Today, Steem’s market capitalization has settled in the vicinity of $294 million. One Steem is worth slightly more than one United States Dollar, and the currency remains a regular presence at the edge of the top 20 most traded digital currencies.
It’s a precipitous rise for a company that just 18 months ago existed only as an idea in the minds of its founders. More than $30 million worth of Steem has been distributed to over 50,000 users since its launch, according to company reports. It’s too early to know whether Steemit can hold onto its users’ interest and its market value. But its goal—upending a model built by social media giants over decades of use in favor of a more populist system—is significant in itself. By removing the middlemen and allowing users to profit directly from the networks they participate in, Steemit could provide a roadmap to a more equitable social network.
Or users could get bored or distracted by something newer and shinier and abandon it. The possibility of a popped bubble looms over every cryptocurrency, and the bubbles are filled with both attention and speculative investment. Steemit’s value is based on money that its founders have virtually willed into existence. Fortunes could vanish at any moment, but someone stands to get rich in the process.
The creators of Steemit didn’t set out to build a social network. When Ned Scott and Dan Larimer first spoke on the phone in mid-2015, having previously chatted online, they began dreaming up new applications for blockchains—the distributed, verified databases that back today’s wave of digital currencies. Scott, a former financial analyst, was fascinated by the economics that drive cryptocurrencies. Larimer, a computer scientist, already had cryptocurrency bona fides, having developed an ambitious exchange called BitShares.
At first, they were intrigued by the idea of using the hivemind trust of blockchain to create an insurance network. They wondered if they could incentivize a group of people to pool money, which could then be drawn upon by an individual in the event of an accident or emergency—a kind of libertarian backup plan.