Confused about Steemit? I was/am. So I decided to create a FREE course on it for Minnows.
Here is my explanation of a question I get asked all the time about Steemit: "Where does the money come from?" People are incredulous about money being made from nothing ... (Even though money has been made from nothing for years. Haha!)
So, let's start with a few definitions ...
What is Steemit?
Steemit is a social media and blogging platform that pays users for posting content.
So, you do what you already do on Facebook, on Instagram, or on LinkedIn, etc. – you post content, you share content, and you comment. However, Steemit PAYS you for that. Sound interesting? Read on, it gets more amazing.
How Steemit works – What is the blockchain?
Steemit leverages a revolutionary new technology called the blockchain.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016)
I would call it a constantly expanding database or ledger that’s housed on multiple machines around the world. So it’s distributed. The beauty of being distributed means that no third party or centralized authority is necessary to validate anything.
The blockchain is the technology that underpins Bitcoin – the first ever cryptocurrency. So, in the case of Bitcoin, no third parties (banks, governments, exchanges, etc.) are needed to make transactions – no bank fees, no exchange fees, no central banks, no uncertainty over government interference with the money supply, etc.
And similarly with Steemit, no centralized authority (Facebook, Instagram, YouTube, etc.) is needed. So no ads, no selling of your personal information, no censorship, etc.
The protocol that runs Steemit is the Steem blockchain protocol. Steem is the currency; Steemit is the social media and blogging platform.
The Steem blockchain protocol, in addition to being able to store value ($$$), can also store content. Users are rewarded for creating content, curating content, and even commenting on content with the cryptocurrency Steem.
There are no ads, so where does the money come from?
The Steem protocol, just like that Bitcoin protocol, creates money out of thin air. If that sounds scammy or strange to you, that’s fair enough. However, in this way, there is no difference between cryptocurrencies and US Dollars or any other currency.
Since the decoupling of the US dollar to gold by Richard Nixon (or "Tricky Dicky" pictured above) in 1971, a system of national fiat currencies has been used. The word “fiat” derives from the Latin meaning “let it become”.
Since the cost of producing any denomination of a national currency is negligible, all money is in fact created out of thin air. However, people believe in a currency’s value. So a US dollar is worth what it is. People prescribe monetary value to precious metals, stone, beads, shells, etc. Human beings have been using money since before they started writing history books.
It’s the same with cryptocurrencies: their value is derived from how much people believe in them, or are prepared to pay for them. Bitcoin, Ethereum, Steem, and all the other cryptocurrencies are traded everyday. Their values go up and down according to the irrefutable laws of supply and demand.
Cryptocurrencies are particularly volatile but above you can see above that 1 Steem token is, at the time of writing, worth roughly $1.50.
If you liked this, you may like my new FREE course!
The Complete Steemit Course: Earn Cryptocurrency For Free
If you enjoyed what you see here, make sure you follow me on Steemit and share in the rewards! https://steemit.com/@robcubbon