Beginner’s Guide to Steem

HOW DOES IT WORK?

The distribution of the three currencies mentioned above incentivizes all participants in the network – from visitors to miners and creators. Similar to Bitcoin, Steem’s blockchain is based on a Proof-of-Work (PoW) algorithm. However, it differs greatly in the distribution of the mining rewards. Unlike Bitcoin and many other PoW coins, only 10% of Steem block rewards are awarded to miners. The remaining 90% are distributed among two groups: content creators, which include original posters along with thread commentators, and holders of Steem Power. Content creators receive 75% of all minted coins, and SP holders are granted the other 15%. The current inflation rate of Steem is 9%, and will decrease by .5% every year until the rate reaches .95%.
Steem Power is the main component that drives the system, as the worth of content is decided by voters who hold Steem Power. Steem Power acts as a locked variant of Steem. When users “power up”, they are transferring their Steem funds to SP at a 1:1 ratio. To power back down, they must enter a “power down” phase, wherein Steem Power is converted back to Steem, with one-thirteenth of the SP being unfrozen once a week over a 13-week period.

Users are rewarded for powering up to Steem Power because it gives weight to their voting. Each Steem Power holds an equal amount of weight, so a vote from a user who holds, for example, 100 SP carries ten times the influence as a vote from a user who holds 10 SP. The larger the weighted vote (the number of votes multiplied by the influence of each vote), the more compensation the comment or post receives.

Rather than keep investments as liquid Steem, supporters of the platform have an incentive to lock up their holdings as illiquid Steem Power because they are rewarded, first and foremost, with 15% of the newly minted supply. Beyond this, SP holders play the role of determining what content gets rewarded. The better they are in rewarding better content, in theory, the greater their investments will be worth, as more people will interact with the platform and invest in Steem if better content is shared.

Lastly, content creators share 75% of generated coins. The amount earned is distributed partially as Steem and Steem Dollars, and is directly proportional to the number of votes they receive. Content creators are encouraged to share fewer, high-quality posts rather than a slew of garbage, as compensation is entirely based on community reception, with each post earning a base amount of $0.
EMPOWERING USERS

STEEM is different from most other cryptocurrencies in that users do not need to sacrifice money or hardware to earn a significant profit. Anyone who puts in the time and effort to contribute meaningful and interesting content has the ability to potentially earn thousands of dollars. Top posts have earned more, reaping rewards well into the five figure range. Such posts can encompass any and all topics; well-received posts in the past have included everything from make-up tutorials to chalkboard cryptocurrency analyses.

Furthermore, crypto knowledge is absolutely not a requirement to use the platform or be successful. Becoming an active member on Steemit.com is as straightforward as running your own Tumblr blog or Medium account. Anyone with the knowledge of or desire to blog is invited to join the hundreds of thousands of individuals actively participating on Steemit right now.