What is Steem (STEEM)? Your ultimate guide
Steem is rewarding users for posting on its social media apps
- What is Steem?
- What is Steemit and how does it work?
- What is STEEM coin used for?
- The hostile takeover
What if you could get paid in crypto for your social media content? Steem is combining blockchain technology with social media to reward users for posting on its platforms. But can it maintain its userbase after what was seen as a hostile take-over?
Social media has become a dominant aspect of modern day life, with technology giants such as Facebook and Twitter making huge profits. Steem was created by the Americans Ned Scott and Dan Larimer with the aim of letting users take back control of their content and data by creating a decentralised platform for social media apps.
Since it launched in 2016, hundreds of apps have been created on Steem, including alterantives to Reddit, YouTube and SoundCloud. But after a hostile takeover, a large number of the Steem community left the platform. Can Steem recover and restore a once bustling social media community?
What is Steem?
As lifechanging as social media can be, it's littered with problems, such as trolls, racism and other offensive comments. Steem was born to confront these issues. The founders noticed that companies running social media platforms were earning billions of dollars from other peoples’ content, while the creators earned nothing. Steem is using blockchain technology to change this. It allows users to earn cryptocurrency rewards from their posts, videos, and music.
The concept of Steem is much more than that. It's a blockchain that gives developers a platform on which they can create social media apps. Steem uses free and fast transactions, stating on its website that it's “the only blockchain that can handle social applications at scale”. The blockchain also has “an entire ecosystem of powerful tools” to make app building easier.
Steem is also attracting developers through its userbase. Building an app on Steem gives developers access to its one million users. There are more than 324 apps on the Steem network, ranging from a video sharing platform to a music-focused social media site.
Steem’s other focus is to ensure high user experience through a rewards feature. Every contribution to a Steem app has the same opportunity to earn STEEM, the blockchain's native cryptocurrency, from a rewards pool. Users can give each other upvotes. Creators receive a portion of the rewards pool depending on the number of upvotes. This creates a principle that the more value a particular piece of content provides to the community, the more the creators will earn.
The reward system is meritocratic – voting power is linked to a user's community involvement. Users can turn STEEM into Steem Power (SP), where one SP is one vote. Those with the most SP have a higher say over which content is successful. Users are incentivised to invest more STEEM into the network – around 90% of new STEEM goes to users who already hold a lot of SP.
What is Steemit and how does it work?
You can get an idea of how the system works by looking at the first Steem app, Steemit. Steem co-founder Ned Scott told FourWeekMBA: “Steemit was born as a place where individuals get rewarded by a community for posting and voting on content.”
Steemit has a striking resemblance to Reddit – even its name is similar. The one key difference is that everything done on the Steemit platform is recorded on a blockchain, whether it's a comment, post or vote. There is no centralised database or authority recording the data.
How does STEEM coin work on the platform? Users can earn it by creating content the community finds interesting and upvotes. They can take part in content and challenges, doing well in contests with STEEM prizes up for grabs. If they don't have time to engage with the community, Steemit users can lease their Steem Power in return for daily STEEM payment.
What is STEEM coin used for?
It's not only content creators that get rewarded with the STEEM cryptocurrency. The network gives a portion of the coin pool to those users who validate transactions. Every Steemit account can become a 'witness', by setting up a Linux server, which creates new blocks on the Steem blockchain. Steem uses a delegated proof of stake protocol, where users vote on the 'witness' to validate the next block. The Steem blockchain schedules a 'witness' to produce a new block every three seconds. Although 90% goes to the content-creators, the other 10% goes to the 'witnesses'.
With a new block created every three seconds and the genesis block having been mined in 2016, there are now a fair few STEEM coins in circulation. As of 3 December, there is a circulating supply of 393m STEEM.
There have been a few spikes in STEEM’s price history. The STEEM coin launched on 19 April 2016 at $0.76. It saw its first rally a few months later when the STEEM cryptocurrency peaked at $4.28 on 19 July. It fell over the next months and did not come anywhere close again until its all-time high of $8.57 on 3 January 2018.
STEEM coin was unable to keep the momentum going and its price dropped to below the $1 mark in 2018. Since then, it has struggled to break the $1 barrier and as of 6 December it was sitting at $0.4309.
The hostile takeover
In February 2020, Steem announced that Steemit had sold to Justin Sun, the Chinese entrepreneur who built the Tron network. The community was less than enthusiastic about this takeover – membets did not like the idea of a centralised authority having control of the platform. The community secretly passed an upgrade to deactivate the STEEM tokens owned by Sun, essentially kicking him off the platform.
Sun managed to get back his tokens and complete what some refer to as a “hostile takeover”. In early March, Sun convinced three major cryptocurrency exchanges, Binance, Huobi and Poloniex, that list STEEM tokens on their platforms, to mobilise customer deposits and stake large amounts of STEEM to return his tokens.
Sun successfully re-activated his tokens, but he lost the support of the community. On March 18, a large group of the Steem community announced its intention to hard fork the Steem blockchain and create a new platform called Hive. This platform was similar to Steem – it's an “information sharing network” where developers can build apps with a community focus. Users were able to airdrop one STEEM for one HIVE. The platform managed to stop Sun’s tokens from being transferred to the alternative platform.
Steem has created an innovative concept, taking the key decentralised principles of blockchain technology and applying it to social media. Before the takeover last year, UltimateMoney said: “Steemit is an invaluable asset to the crypto community and a beloved platform that showcases the potential future of social media platforms.”
Similarly, Crypto Coin Judge pointed to the strong community and the key concept encouraging people to keep engaging. It said: “[Steem] is targeting a huge impact on the vibrant and bustling social media world as its rewards are designed to encourage an increasing number of users to get engaged in more constructive activity.”
Despite the turmoil last year, Steemit is still alive. It has a strong Korean community, consistent weekly content and loads of recent posts. But the uprising has affected the network. With the native currency below the launch price and Steem’s Twitter and Facebook accounts inactive, the social media network faces an uncertain future.
There are currently 393m STEEM in circulation. There is no supply limit. A new block is created every three seconds.
Steem was co-founded by Ned Scott and Dan Larimer. Scott worked as a financial analyst at Gellert Global Group, an American food importer. He met Larimer, a software engineer and entrepreneur, in 2015. Steem was founded in April 2016. Steemit, the first app, went live in July that year.
Steem is secued through a delegate proof of stake protocol. Users can become a witness by running a Linux server, which validates and creates the next block. 10% of all STEEM will be rewarded to witnesses.