Steemit is a blogging and social networking website on top of the Steem circlechain database. The Steem blockchain produces Steem and Steem Dollars which are tradeable tokens users obtain for posting, discovering, and commenting on interesting content.[2]
Steemit, Inc is a privately held company based in New York City and headquartered in Virginia. The company was founded by Ned Scott and Dan Larimer, creator of BitShares, and EOS.[3][4]
On July, 4th, 2016, Steemit, Inc officially launched Steemit, a social media with virtual currency rewards that runs over the Steem blockchain. On July 1, 2016 Steemit announced on their website that they were hacked. The attack, according to them, has compromised about 260 accounts. A little less than US$ 85,000 worth of Steem Dollars and Steem are reported to have been taken by the attackers.[5] On March 15, 2017 Dan resigned as a head of technology and a marketing team was announced with Mitchel Loureiro (@zuvarnic) and @andrachy. Frank Rimalovski, Andrew Haines and William Mougayar (@wmougayar) are advisory board members while @cass, Jeffrey Paul (@sneak), James Calfee (@jamesc) and Valentine Zavgorodnev (@val-a) are a few of the staff members.
Concept[edit]
The Steemit concept was described in the companies white paper, released in March 2016.[6] The general concept is similar to other blogging websites or social news websites like Reddit, but the text content is saved in a blockchain. Using a blockchain enables rewarding comments and posts with secure tokens of value. Images can be uploaded and hosted on Steemit. Other multimedia content must be embedded from other web hosts. For formatting, there is a WYSIWYG editor. Users can also opt to use Markdown formatting with HTML elements.
User accounts can upvote posts and comments, and the authors who get upvoted can receive a monetary reward in a cryptocurrency token named STEEM and US dollar-pegged tokens called Steem Dollars. People are also rewarded for curating (discovering) popular content. Curating involves voting comments and post submissions. Vote strength and curation rewards are influenced by the amount of STEEM Power held by the voter.[4]
Steemit has a reputation system, where new accounts start with a reputation of 25. An account's received votes can influence its reputation up and down, incentivizing online etiquette and interaction with the community.
3rd party applications[edit]
Steemit includes third-party applications, such as d.tube a decentralised video platform based on the InterPlanetary File System (IPFS) protocol. D.tube is similar to YouTube, but without advertisements, instead uses the built-in Steem currency which gets awarded by users upvoting videos.[7]
Monetary system[edit]
The Steem blockchain has two tokens: STEEM and Steem Dollars. There is also a vested or stored interest known as Steem Power. Steem Power is strictly for internal use in the Steem community, while the tokens are used for stored value and trading.
Steem[edit]
Steem is based on the Smart Media Tokens (SMT) protocol, developed by Steemit. As of December 2017, CoinMarketCap.com listed Steem with a $475 million market capitalization, and ranked Steem tokens 32nd of 1,358 cryptocurrencies. User actions, such as upvoting facilitates Steem's Proof-of-Brain algorithm, which also factors in the Steem Power a user holds, to provide incentives for content creators and the community by transferring small amounts of the Steem token currency.[8]
Steem began with a highly inflationary supply model, doubling roughly every year.[4] However, due to community demand, on December 6, 2016 the inflation rate of Steem was changed to 9.5% per year, reducing by 0.5% per year.[9]
Usage and media coverage[edit]
As of Nov 2017, there are more than 450,000 Steem accounts.[10] After an initial public beta for which no payments were made, the hard fork on July 4th, 2016, saw $1,300,000 of STEEM and Steem Dollars paid out to Steemit users.[11] According to company reports, since October 2017, $30 million were paid out to over 50.000 users.[12]
The exchange rate of STEEM compared to Bitcoin rose continuously during July 2016, peaking at a price of over 4 US dollars.[4] 20th of July 2016, Steem had a first notable peak of market capitalization with about 405 million US dollars.[13] As of December 16th, 2017, its market cap is 525 million US dollars.
Steemit was described as a novel and "disruptive blockchain-based media community" by Adam Hayes (Investopedia) in July 2016.[4] It got media coverage in cryptocurrency- and business-related media.[14][15] Author Neil Strauss, a Steemit member, wrote an article for Rolling Stone calling its reward distribution "particularly clever" and echoing the sentiment of its disruptive potential.[16]
Andrew McMillen explained in Wired Steemit's function being rooted in transparency with every vote and transfer being viewable to the public from upvotes on posts to wallet transfers. Unlike most digital currencies which are difficult to access for the majority of the world without any money to invest, Steem removes the friction for the average person to join in the cryptocurrency world by allowing earnings via posting without needing to buy in first.[12]
Criticism[edit]
Joe Lee, co-founder and CIO of digital currency trading platform Magnr, told CoinDesk. "Whether Steem succeeds as a digital currency will be more a reflection of Steemit’s success as a platform as opposed to the economics of the coin itself. This is a good example of a digital currency whose value will be closely affiliated to its utilitarian value as a social networking and sharing platform."[17]
“I’m skeptical about 'appcoins'/'appchains,' and Steem is very much one,” stated algorithmic trader Jacob Eliosoff.[17]
DecentralizeToday had an article published giving an overview of the platform and blockchain pointing out how the developers consciously relaunched the currency to assure centralization, even quoting Tone Vays calling the system a Ponzi Scheme [18]
The Steemit Blog operates on the anarchist principles of self governance and community policing. While a novel concept it has opened the doors for abuse through vote selling and potential bullying by wealthier members of the site that use their influence to set policy, control and censor content at will.
STeemit has in some instances allowed for the inclusion of bad content due to lack of moderation, quality control and unified governance. This has led to instances of child pornography[19] being uploaded to the site.
Quality control deficiencies and lack of moderation in combination with vote selling abuse has created a free market of pay for exposure regardless of content quality. Steemit blog was originally brought forth under the ideals that the best content would be promoted based upon user curation. An excellent ideal that in theory would serve to continually better the site; however, this has failed to some degree with the inclusion of vote selling bots. As a result in many instances highly upvoted content on the site is spam in the form of Youtube Video links, stolen images, Google news links etc. promoted through the use of vote selling bots.