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An In-Depth Guide to Steem 

 July 19, 2021

By  Brian Forester

This is a detailed guide on the Streem cryptocurrency. Read it to know all you need to know about this crypto coin.

Check with the table of contents for easier navigation across the article:

  • Introduction
  • Where does Steem come from?
  • What is Steem coin?
  • Steem coin market performance
  • What is Steem Dollars (SBD)?
  • What is Steem Power (SP)?
  • How Does Steemit Work?
  • Does Steem have any issues?
  • Pros and Cons
  • Conclusion
  • FAQs

Introduction

The past few years have seen a drastic growth of the cryptocurrency market. Today, the overall digital currency market capitalization has reached an insane peak of $365 billion. Among the most popular crypto coins is Steem.

But what are the reasons for Steem to be that popular? What drives this digital currency? What is its market cap? And, if we go to the very start, where does Steem come from, and how does it work? We will answer all these questions and more in this guide. We will take you through the history of Steem cryptocurrency to show you where and how it started, who stands behind it, what purposes Steem digital currency serves for, and how it performs in terms of functionality.

You will also learn about Steem coin, Steem Dollars, and Steem Power, which makes this guide a perfect place to start if you’re planning to join Steemit.

But whatever cryptocurrency you are willing to deal with, remember to use only trusted cryptocurrency exchanges such as Binance and make transactions using only high-quality hardware wallets such as Ledger Nano S, Ledger Nano X, or TREZOR. Keep your crypto coins secured and trade carefully!

Where Does Steem Come From?

The history of Steem begins back in 2014. That’s when the Steemit blockchain-based social media network comes into existence. Created by blockchain developer Dan Larimer (Bitshares, CEO), Steemit was pretty much like Reddit allowing users to post their content online and get rewarded for it. However, there is a significant difference that sets Steemit apart from all other social media networks out there.

Since Steemit is a blockchain technology-based network, it operates in a decentralized method. This is a fundamental feature that makes the network censorship-free with no such things as central control, downtime, data vulnerability, or data abuse. Thanks to this feature, Steemit users don’t have to deal with issues that are common for regular social platforms like Facebook or Twitter.

But there is another thing about Steemit – the platform uses cryptocurrencies to reward its users. This means that Steemit community members get paid for publishing their original content on the platform.

There are three different altcoins that the Steemit social media platform created:

  • Steem coin
  • Steem Dollars
  • Steem Power

In the following sections, we will delve deeper into each of the Steemit cryptocurrencies.

What is Steem coin?

Although there are three cryptocurrencies on Steemit, it is important to say that they are not equal. There is one dominant currency and two dependent ones. The dominant Steemit Inc. currency is the Steem coin.

Released in 2016, the Steem coin increases its circulating supply by 100% yearly. And there is no stopping it. Steem’s basic feature that sets this altcoin apart from other digital money is that new coins are not only created through mining – the Steemit social network creates new Steem coins itself each day and then shares them in the following manner:

  • Authors and curators accept 75% of the new coins;
  • Steem Power holders get 15% of Steem’s fundamental cryptocurrency
  • And finally, miners get the residue of only 10% of the overall volume as their block rewards

The fact that Steem is created on a daily basis and its circulating supply is not limited (unlike that of Bitcoin), the key financial advice in dealing with this cryptocurrency is not to hold it for too long. Customers can do the best thing to convert Steem coins to Steemit’s other currencies like SBD and SP or some other digital money. For instance, BTC or LTC.

If you want to know where you can buy and exchange Steem – check out the Binance crypto exchange service. The company has a long history and a solid reputation as one of the most trusted crypto exchanges. Another thing to think of is reliable and hacker-proof storage for your crypto assets. We would highly recommend checking out Nano S & Nano X hardware wallets by Ledger or a TREZOR hardware wallet. These two companies are undisputed leaders in their field, providing high-quality services.

  • We encourage you to do your own research for more information on cryptocurrency exchanges and hardware wallets for safer transactions.

Things to know about the historical Steem price events:

  • In July 2016, Steem became the world’s third most expensive cryptocurrency when its market cap peaked at $384.5 million. During the week, the Steem price was rapidly rising, resulting in a peak of $4.34 on 7/20/2016 – a significant growth in trading volume.
  • By November 2016, however, the Steem price dramatically sank to a $0.12 mark.
  • In January 2018, Steem reached a new peak of $7.28 per coin.
  • Later in 2018, Steem lost its position (like the majority of other altcoins). Sadly enough, Steem has not been able to regain its price and is not trading at around $0.25.
  • Because creating Steem is not limited in any way, the growing number of coins affects the Steem price in a negative way.
  • That is why Steemit company decided to create SBD and SP as supporting currencies.

What is Steem Dollars (SBD)?

Another digital currency on the Steem blockchain is Steem Dollars (SBD). Unlike Steem coins, SBD is more stable. Its exchange rate towards USD is 1:1. This means that with one US dollar, you can buy 1 SBD or the amount of Steem that is equal 1 SBD.

However, there was a dramatic rise in price when SBD skyrocketed to the mark of $13. It happened in November 2017. Sometime later, the price was regulated, and now it manages to stay around $1.07.

Almost 50% of the creator/curator payment is made in SBD. That is because SBD is stable, and this measure will protect members against the Steem price changes. You can also trade SBD on a number of exchanges, as well. The current SBD market cap is slightly over $600 million.

Here’s a piece of financial advice for you:

  • If you choose to hold SBD for a long period of time, you will earn a 10%-interest each year.

SBD can also be withdrawn through converting to Steem or Bitcoin and then converting to one of the fiat currencies. Or you can choose to exchange SBD for SP, which is the third currency within the Steem blockchain. More details on this currency below.

What is Steem Power (SP)?

SP is a token within the Steemit community that shows how much of an influence a user has on the platform. With enough SP tokens on an account, a user will have more weight in voting with the ratio of 1:1.

Here’s an example: if your account has 200 SP, then your vote is 20 times more influential than a vote from an account with 10 SP. And this is what a Steemit beginner must keep in mind when becoming a part of the community since voting results affect compensations. This works the following way:

  • You would receive more money for a post or a comment if it was upvoted by a user with more SPs.

And one more thing about voting: you cannot vote at all if you have no SP tokens.

Here’s more of what you need to know about SP:

  • SP is an in-platform long-term investment;
  • You can only sell SPs after you’ve been holding them for the minimum time span of 13 weeks;
  • You cannot trade SPs on crypto exchanges;
  • Contributors accept half of their payments in SPs;
  • You can withdraw SPs by converting them to Steem;
  • Large amounts of SPs make you more “powerful” within the platform and add to the functionality of your account.

How Does STEEMIT.COM Function?

When Steemit started, it was conceived to be not like other social media platforms. What makes Steemit unique is that its users are actually rewarded for posting. Payments come in the form of in-platform currencies.

But only creators receive payments within the platform. Another important part of the community is curators. They are users who make their contributions by upvoting and evaluating the network’s content. For doing so, curators also accept payment.

Although the platform is decentralized, it still has some sort of inner set of rules that regulate the community – Steemetiquette.

For instance, here are some of its key points:

  • Users are welcome to cite sources and give credit;
  • Creating original content is encouraged more than just copying something someone else had posted – this, creators of original posts get more rewards;
  • Rewarding spam and “undesirable” content is not appreciated.

With its technologies and inner etiquette, Steem aims to create a fully decentralized environment for users to be in charge of everything that is going on within. Users ger to decide what kind of content deserves rewarding, how they should encourage good behavior, and how to run the community in a positive and productive way.

Does Steem Have Any Issues?

One of the major reasons for the Steem price skyrocket in 2017 is that Steem offers a genuinely appealing concept – it offers its users to create a unique set of options that are not present in any of the other social platforms.

However, sometimes advantages tend to have two sides. The Steem case is no exception since the platform does have some issues worth mentioning. If the company does not find its way with the issues we will cover in the following subsections, it risks turning its groundbreaking platform into another great idea that failed. So what are those issues?

The voting issue

We will start with the voting procedure since it is directly related to how users earn their Steem coins. And the issue is that one can easily create a voting spam bot. What makes the whole situation even worse is that the company itself made its bot fighting measures publicly open. It is a no-brainer that with such data, it is very easy to make a bot that will look just like a real-life Steem user.

Comparing what Steem did with Reddit’s grave measures, it is fair to say that the Dan Larimer creation still has a lot of work to do.

The cash issue

Financially encouraging users to contribute to the network is, let’s be honest, a good idea. But at the same time, it comes as a big downside, too. The reason is that after some time of receiving revenues for posts and comments, users will look at sharing information as only a means of earning some crypto coins. And that is when a good idea becomes just another market startup.

When Dan Larimer created the network, it was conceived as a cool place for people to gather online and engage in a sort of data-sharing competition. But now, the whole thing has become a source of income which affected it in a negative way.

Community members no longer just share information – they make money by posting something that will earn them as much as SP-supported votes possible. But that’s just half of the problem. The other half is that some people will choose to go all the way down for their own good by engaging in frauds and doing whatever it takes to promote their content.

Sadly enough, the same goes for curators.

Many of them don’t look for posts that are good, informative, etc. – instead, they will only look for articles that will get the most votes. Thus, curators only seek to boost their own market cap.

And this leads us to an obvious conclusion:

  • Monetization destroys the main purposes of whatever you choose to do. Money is never enough. So when you decide to boost your income, you will most likely lose the very idea of why you chose to do what you’re doing in the first place.

When sharing data becomes a subject to rewarding, then a user starts to share only for the sake of making money through it but not because they want other people to see something really interesting, inspiring, etc.

When commenting becomes a source of income, then a user will begin commenting on something that they think will make more cash for them.

But, of course, we must stress that no all Steem users are like that. There are still many fair members. But at the same time, Steemit has drawn a lot of narrow-minded people who only regard it as a means of making more cash. And with such a mindset, you know some people will not feel uncomfortable in crossing certain lines.

The plagiarism issue

Finally, there comes plagiarism as the third issue that STEEMIT.com has to deal with.

There are cases when potentially successful stories get ignored by the wider audience. But then those original posts get duplicated – plagiarized – by other users and then upvoted by curators and those with a lot of SPs. Many curators just don’t care whether the story they are promoting is original or not – they only care to promote successful content just for the sake of the market cap.

What the situation does is making the network uninteresting for originally enthusiastic users – the ones who make the best out of it are pro-market technologists or bot makers.

In the nearest future, this whole situation will result in a unique content deficit. And that is something that can destroy Steem from the inside resulting in a massive downfall of Steem price and the whole blockchain.

Pros & Cons

Pros

  • Steem is used as a financial fundament for a blockchain-based social media network.
  • Steem is a part of an innovative social media startup
  • This is a stable digital coin

Cons

  • Not suitable for long-term investment plans
  • Steem’s circulating supply is unlimited, which does not let its price go too high since it is much easier to get than most other altcoins.

Conclusion

While Steem is hardly as popular as Bitcoin or Ethereum, this cryptocurrency is fast, free, and scalable. But what makes Steem prominent is that it is a part of an innovative social media ecosystem called STEEMIT.com, a blockchain-based social network with a user-reward system.

Created back in 2016, Steem has seen good and bad times and now boasts a market cap of almost $340 million. Today, you can buy and sell Steem on a number of exchanges, including Binance. Steem supports trading for other altcoins that you can later convert to fiat currencies. When you buy Steem, you can keep them on software or hardware wallets by Ledger (Nano S, Nano X) or TREZOR.

Because of an unlimited circulating supply, Steem does not experience dramatic price rises like many other altcoins. But at the same time, this makes Steem relatively stable.

FAQs

Is Steem a good investment?

Being part of an innovative ecosystem, Steem is a popular and potentially profitable altcoin. There is a high chance that Steem is yet to meet growing demands and trading volume increase. Having a market cap of almost $340 million, Steem is considered to be a good investment. However, for more detailed advice, address your financial advisor.

What is SteemKR?

SteemKR is a subdivision of the Steemit network created especially for the Korean community. On SteemKR, people are paid for their posts and post upvoting.

How to get a free Steem coin?

People can earn Steem coins by doing certain online tasks like watching videos, inserting data, installing apps, taking part in surveys, taking up online jobs, etc. This is all available on a number of websites. One of them is earncrypto.com. On this site, you can choose among a variety of tasks to engage in and receive Steem for payment.

How does STEEMIT.com pay?

Steemit.com pays two parties – content creators and those who upvote posts and share them. Payment is made in a 50/50 ratio, with one half of payment processing in SBD, and the other half of payment is processed in SP:

  • SBD is a social network’s sub currency that supports trading it to Steem or Bitcoin with the subsequent conversion to a fiat currency. SBD is a stable altcoin with a total market cap of nearly $600 million.
  • SP is a local token used on STEEMIT.com to gain more influence within the social network.

Brian Forester


Brian is an experienced journalist and crypto enthusiast. Founder of CryptoCurry - famed for his insightful input on the future of cryptocurrencies and blockchain technologies.

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