as Instagram-style image posting. Busy.org is a Steem-interacting website with an alternative user interface. eSteem is a Steem-interacting Android and iOS app. A forum-style application called chainBB is also available.
Non-Steemit apps and websites use the same Steem user credentials as used on Steemit. This is possible because the user account and password are part of the network database, using public-key cryptography. Only the user who owns an account can authenticate actions such as commenting, voting, or transferring with their password or appropriate key. Each account has a set of private keys with different access privileges. The lowest security level key allows posting, commenting and voting, but not transfers of currency. Therefore with a hierarchy of keys, it is possible to use other Steem-connected apps without risking a loss of funds or account control.
Reply down below about what you think?