This is not unlike the AGPL.I don't personally agree that the restriction for use only on this Steem Blockchain causes it to be non-free software.
I don't agree. AGPL places no restriction on the freedom to make unrestricted modifications and especially to use modified versions (including those modifications you make yourself). This is the very essence of the freedom to which free software refers. AGPL requires that if the software is modified and used by others, the modifications (source code) be made available to those who use it. This is a completely and utterly different form of restriction from one on modifying and using yourself, or on certain forms of modification being made at all without permission from a unique named party.
Please refer to Four freedoms.
Steemit's license satisfies only two of the four freedoms.
Alternately you may refer to Debian's desert island test. A castaway on an island would not be permitted to make and use modifications as he sees fit (for example if the requirements of the island required forking the blockchain to better support coconut transactions or perhaps more realistically to allow the software to continue to be used at all given that a majority of stake, presumably external to the island, could not witness blocks produced on the island and therefore the chain would halt) because he would be unable to contact Steemit Inc. to obtain permission or have Steemit Inc. "recognize" his island fork.
There is no reasonable definition of free software by which software which requires permission from a unique designated party to make certain modifications or to use those modifications can be properly described as "free software". It is frankly a bastardization of the term and downright Orwellian to claim that requiring permission from the developer of the software is free software; that is exactly the sort of needing-permission that by its absence defines free software and directly motivated the concept.
Everyone has freedom to modify as they see fit - except the genesis block. That is not an undue restriction, in our view.
Notwithstanding that this restriction itself is contrary to free software by definition, if that is the intent then please clarify this. In the past a situation arose where a non-Steemit developer was unwilling to release a modification which implemented a fork to be voted by witnesses (which did not modify the genesis block).
The restriction on using the software "with forks" of the blockchain unless those forks are recognized in writing by Steemit Inc would seem to apply to hard forks or soft forks that are adopted by witnesses. If it does not this should be made clear in the license.