A friend wanted to know more about how Steemit works, so I decided to write post about it. Please let me know if I have got anything wrong and feel free to mention what I have missed out.
What is Steemit?
Steemit is a social blogging site. You post anything from a single line with a picture to a full length blog with fancy formatting and lots of pictures. People can comment on your posts if they have joined up. They can also vote on them and that can make you money!
How is Steemit different?
There are other sites that say they can pay users. I was on Tsu that did this until it folded. The immediately obvious difference with Steemit is that there are no ads. Just about every site out there uses advertising to cover their costs. Some will pass some of that onto the users.
Steemit also decentralised. The Steemit web site is just one way to access the content that is stored in a blockchain. A blockchain is a sort of audited database that anyone can have a copy of. As long as someone has it the data cannot die. The blockchain is maintained by people called witnesses. They have computers on-line that check that all updates are valid and can get rewarded for doing that to cover their costs.
What's so great about a blockchain?
As I said above the blockchain doesn't require some company or organisation to keep it running. This is how Bitcoin also operates. The Steemit blockchain contains all the user accounts, their posts, comments, votes and financial transactions. Each item is digitally signed by the account that created it. It is not feasible to fake a transaction, so we can trust the data. The witnesses will check for any attempts at fraud. Even Steemit Inc cannot override this. They have some control over the direction of how Steemit develops. They provide this web site and I assume they earn enough to cover the costs.
What can you post?
You can post just about any sort of content. There's a post editor that allows for some formatting options or you can write directly in Markdown which allows more control. You can use some HTML features to enhance this further. Originally you had to host images elsewhere, but they can now be uploaded directly in a post. They are not stored in the blockchain, so I assume there could be issues if the place they are hosted crashed.
Posting videos from Youtube and some other services is as simple as pasting the link.
You can see this post is pretty long. The editor does save a draft, so you are pretty safe if your computer crashes.
How do you earn?
You earn from your posts if people vote on them. The amount depends on how much 'Steem Power' (SP) the voters hold. A new user may be able to grant you a cent. A 'whale' (who has a massive amount of SP) can grant you many dollars. This is paid out after seven days. A quarter of the post value goes to those who voted as a 'curation' reward. They are highlighting the good content. What they get also depends on their SP and also the timing of their vote. If you can get your vote in before a whale sees the post you can make more.
Comments can also get voted up to earn something.
These is also a facility to earn interest on your earnings, but I don't think this is giving anything significant at the moment.
Where does the money come from?
You do not get paid in US$ or any other national currency. The currency of Steemit is called Steem. It is very similar to Bitcoin in that it is created at a steady rate. Whilst the 'mined' Bitcoin is awarded to those with massive computer farms who do hard calculations the Steem is shared out to users in the author and curation awards.
The value of Steem depends on what the market decides. Cryptocurrencies are traded all the time. Steem has value because holding it can earn you something here. It's also a useful currency to buy things with. Unlike Bitcoin transactions are free and almost instant. They are less anonymous as anyone can check which accounts have had transfers between them, but that may not be an issue for most people.
The Steem price was over $4 in the very early days and has been down to about 6c. It's currently floating somewhere in between. Bitcoin is so dominant that any change to that affects all the other coins too. In time the usefulness of Steem may be more appreciated and more people will want to have some.
What about Steem Dollars?
I'll confess I don't fully understands the intricacies of finance, but Steem Dollars seem intended as a more stable currency that's more useful to those wanting to buy and sell goods or services. Your rewards can be split between Steem and Steem Dollars if you want. Depending on the state of the market this may give your rewards a higher dollar value. There's an internal market that lets you exchange between them.
And Steem Power?
Steem Power (SP) is a special form of Steem that is locked up. It affects the power of your votes, but you cannot just withdraw it. If you choose to 'power down' to Steem that can be instantly transferred then your SP moves to Steem over a period of 13 weeks with an equal amount each week. You can stop this at any time, so if you needed funds you could power down for a week or two.
How secure is this?
You do not want anyone stealing your valuable earnings. Steemit has several levels of password. These are automatically generated long strings of random characters. The three you need to know about are:
- Posting key: This is what you want to use day to day. It allows you to post, comment and vote. You cannot transfer funds with it.
- Active key: This can transfer funds and let you change your settings. You should only log in with it when you really need it in case someone else accesses you computer. I suggest using a password manager with a secure master password to keep it safe.
- Owner key: This one needs to be kept really safe as it lets you change the other keys. I've not used this one since I joined up.
How do I join?
When I joined Steemit you could verify your identity with a Facebook or Github account. Now you need to use an email account and a mobile phone number. There's then a manual process that may take a few days. I hope this can be automated to speed up the process. There are issues if people can just create as many account as they like. They can be used to spam the system, but they also use up the available Steem as each account needs at least a small amount to operate.
When you do join make sure to put your keys somewhere very safe. It may be possible to recover them, but do not assume you can. You can even print them out and put them in a safe.
There are some options to buy an account. This can allow you to be more anonymous.
How do get my money out?
There are very few places you can spend Steem at the moment, so you may want your funds in some other form. Steem and Steem Dollars are traded on various exchanges, so you can get other cryptocurrencies for them. Depending on your location there may be services that will convert these to cash. What I've done is to get a debit card from Bitwala that can be funded with Bitcoin. I just buy some Bitcoin with my Steem at the current rate and can then spend it anywhere. There are fees for that, but it's convenient.
What else does this platform offer?
The main Steemit site is not the only place you can access the blockchain. Busy and ChainBB offer alternatives with some different features such as private messages (that are not using the blockchain).
There are also some mobile apps such as ESteem.
The open nature of the data has led to a massive ecosystem of tools. There are lots of ways to get extra statistics about your account and Steemit in general. People are providing services to automate your votes or to borrow some Steem Power for a fee.
A controversial area is 'bots'. These are basically pieces of software that operate on the blockchain. Some may just read the data or them can automate transactions. Some people don't like them posting and commenting. They can be used for spam, but there are also some that look for plagiarism and other abuse to highlight it.
As Steemit Inc do not have special rights they do not moderate the system (although they could do this with their massive SP). You can vote down a post or comment (aka flagging) to reduce the reward. If a post is flagged enough it will be hidden by default. Each account has a 'reputation' that is enhanced by up-votes and damaged by flags. If it sinks low enough them everything you post is hidden by default.
There's a convention that 'adult' material be tagged with 'nsfw' so it will be hidden by default depending on account settings. The site is not really suitable for young children as it is so unregulated. Most social sites have a lower age limit, but this is hard to enforce.
What issues are there with Steemit?
Nothing is perfect. Steemit cannot fully replace what some social sites offer. Nothing is private here, so you cannot share a post with just specific people. There is the occasional flagging war over various disagreements. The sign-up process can be slow, but it may be being limited whilst the service is still under development. There are under 300,000 users and it may not be quite ready for millions.
Further information
You can find more in the FAQ, Quick Start Guide and Wiki.
Closing words
I think that's enough for now. I welcome comments and questions. I can try to help or others may chip in.
Steem on!
I'll buy guitar picks for Steem Dollars
If this post is over seven days old you can vote up one of my newer posts to reward me.