- Steem is a Smart Media Token cryptocurrency developed in conjunction with a social media platform.
- Steem is the base cryptocurrency, while you use Steem Power on the social media platform and Steem Dollars to convert your steem to usable cash.
- The social media platform, Steemit, is an all-in-one wallet, exchange, and social media.
- The market capitalization of Steem is more than 80 million USD. Its price has remained relatively stable over the past two years, at around $0.20. Steem has seen some growth in the first couple of weeks of 2021, though.
Steemit created Steem cryptocurrency in 2016. The unique part of Steem is its interface, which uses blockchain technology to reward their valuable users and curate popular content. The social media platform is integral for the growth of Steem Coins.
Steem Coins, Power, and Dollars are all aspects of the blockchain technology targeted at users in a three-pronged currency approach. The tokens, mostly just referred to as Steem, are the base currency used to purchase Power or Dollars. Steemit rewards you for posts that get a lot of likes and engagement with Steem.
Users utilize Steem Power when they make a post or engage with one another. Every post costs some Steem Power, but you can easily make it back with a popular post. You can exchange Steem for Steem Dollars, which are stable coins pegged to the US dollar to avoid exchange rate fluctuations with Steem.
Steem stands out from other cryptocurrencies because of its integration with Steemit, a social media platform. The mix of social engagement and reward via cryptocurrency can profoundly affect the crypto market, both in general and for Steem. Since Steemit is an all-in-one wallet, exchange, and social media platform, the whole process is easily navigable.
How Does it Work? — The Technology
In 2016, the inventors of Steem set about trying to find a solution for a problem that’s only become more apparent since then; websites only monetize their social media content in favor of the advertisers. The content creators are either a second thought or left out entirely.
The Steemit social media network created Steem to finally end this problem. Users on Steemit create content that others view, upvote, curate, comment on, and more by users on the site. Content creators and curators receive a portion of Steem tokens based on the engagement with their content. This means creators make money using their brain, which Steem calls their proof of brain concept.
The website, on its face, functions a lot like Reddit or Medium. Users can post text or images and create communities, but most importantly, they have the potential to make money with every post. That’s not something you can do on Reddit!
The base currency, Steem tokens, is created by mining blockchain. A set amount of Steem is produced daily from the blockchain, about one every three seconds, with 75% of those newly mined coins going to reward creators. One new coin every three seconds adds up to 28,800 new coins a day.
Steem’s yearly inflation rate was at 9.5% in 2016. The rate reduces by 0.5% per year until finally reaching 0.95%. This means the number of new tokens created each year reduces until the inflation rate hits 0.95%, but new coins will be produced every year in perpetuity.
The account mechanics that are associated with Steemit to ensure your privacy are rigorous. Steemit has various passwords tied to your account, and each one is associated with different account actions, like post keys, wallet keys, or a general login key.
How to use Steem to Make Money
Users of Steemit generate Steem tokens by posting and curating content. To curate or post content, users need Steem Power. You can convert Steem into Steem Power on the Steemit website. Every time you post or upvote, you use some of your Steem Power. Steem users call converting Steem to Power “powering up” because you’re gaining more Power.
Power is also useful because it appreciates over time. Steemit, the wallet used by most Steem holders, pays interest on the amount of Power you have. You can convert Steem Power back into Steem, a process known as “powering down.”
Steemit rewards creators with Steem based on how popular their posts were with the broader community on Steemit. The user can then convert their Steem into Power to post or curate more or convert it into Steem Dollars, which are equal in value to USD and easily exchanged through Steemit.
Exchanges work by pairing a seller with a buyer. The seller is looking to exchange their Steem with USD or another currency. Once the exchange has paired the buyer and seller, an exchange of currencies occurs, resulting in the seller changing their Steem for whatever currency they choose. Since Steemit is an exchange, you don’t need to find one yourself.
You can mine Steem yourself, but the best way to earn it is by using the Steemit social media platform. There is a demand for Steem outside of just Steemit, though. You can hold Steem in many wallets, like Steemit, ESteem, or Vessel.
Pros and Cons of Buying Steem Coin — Risk or Reward?
Steem and Steemit are new technologies, and with that comes some obstacles. Here, we’ll lay out some of the main benefits and drawbacks of investing in Steem Coin.
- By allowing all users onto the platform, Steem has eliminated systemic barriers that bar many from investing in cryptocurrencies. Steemit primarily distributes Steem through posts on their social media, which means economic or social issues don’t get in the way of investing.
- Steem’s use of Steem Dollars creates what is essentially a stable coin. Since Steem Dollars are pegged to the US dollar, their value never changes, although the amount of Steem needed to convert it into Steem Dollars will change. By having a stable coin as an aspect of their currency, Steem has easily identifiable exchange rates.
- Steem has a good outlook as a long-term investment, especially when it’s converted to Steem Power. Steem Power accumulates interest in your Steemit wallet, which you can later convert to Steem Dollars. This process can earn you money both as a long-term investment and with short term gains.
- Depending on what type of investment you’re looking for, Steem may not be for you. Steem is not a short-term investment or speculative tool meant to show returns in a short period.
- Steem’s rating from Weiss, which produced the first global cryptocurrency rating scale, has fallen in recent years. Their rating currently sits at a C-, while Bitcoin and Etherium are both at A-. These ratings indicate how much a coin is trading, what technology it uses, and how secure it is, among other criteria.
- The reputation system used on the Steemit social network can create a reliance on one social network and give undue influence to a small group of creators. Those with a lot of Steem Power have more influence when it comes to upvoting and curating, which can create different amounts of accountability for users.
The Bottom Line
By using blockchain with a social media platform, Steem has undoubtedly changed the way people thought about crypto. A social media platform dedicated to its growth can increase the amount of Steem users in a short period, ultimately increasing demand for the coin. Who knows, maybe this will be the next Reddit?
Its use of a decentralized system that bases growth around the addition of new users, and with the popularity of social media sites only growing, their trading volume will surely rise.
If you’re looking for a long-term investment that you can not only make money with but also use daily, Steem is for you. Since you can use the social network to increase the amount of Steem in your account, it can be a fun and easy way to dip your feet into cryptocurrencies. And with a built-in wallet and exchange right in Steemit, the social media platform, anyone can start!