Steem blockchain is a database that supports community building and social interaction with cryptocurrency rewards. Steem combines concepts from social media and cryptocurrency with lessons learned from building their communities. An essential key to encouraging participation in any Community, currency or free market economy is a fair accounting system that consistently reflects each person’s contribution. Steem is the first cryptocurrency that attempts to accurately and transparently reward an unlimited number of individuals who make personal contributions to its community.
Steem blockchain supports social media and online communities by aiming to return much of its value to the people by rewarding them for their actions proportionately to the amount they are bringing to the network.
Three fundamental principles have been used to guide the design of the Steem blockchain. The most important of these is that everyone who contributes to a venture should receive pro-rata ownership, payment or debt from the investment. It is a similar principle if you apply to startups as you allocate shares at founding and during subsequent funding rounds.
The second principle of the Steem blockchain is that all forms of capital are equally valuable. Those who contribute their scarce time and attention toward producing and curating content for others are just as valuable as those who give their limited cash. Work or money is the sweat equity principle and is a concept that two prior cryptocurrencies have often had trouble providing to more than a few dozen individuals.
The third principle of the Steem blockchain is that the community produces products to serve its members. This principle is exemplified by credit unions, food co-ops, and health sharing plans, which help the members of their community rather than sell products or services to people outside the eco-system.
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.
On any given day, as of May 2018, Graphene-based blockchains are processing the vast majority of global blockchain transactions. As you can see in the image below, Steem blockchain is no exception. So much market cap value sits on Bitcoin, its blockchain utilization is at the maximum, yet it is for much less operations. No offense Bitcoin, you are still a good store of value for now.
Steemit.com is one of the many websites (including Busy.org, DTube, Steepshot.io, and Utopian.io) that are powered by the same Steem blockchain and STEEM cryptocurrency. Steemit Inc, created the blockchain that now runs almost entirely by its Community. All of these websites read and write content to the Steem blockchain, which stores pointers to content in IPFS and meta-data in an immutable blockchain ledger, and then rewards users for their contributions with digital tokens called STEEM.
Every day, the Steem blockchain mints new STEEM tokens and adds them to a Steem Community “rewards pool”. As a Steem user, you recieve rewards based on the votes that your content receives. Users who hold more tokens in their account as “Steem Power” will get to decide where a larger portion of the rewards pool is distributed.
Using the platform earns rewards in Steem backed dollars (SBD) for posting and curating content.
SBD acts for quick exchange to USD and the STEEM core token. A percentage of rewards get paid to users in SBD. SBD can be interchanged on the platform quickly to either power-up or trade for STEEM to cash out. The original intention was to create a peg to the US Dollar, backed by the STEEM core token. For SBD, free market forces have caused its price to fluctuate and value increase on cryptocurrency exchanges.
Steem power (or SP) is a token symbolizing how much power you have inside the Steemit platform. A higher amount of SP means you will have a higher reward value in your voting stake. ‘Powering Up’ is a process whereby you are taking STEEM acquired from rewards or externally, and temporarily locking it into the network.
SP controls the amount your vote it worth. Increasing your SP is known as “powering up” and decreasing it is known as Powering Down. The network employs a 13 week vesting period to ‘power down’ before releasing the tokens for conversion to Bitcoin or fiat.
A relatively simple concept drove the design of Steemit. Value of meaningful contributions is determined by the users. When people are recognized for their meaningful contributions, they continue contributing and the community grows. Then over time any imbalance in the give and take within a community is unsustainable. Eventually the givers grow tired of supporting the takers and disengage them from the community.
See also https://www.wired.com/story/the-social-network-doling-out-millions-in-ephemeral-money/