The Steemit social network has been gaining considerable traction in the last few months. It now boasts more than one million users and is one of the most-visited sites in the world.
But it’s not like any other social network. It’s closely integrated with the Steem cryptocurrency and thus has some unique features which have been enticing users. So, what’s all the fuss about? Let’s take a closer look!
What Is Steemit?
Steemit is part blogging platform, part social network. At its most basic level, it functions a lot like Reddit; you can upvote and downvote, follow topics that interest you, submit content, and discuss posts with other users.
However, it’s also a revenue-sharing website. And that’s where the cryptocurrency part comes into play. Instead of receiving payment in regular flat currencies like the US dollar or the British pound, Steemit pays you in the Steem cryptocurrency.
You don’t only get paid for posting content. You can also earn Steem for commenting and even just upvoting other posts.
How Does Steemit Work?
Unlike regular social networks, which store all their content on their own servers, almost all the text on Steemit is saved on the Steem blockchain. For images, you’ll still need to use a third-party hosting site like Imgur.
The use of the blockchain has some practical benefits. For example, you retain ownership of your content forever, and no one can delete it.
But more importantly, the blockchain also underpins the entire rewards scheme. Every day, the blockchain mints new Steem tokens. From the new tokens, five percent goes to people who hold Steem Power, 75 percent goes to the community pool, and 10 percent goes to the Steem miners.
Steemit then divides the community pool between users depending on the popularity of their content.
Note: You should understand how a blockchain works before reading any further.
How Does Steemit Divide the Community Pool?
Whenever you create new content, you can choose how to receive your payment. You can either receive 50 percent in Steem tokens and 50 percent in Steem dollars, or you can receive the entire payment in Steem Power.
There are some critical differences between the three:
- Steem: Steem is like any other cryptocurrency. It’s liquid, tradable, and transferable. You can buy and sell it on any of the major cryptocurrency exchanges and keep it in secure wallets. Its price determines the value of the other Steem-based tokens.
- Steem dollars: Steem dollars are pegged to the US dollar. They are a debt instrument that will pay $1 worth of Steem to the holder in the future. You can also convert your Steem dollars into Steem. Some cryptocurrency exchanges allow you to trade Steem dollars.
- Steem Power: Steem Power is like an influence score. The more Steem Power you have, the more your upvote is worth on the network. It’s a tool designed to keep people engaged with the Steem project over the long-term. It is the most illiquid of the three assets. If you want to sell your Steem Power—referred to as “powering down”—you will receive the value of the Power in Steem in 13 equal payments over 13 weeks. Steem Power is not tradeable.
How Much Money Can You Earn on Steemit?
Steemit is not a get-rich-quick scheme. Like with any social network, some social posts can go viral and earn their creators a surprising amount of Steem in a short amount of time.
But if you want to earn a solid amount of Steem consistently, you’ll need to invest time and effort to grow your following, become known in your own part of the community, and develop high-quality content. Again, it’s just like any other social network.
One particularly famous user made $100,000 in a week, but your expectations shouldn’t be so high. If you earn more than $500/month, you’re doing really well. As a new user, you shouldn’t expect to earn more than a few dollars.
Is the Steem Cryptocurrency Valuable?
Steem has a market capitalization of around $440 million putting it comfortably in the world’s top 40 coins. Its all-time high was $7.31 at the start of 2018, but it has spent most of the last 12 months bouncing between about $1.50 and $4.
Are There Any Downsides to Steemit?
So far, we’ve painted a rosy picture of Steemit, but the social network does have some drawbacks that you need to be aware of…
Fleeting Post Exposure
Some users have complained about the transient nature of the posts. They put a lot of effort into creating high-quality content, only to see it vanish from view in minutes because it didn’t receive enough early traction.
Unbalanced Voting Power
As some of the early adopters collect more and more Steem Power, their votes (both up and down) become worth significantly more than any other users’ votes.
This has led to accusations of vote bullying, whereby a couple of long-term users can band together and immediately scupper any hopes you might have of earning money from your content.
One of the biggest criticisms aimed at the crypto world is the frequency with which hacks occur. There have been numerous high-profile cryptocurrency hacks that have cost users millions of dollars.
Back in July 2016, hackers attacked Steemit. A total of 260 accounts were compromised, and more than $80,000 was stolen. Steemit responded by shutting down its network and reimbursing any users who lost money.
However, the fact it happened is concerning. Who knows how it would play out if another hack were to occur in the future and a more significant amount of money was taken.
Some Steemit users have expressed concerns about the high-profile users who hold disproportionate amounts of the Steem token.
If they decided to cash out in one go, it could crash the price of Steem in a flash. The crash would have a disastrous effect on the amount of money you could earn on the network.
Because of the nature of the underlying blockchain, you cannot reset your Steemit password. If you lose or forget your credentials, you will be locked out forever with no way to recover the funds within your account.
You need to guard your login credentials closely; at the very least, use a password manager.
Steemit: One of Many Alternative Social Networks
If you’re growing tired of the incessant bickering on Twitter, selfies on Instagram, and baby photos on Facebook, Steemit is worth checking out. It’s just one of many alternative social networks that deserve your attention, and we’re happy it exists.