What Makes Steem Think STEEM Has Steam? Where Gamification & Blockchain Meet Social Media

On August 18th, 2017, Steem had a market cap at USD $263,521,157, for the equivalent of 62,080 BTC or 881,004 ETH, with a circulating supply of 239,793,582 STEEM at a price of $1.10 per coin.

Today, Steem is the 23rd largest cryptocurrency by market cap. At a time when there is a LOT of fluctuation in cryptocurrency market caps, Steem has held its position among the other digital currencies in a relatively stable range.

“Collectively, user-generated content has created billions of dollars worth of value for the shareholders of social media companies, such as Reddit, Facebook, and Twitter. Steem supports social media and online communities by returning much of its value to the people who provide contributions by rewarding them with virtual currency.”

OK… I get it, but doesn’t Facebook already pretty much have a stranglehold on the social media sector? On their own words, Steem is in a VERY competitive market in which tech giants such as Google have already tried, and failed.

So what makes Steem think STEEM has steam?

Let’s dig into the company website, whitepaper, analyst articles, and any other content that comes our way in scrying the future for Steem!

“Steem is a blockchain database that supports community building and social interaction with cryptocurrency rewards.”

Steem is the first cryptocurrency that attempts to accurately and transparently reward an unbounded number of individuals who make subjective contributions to its community.
Steem combines concepts from social media with lessons learned from building cryptocurrencies and their communities. An important key to inspiring participation in any community, currency or free market economy is a fair accounting system that consistently reflects each person’s contribution.

The Steem community provides the following services to its members:
A source of curated news and commentary.
A means to get high quality answers to personalized questions.
A stable cryptocurrency pegged to the U.S. dollar.
Free payments.
Jobs providing above services to other members
Steem’s purposeful realignment of economic incentives has the potential to produce fairer and more inclusive results for everyone involved than the social media and cryptocurrency platforms that have gone before it.
Steem is designed from the ground up to address the major barriers to adoption and monetization of a social media based economy.
“Our thesis is that the same techniques used to grow major social media platforms can be used to bootstrap a successful cryptocurrency.”
“It is the synergy between cryptocurrency and social media that we believe may give Steem a powerful advantage in the market.”
The fundamental unit of account on the Steem platform is STEEM.
Steem operates on the basis of one-STEEM, one-vote.
Steem members have a financial incentive to vote in a way that maximizes the long term value of their STEEM.
Steem is designed around a relatively simple concept: everyone’s meaningful contribution to the community should be recognized for the value it adds.
Steem is designed to enable effective micropayments for all kinds of contribution by changing the economic equation: Readers no longer have to decide whether or not they want to pay someone from their own pocket, instead they can vote content up or down and Steem will use their votes to determine individual rewards. This means that people are given a familiar and widely used interface and no longer face the cognitive, financial, and opportunity costs associated traditional micropayment and tipping platforms.
STEEM is constantly increasing in supply by 100% per year due to non-SMD incentives.
Someone who holds STEEM without converting it to Steam Power (SP) is diluted by approximately 0.19% per day.
The majority of STEEM inflation is actually an accounting artifact rather than true reallocation of wealth. 90% of non-SMD inflation is distributed back to existing holders of STEEM proportional to the STEEM value of their SP balance, making inflation more of a “split”. Only about 10% of non-SMD inflation redistributes ownership in the network.
Because Steem wants to encourage long-term growth, it is hardwired to allocate STEEM to Steem Power (SP) stakeholders for every 1 STEEM it creates to fund growth through contribution incentives.
SP can only be converted back to STEEM over 2 years via 104 equal weekly payments.
‘1 SP’ can be viewed as a share in a pool of STEEM. The network automatically adds STEEM to the pool every block.
Individuals are guaranteed to have more STEEM in the future than they have when they first convert from STEEM to SP.
SP balances are non-transferrable and non-divisible except via the automatically recurring conversion requests. This means that SP cannot be easily traded on cryptocurrency exchanges.
SP is a requirement for voting for or against content. This means that SP is an access token that grants its holders exclusive powers within the Steem platform.
Transferring from STEEM to SP is referred to as powering up.
Transferring from SP to Steem is referred to as “powering down.”
With Steem, block production is done in rounds. Each round 21 witnesses are selected to create and sign blocks of transactions. Nineteen (19) of these witnesses are selected by approval voting, one is selected by a computational proof-of-work, and one is time-shared by every witness that didn’t make it into the top 19 proportional to their total votes. The 21 active witnesses are shuffled every round to prevent any one witness from constantly ignoring blocks produced by the same witness placed before.
Steem is both Botnet and Mining Pool resistant.
The Steem network allocates STEEM via proof of work at a rate of approximately 40 STEEM per minute to miners, with an additional 40 STEEM per minute being created to seed the content and curation reward pools.
STEEM grows at a rate of approximately 800 STEEM per minute due to the combined effects of the various Contribution Rewards.
Steem pays people to figure out who should be paid.
Steem bypasses micropayments completely because when a user upvotes a post it is the community that pays the bill.
Every post submitted to STEEM is voted upon by users with a vested interest in the long-term value of STEEM. The more votes a post receives the more money the poster makes. Posters are also rewarded anytime someone inspires others to create replies that also get up voted.
“One of the primary goals of Steem’s reward system is to produce the best discussions on the internet.”
Each and every year 10% of the market capitalization of Steem is distributed to users submitting, voting on, and discussing content.
In Steem, when you reply to someone else, they get 50% of any payout you receive in that thread. This rule applies up to 6 levels deep. Starting a big discussion greatly rewards the parent poster.
When a post is receives a payout it takes the form of 50% STEEM backed dollars (SBD) and 50% vesting STEEM. The vesting STEEM give the user increased voting and transaction power while the SBD gives the user an immediate benefit in a stable currency. Both vesting STEEM and SBD pay interest for holding them rather than selling.
Each account is only allowed to vote with up to 5% of its voting weight on any given post.
To maximize its voting power, an account must vote for at least 20 items per day.
Users who commit to STEEM for a year or more earn interest and are protected from dilution.
The combination of dilution protection and earning interest make vesting STEEM the first “high yield”, “dividend-paying”, “deflationary” crypto-asset.
STEEM borrows a concept from the startup world known as a convertible note. Convertible notes come in many forms, but the basic idea is that they are worth $1.00 of shares at a future price. STEEM Backed Dollars (SBD) convert to a crypto-currency rather than to shares in a company.
Steem creates new SBD to pay interest on existing SBD. This increases the debt-to-equity ratio of STEEM.
A Steem price feed is produced by 21 active miners. Once per hour the median published feed is logged. The median of all feeds logged over the past week is used to determine the rate at which SBD converts to STEEM. With this process it takes 51% of active miners colluding for 3 and a half days to meaningfully corrupt the feed. It is safe to say that STEEM holders with a vested interest in the future value of STEEM will be very pro-active in voting for reliable miners to produce feeds.
“Steem has tremendous potential. Its innovative way to reward both content creation and voting consensus may solve problems found with typical social media services.” –James Stroud, CEO, CryptoCertify
The blockchain distributes payouts as 50% Steem Power for voting and 50% Steem Dollars. Rewards are distributed by the blockchain, similar to how miners are paid by Bitcoin, and occur roughly 24 hours after content and votes have been submitted.
Steem CTO Dan Larimer to CoinTelegraph: “Steemit is a brand new way to recognize contributors online, especially those who join our community early and stay long term. New users will be given a portion of Steem when they sign up and those who initiate or improve the quality of discussions, through persuasiveness, clarity, grammar and formatting, will be upvoted faster and more appropriately rewarded.”
Guide on how to mine STEEM: https://steem.io/documentation/how-to-mine/
Steem whitepaper: https://steem.io/SteemWhitePaper.pdf
The primary markets for Steem are:
Poloniex (under currency pair STEEM/BTC or STEEM/ETH)
Bittrex (under currency pair STEEM/BTC)
Livecoin (currency pairing STEEM/BTC)
The Twitter handle for Steem is: @Steemit
Market cap history:
On April 18th, 2016, the market cap for Steem was only $2,607,840.
On May 15th, 2016, the market cap for Steem passed $10 mil for the first time.
On May 22nd, 2016, the market cap for Steem passed $15 mil for the first time.
May 26th, 2016: the market cap for Steem passed $20 mil for the first time.
July 9th, 2016: the market cap for Steem passed $25 mil for the first time.
From July 11th to 12th, 2016, the market cap for Steem exploded from $44,510,700 to $79,675,000.
Then, amazingly, on July 13th, 2016, the market cap for Steem ended the day at $216,204,000.
The market cap for Steem passed $300 mil for the first time on July 14th, 2016.
Unfortunately, by May 22nd, 2017, the market cap for Steem was only $305,563,000.
The market cap for Steem passed $400 mil for the first time on June 6th, 2017.
On June 7th, 2017, the market cap for Steem stood at $611,817,000.
On August 17th, 2017, the market cap for Steem was only $281,663.
“Our vision is to not only build an empowered community but give content creators an avenue to make money online without needing to advertise.”
Steem is capable of handling a larger userbase than Reddit.
Steem is capable of 1000’s of transactions per second.
Steem designs permissions around people, rather than around cryptography, making it easy to use.
The Steem consensus algorithm ensures a robust, censorship resistant social media platform.
Steem combines techniques used by Delegated Proof of Stake and Proof of Work mining to create a new protocol that is more robust and censorship resistant than any existing protocol.
Steem is “maximally decentralized.”
“Steem is an experiment designed to address challenges in the cryptocurrency and social media industries by combining the best aspects from both. Steem presents earning opportunities to content creators and internet readers in ways that have not existed within the social media industry.”

That’s all well and good… innovation is great. But, in an era of instant adoption and constant innovation and disruption, I’m surprised Steem hasn’t been picked up for cryptocurrency greatness by investors. To me, this indicates usability and/or adaptability issues.

In the crypto world, “cool” is definitely the word of the day. Maybe Steem just isn’t an awesome innovation? Or, maybe social media users simply don’t care?

In any event, Steem has NOT led to a mass-migration from Facebook or any of the other popular social networking sites with which Steem directly competes.

It remains to be seen how successful Steemit will be in attracting new users!

Thanks for reading!