Steem Money: Where Does It Come From?

So, Welcome and today we're going to talk about where does the money in steem come from? There's been a lot of concerns from new users coming into the platform. They're suspicious about how this platform works and they're wondering how is the platform able to pay out so much money to the new content providers. So, there are basically three ways that you can think about how new money is created in steemit.

one way is to think of it like Bitcoin, where they issue new bitcoins and
another way is to think of it like a company issuing new stock and
the third way is to think of it like a fee on the users who use the steem currency.

issuance of new bitcoins.jpg

Issuance of new Bitcoins
So, the first way you can think of money creation in steemit is to think of it like the way Bitcoin creates new money to pay for the miners who secure the Bitcoin network. The way Bitcoin pays its miners is to issuing new currencies. It issues new bitcoins every 10 minutes and it pays this to the people who operate the network. So, the money is created basically out of thin air but according to a certain algorithm and the people who participate in the network and secure the network get this reward. Bitcoin has been in existence since 2008 and many people were sceptical that this system of creating the new currency and paying the people who sustain the network would actually work as an economic system but in the last eight years, Bitcoin has proven that this system works. Bitcoin is now a ten billion dollar industry and steemit aims to take this economic model of issuing new currencies to the users who participate in the system and apply it to a social media network. So, the way steemit does this is instead of paying the miners who secure the network like in bitcoin, steemit pays the people who post, comments and upload contents.

issuance of new stock.jpg

Issuance of new stock
Another way to think about the money creation in steam is to think of it as a new company. A new company can issue new stock, basically created out of thin air to pay for workers, investors and stuff that the company needs. So, steemit
has its own currency called steem and you can think of steem as a sort of stock in the steemit platform. When you hold this stock, you are exposed to the appreciation of the value of the whole social platform and the platform as a whole can issue new shares to pay for the people who post, upvote and comment on contents.

Fee on the users who use steem currency.jpg

Fee on the users who use steem currency
Another way to think of money creation in steem is to think of it like the fee on the users who use the steem currency. The steem currency is basically diluted a little bit each year to pay for the new content and the money is taken from the people who use the steem currency or speculate in the steem currency.

So, these are some of the ways I use to understand how the steem platform pays its users for content, upvotes and comments.

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