Hi Steemians, lets talk about where the money in Steemit comes from. There's been concerns from new users about the Steemit platform. They're suspicious about how this platform works, and they're wondering how Steemit is able to pay out so much money to content creators, so lets get right into it. There's basically three ways that Steemit generates money.
One way is to think of it like Bitcoin, where they issue new bitcoins. The other way is to think of it like a company issuing new stock. The third way is to think of it like a fee on the users who use the steem currency. 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 secured the Bitcoin network. The way Bitcoin pays its miners is to issue new currencies. Bitcoin issues new bitcoins every 10 minutes, and it pays this to the people who operate the network. The money is basically created out of thin air. According to a certain algorithm, the people who participate in the network get this reward.
Bitcoin has been in existence since 2008. Many people were skeptical that this system of creating new currency, and paying the people who sustain the network would actually work as an economic system. Fortunately, for the last eight years Bitcoin has proven that this system works. Bitcoin is now a ten billion dollar industry. 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.
Steemit can pay people who post comments, and give companies another way to think about money creation into steem. I think about it like a new company, who can issue new stock created out of thin air to pay workers, investors, and stuff that the company needs. So Steemit has its own currency called Steem. You can think of steem as a sort of stock in the Steemit platform. So when you hold this stock you are exposed to the appreciation of the value of the social platform. The platform can issue new shares to pay the people who post a comment.
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