A social network Steemit, based on blockchain, became popular on the beginning of July, after it paid off its first users around 1.3 million dollars. At that time the value of its main token Steem has increased for more than 15 times, and the capitalization reached 352 million dollars, letting it take a third place among the cryptocurrencies.
Reward for publication
Why has one more social network attracted high attention of the public? In the first place, because this resource pays its users a reward for the unique content and its support. One more important fact is that all articles are stored in blockchain, which excludes the possibility of censorship.
The system of tokens
The system of Steemit token is quite tangled. Let’s try to look at it in detail. The basis is a currency Steem, which is a typical token like Bitcoin, Ethereum, and other crypto-currencies. After buying Steem, it can be exchanged to Steem Power (SP) or to Steem Dollars (SMD).
It should be done to reduce the effect of value loss in the long term perspective. The thing is that one is recommended to own Steem tokens for a short period of time, when they have high liquidity. Steem money supply constantly increases of 100% per year. If one keeps Steem without converting it to SP or SMD, one loses around 0.19% of its value every day.
Steem Power
Steem Power is used in the social network system and allows to vote for the articles one liked. It works on the following principle: the more SP you have, the more important is your vote.
Steem Power was implemented by the development team with the aim of attracting long term investments in the project. The project creators explain this by the importance of such investments for the startups, and by the wish to protect from the speculators, who withdraw money, trying to earn on the short term fluctuations of token price. That is why one can convert an SP back to Steem in 104 weeks by equal parts. The correlation of Steem to SP is 9:1, however, it is assumed to be a bit bigger during the increase of Steem money supply.
Steem Dollars
As for Steem Dollars, it is a stable debt tool, which promises to give back a certain amount of Steem for the sum of $1 in the future. If Steem costs $1, the owner of 1 SMD will get 1 Steem. If the price of Steem is $2, 1SMD will bring the owner 0.5 Steem.
The process of SMD withdrawal lasts seven days. It is done with the purpose to minimize the possibility of speculation of the rate fluctuation and earn more than it is provided by a smart-contract. 10% per annum for SMD owners are aimed at compensating this inconvenience.
How it works
So, you’ve published an article on Steemit. Other users can vote for it, raising its ranking. The users’ votes have different value, depending of number of SP they own. The more votes the article has, the more earn the author and the users who vote for it and actively comment (they are called curators). The end reward is distributed the following way: 75% for author and 25% for curators. Half of reward is paid in Steem Power, and half in Steem Dollars.
One must remember that the published articles are stored in the blockchain, so they are impossible to delete. So one should think twice before publish something in the social network.
Competition
The time will show whether this quite bulky system of voting and getting reward for the unique content is viable. The idea of social networks, based on blockchain, is undoubtedly perspective, the competitors are hot on Steem’s tail, for instance, Yours, which is still in development.
