A Beginner’s Guide to Steem

WHAT IS STEEM?
Steem is a custom blockchain responsible for rewarding content creators and site participants of steemit.com. Through a complex algorithm, the site’s participants, content creators, and miners receive some combination of payouts from the platform’s three currencies: Steem (STEEM), Steem Dollars (SBD), and Steem Power (SP).

Steemit.com has grown tremendously since launching on July 4, 2016, now recording close to 1 million unique users daily and about 10 million unique users monthly. While much of the content on the platform is related to cryptocurrency, there have also been a number of very popular accounts dedicated to topics such as gaming, travel, lifestyle, and artwork. The unique and highly incentivized nature of the platform has caught the interest of thousands of content creators, including individuals both highly involved and completely oblivious to the overarching cryptocurrency community.

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%.

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.

PRICE HISTORY
Shortly after the launch of Steemit.com, STEEM saw a massive explosion in price, touching a market capitalization of almost US$400 million in mid-July 2016. During this period, STEEM was the third highest valued cryptocurrency, behind only Bitcoin and Ethereum. However, this massive explosion brought out a number of inherent flaws in the system. Most importantly, a handful of Steem Power whales had almost complete control over the distribution of coins and direction of content, as the weight of their holdings gave them total power to vote any post to the top, thus rewarding the poster (oftentimes themselves) with thousands of dollars worth of Steem and Steem Dollars.