Getting to Know Your Social Media Coins: Steem (STEEM)
May 11, 2018
Quantamize Crypto Products
Key Highlights for Steem (STEEM)
- Steem (STEEM) is a blockchain database that supports community building and social interaction with cryptocurrency rewards
- The fundamental unit of account on the Steem (STEEM) platform is STEEM, a crypto currency token.
- Steem (STEEM) attracts capital investment into the network via debt and equity. These different asset classes on the network are called Steem (STEEM), Steem Power (SP) and Steem Dollars (SBD).
- Steem’s (STEEM) blockchain produces approximately 700 STEEM per minute (as of Summer 2017)
- Approximately USD$40,154,371 worth of rewards have been paid, 920k Steemit accounts have been created, ~1.50mm monthly posts and ~3.78mm monthly comments have bene made since inception
Steem (STEEM) is the 33rd largest cryptocurrency by market capitalization, currently valued at ~USD$875mm. One Steem (STEEM) currently trades at ~USD$3.43. A main component of Steem (STEEM) is that it aims to integrate social media and blockchain technology. The Steem (STEEM) developers have created a protocol with three principles:
- Everyone who contributes to Steem receives pro-rata ownership, equity or debt from the venture.
- All forms of capital are equally valuable, producing and curating content is just as valuable as contributing scarce cash.
- The community produces products to serve its members rather than sell products or services to people outside the community. The development of the Steem (STEEM) protocol has created a social media community that is not manipulatable like Reddit, Facebook and Twitter.
Essentially, Steem (STEEM) is designed to address major barriers to adopting and monetizing a social media-based economy. In other words, with the Steem (STEEM) protocol, individuals can be financially rewarded for social media contributions.
In order to become involved in the Steem (STEEM) social media platform, a user must become a Steemit user on their desktop or mobile application. After an individual’s account is created, users can post blogs, articles, comment on other member’s content and vote up or down on others’ content. Users are rewarded for curating the work of others by upvoting posts and comments and for authoring content that receives upvotes and comments. Users can see a potential payout figure that is derived from the Steem protocol. A user’s potential payout can increase if they receive upvotes on their post, if other posts receive more downvotes, or if the price of Steem (STEEM) increases and vice versa. As a result, Steemit users are rewarded for building a following, connecting with other users, and developing a reputation for producing high quality content.
The Steem (STEEM) protocol refers to three different “asset classes”:
- Steem (STEEM)
- Steem Power (SP)
- Steem Dollars (SBD).
STEEM is the fundamental unit of account and liquid currency on the platform. It can be powered up into Steem Power (SP) or transferred to other accounts. STEEM is a tradeable cryptocurrency token that is traded on major cryptocurrency exchanges.
Steem Power (SP) is a measurement of how much influence a user has in the Steem (STEEM) network. A user collects Steem Power (SP) by receiving positive votes and comments on their posts. The more Steem Power (SP) a user collects, the more they can influence the value of posts and comments. Users can convert Steem Power (SP) into Steem by “Powering Down” in which a user will receive equal distributions of the STEEM which vests over a 13-week period. By holding Steem Power (SP), not only do individuals have more influence and value in the community, users also receive interest paid on the balance of Steem Power (SP) that they hold in the form of Steem (STEEM).
Steem Dollars (SBD) are liquid stable-value currency tokens designed to be pegged to the USD$. The Steem Dollars (SBD) can be traded with Steem (STEEM) and traded to other accounts for commerce or exchange. Additionally, Steem Dollars (SBD) can also be converted into STEEM via a process that takes 3.5 days. Two strong incentives for holding Steem Dollars (SBD) are:
- A percentage of Steem Dollars (SBD) can be converted into ownership of STEEM in the future
- While holding Steem Dollars (SBD), a user receives interest payments on the amount of Steem Dollars (SBD) that he/she holds.
These built-in incentives in the Steem (STEEM) network allow it to grow effectively while maximizing the return for Steem (STEEM) holders.
The total supply of STEEM is estimated to be growing at approximately 800 STEEM per minute as of the Summer of 2017, with a yearly growth rate of 9.5% which decreases by about 0.5% per year. Of the new tokens generated, 75% fund the rewards pool which is split between the authors and curators. The other 25% is split by a 15% allocation to holders of Steem Power (SP) and the remaining 10% pays the miners of the blockchain. Investors must keep in mind that a rapid change in the value of STEEM can drastically change the debt-to-ownership ratio. When the ratio gets too high, the blockchain reduces the amount of STEEM awarded through SBD conversions if the debt level ever exceeds 10%.