Where Does The Money Come From? How STEEM Works!

Hello, guys today we're going to talk about where does the money in Steemit come from. There's been a lot of concerns from new users coming into the platform. They're suspicious about how this platform works and they're wondering how is the platform able to pay out so much money to the new content providers so there are basically three ways that you can think about how new money is created in Steemit .

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#1. Think of it like Bitcoin where they issue new bitcoins.

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#2. Think of it like like a company issuing new stock.

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#3. Think of it as a fee for the users who use the Steem currency.

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The first way you think of money creation in Steemit is to think of it like the way Bitcoin creates new money to for the miners who secure the Bitcoin network. The way Bitcoin pays its miners is to issue new currencies. Issues new Bitcoins every 10 minutes and it pays this to the people who operate the network.

So the money is created basically out of thin air according to a certain algorithm and the people who participate in the network and secure the network gets this rewards. Bitcoin has been in existence since 2008 and many people were skeptical that this system of creating a new currency and paying the people who sustain the network would actually work as an economic system but in the last eight years, Bitcoin has proven that this system works. Bitcoin is now a ten billion dollar industry.

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Steemit aims to take this economic model of issuing new currencies to the users who participate in the system and apply it to a social media. The way Steemit does this is instead of paying the miners who secure the network like in Bitcoin, Steemit pays the who post comments and upvote comments.

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Another way to think about the money creation in Steemit is to think of it as a new company that can issue new stock basically created out of thin air to pay for workers, investors, and stuff that the company needs.

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Steemit has its own currency called STEEM and you can think of Steem as a sort of stock in the Steem platform. When you hold this stock you are exposed to the appreciation of the value of the whole social platform and the platform as a whole can issue new shares to pay for the people who post upvote and comments.

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Another way to think of money creation in Steam is to think of it as a fee for the users who used the Steem currency. Steem currency is basically diluted a little bit each year for the new content and the money taken from the people who used the Steem currency or speculate in the Steem currency. So these are some of the ways to help understand how Steem platform pays its users for content and comments.