That a cryptocurrency with a total market capitalization of approximately 14 million shoots to more than 300 million does not go unnoticed.
But when that cryptocurrency forms the backbone of a social network that rewards people for creating content, sometimes with hundreds or even thousands of dollars for a single post, enthusiasm and skepticism are produced at the same time
Launched in March 2016 and gaining notoriety in July, Steemit, a social network based on blockchain, has seen an uncommon level of popularity in a few months. To date, it has polarized the blockchain experts, while winning a non-negligible number of new users to the technology.
The child prodigy of Daniel Larimer, founder of BitShares, and Ned Scott, a former financial analyst, founders of Steemit announce that the platform aims to provide a place for users to create and promote content they believe is good and comment on the publications - all while earning money.
But Steemit is much more than a website to make money.
It is a real blockchain platform built on a piece of technology developed by Larimer called "Graphene", which allows the deployment of Blockchain technology specific to the application.
Scott, in an interview by CoinDesk, explained that the team came up with Steemit's idea in January and, due to the Graphene framework, they were able to quickly launch the project, in about two months.
The rest, like most things in the Blockchain world, is a bit difficult to explain.
THE BOOM
During the first months, there was not much talk of Steemit.
While there were pioneer miners and some users who helped create content, the real explosion did not come until July 4. When the dam was opened. Steem was launched, the cryptocurrency, a capitalization valued at 1.3 million dollars was distributed to the users of the platform.
Scott explained that, while all the posts, comments and upvotes that had occurred on the site before July 4 were all in the blockchain, the rewards that had been promised to their users for their contributions had not been distributed. The underlying idea was that the team wanted to continue testing the platform, finding bugs and fixing them before a fever of new Steemians signed up.
He warned that, no matter how diligent and professional the development team is, there are going to be bugs and they wanted to make sure that Steemit was safe for everyone.
However, the 4th of July was a day everyone expected.
Scott said:
"What happened on July 4 was like the end of a three-month day ... thereafter, the rewards are distributed continuously, that first day, however that momentum that had been building was discharged"
And with that "pop", users who had been watching their balance sheets were instantly rewarded.
One currency, two smart contracts
Part of the confusion with Steemit lies in the different ways in which the currency is presented to users.
At the root is the Steem coin, which is the typical freely interchangeable token similar to bitcoin, ethereum or any other cryptoconversion. But that same Steem can be put into two different types of intelligent contracts depending on the particular utility that an individual wants.
The first is called Steem Power, which provides utility and leverage. Steem Power is the backbone of the voting potential of an account. In other words, the more Steem Power an individual has, the stronger their vote in Steemit.
Scott explained that the team wanted to provide a mechanism by which people could have a long-term interest in the project, while allowing others to continue their speculation. In the "whitepaper", the Steem Power is compared to long-term capital commitments, similar to what a risk investor could do.
While users can invest their money instantly, they must spend a period of time to see a return on that investment.
In the case of Steem Power, if a user wishes to convert back to the Steem base currency, he will have to wait for it to occur in 104 daily conversions.
The second smart contract is called Steem Dollars, which is also quoted in coinmarketcap with little variable value at $ 1
Scott explained:
"This is the block chain telling Steem Dollars holders that, at any time in the future, the platform will convert its Steem Dollars to a Steem value after a seven-day conversion process."
This seven-day conversion process is intended to minimize the ability to create arbitrage attacks by market timers. If the Steem Dollars were convertible into Steem immediately, a user could take advantage of a difference in price, convert their Steem Dollars into regular Steem and earn more than the $ 1 value of the smart contract meant for them.
Because this is a stable payment instrument, users who have Steem Dollars are not affected by the Steem price change. If Steem is worth $ 1 and this conversion took place, the individual would receive 1 Steem for each Steem Dollar he owned. If Steem went up to $ 2, the individual would receive 0.5 Steem for each Steem Dollar they owned.
To offset the blocked value, Steem Dollars grants interest. At the moment I am writing this, users who have Steem Dollars will earn 10% per year in interest, paid in Steem Dollars.
Rewards for writing and curing
There are two methods to win Steem in Steemit.
The first is to write a blog post. As blog votes accumulate, the amount of Steem that will be distributed to the writer will increase.
However, every vote in Steemit is not worth a fixed amount of money. Instead, the amount obtained is based both on the number of votes an individual receives and on the amount of Steem Power that a voter has.
For example, if a user had 1000 Steem Power and another had 10,000 Steem Power, it is clear that the latter has a more powerful account than the previous one. The effect of each of those two people who vote on a content is not the same; Specifically, the user with the vote of 10,000 Steem Power is worth more.
This has resulted in the development of a kind of whale-hunting culture, through which writers hope to convince the big owners of Steem Power to give them upvotes. A vote of Scott or Larimer is worth to increase the value of a post to hundreds of dollars!
To encourage voting, there is also the healing reward paid in the form of Steem Power. If a post likes and is of good quality, you gain more Steem Power, while bad content is rarely rewarded, which encourages you to vote and give more visibility to higher quality content.
Also, not all votes in the same account have the same value. Voting too many times a day reduces the strength of each of your votes depending on how much time passes between each vote. Scott explained the voting power by comparing it to certain videogames.
He said:
"It's a lot like the Diablo game or something you have mana in. What happens is, if you're casting a lot of spells, your mana drops and then regenerates over time. The same thing happens with the voting power. give your vote to who really deserves it, because you do not want to waste your voting power. "
Proof of delegated participation (proof-of-stake)
A chain of blocks without security is not something you can trust
Steemit obtains its security from a delegated participation test algorithm, developed for the first time for Larimer's BitShares project, which is a variation of the participation test. A true participation test algorithm, such as peercoin, is based on those that have the currency to verify transactions.
The more coins have a larger number of people, the more secure the network will be.
In a delegated test system of participation, the community votes for individuals, called witnesses, responsible for verifying transactions.
The easiest way to think about it is the proof of participation is true democracy, similar to that of ancient Athens. Delegated demonstration is more a democratic republic, like the United States. By that logic, the witnesses are like the congressmen, chosen by the community to be responsible for securing the network.
However, the analogy ends there, because witnesses can be expelled from their work for not doing it, something that in the US Congress. It is not seen very often.
Scott said:
"It's a paid position, we're not talking about periods of four years, we're talking about people with very specific jobs, which are producing and checking blocks."
there are 30 witnesses responsible for creating and signing transaction blocks each time a new block is made.
In the Steemit whitepaper, the authors write:
"This process is designed to provide the best reliability while ensuring that everyone has the potential to participate in the production of blocks, regardless of whether or not they are popular enough to be voted to the top."
New, but growing
From the stratospheric rise in value to more than 400 million dollars, Steem has been lowered to an approximate market value of 300 million dollars, but that still makes it one of the 15 largest cryptocurrencies
New, but growing
From the stratospheric rise in value to more than 400 million dollars, Steem has been lowered to an approximate market value of 300 million dollars, but that still makes it one of the 15 largest cryptocurrencies
While there are certainly detractors, the reality is that Steemit continues to see how more people get into the car and participate.
However, it is not simply Steemit as a social network, but also the blockchain itself that has experienced tremendous growth. Scott said entrepreneurs and developers have already created 50 different tools, such as Catch a Whale (which tracks where whales have recently voted) and SteemMarket (which allows users to buy, sell and rent goods with Steem).
Ned said:
"The people who show up to use the platform go directly to the block chain, we do not have the authority to tell them not to do it, we actually encourage it, what we set out to do is build an ecosystem, a community and that's exactly what what's going on"
However, if they stay or not as permanent users past the emotion, it is yet to be seen.
People who pay bills, buy washing machines and go on vacation with Steems are some of the stories that are told in Steemit. Steemit could have found a niche for content creators looking for ways to generate revenue.
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