The prequel to The ultimate guide to Steemit.
Too long to read, you already know what Steemit is: just read the conclusion.
What is Steemit?xp
Steemit is a lot like Reddit but one major difference between the 2 is, Steemit pays to post, comment and upvote. This is one pretty radical difference. As you read, you will realize Steemit is a lot more than Reddit can ever be. A lot of redditors use Reddit on their lunch break while on Steemit people are already earning their living out of it. For those who don’t know Reddit, Steemit could very well be compare as some sort of Facebook. But again, whoever use Steem is getting paid with shares of the “company.” I don’t know about you but this feels like Steemit is onto something, it feels pretty promising to say the less. I’ve expand a bit on this in the last paragraph
3 Tokens, 1 sophisticated monetary system
Steem uses 3 different money or tokens. They’re called Steem, Steem Power and Steem Dollars. All three money or tokens have their own separate properties. These 3 different tokens all have their purpose and have a symbiotic relation to one another. This 3 token monetary system is another important part of the whole genius behind Steemit. I’ll expand on these tokens and relations as I go.
Getting paid
Steem users get paid for their posts, comments or votes, every 24 hours or so. These pay are of 2 different, called Steem Power and Steem Dollars. Around 25% of the reward are received as Steem Dollars and 75% as Steem Power. Let’s concentrate on Steem Power first. Every year, except the first year, the number of Steem Power doubles. 90% of the new Steem Power are distributed proportionally to the holders of Steem Power. The 10% left is allocated to posts, votes and comments.It could be seen as Steem Power holders paying around 10% of their shares as dividend to people who write, vote and comment. Anyone posts, comments or votes will receive a % of that 10%.Whenever a Steem user vote for a post or a comment, the poster or the commenter is paid with a reward. The more Steem Power someone own, the more his or her votes are worth and thus the greater the reward to the poster, commenter, and voter. Here’s how rewards are distributed for each post or comment.75% to posters or commenters
25% to curators (upvoters)You can see the pending payout (reward) for each post and comments at the bottom of every post. The sooner someone vote on a post, the bigger his % of the 25% he/she will get of the curation reward relative to his Steem Power and voting power. Let’s not forget, the more Steem Power one has, the bigger the % of total curation reward. I clarify this, 2 paragraph below with a concrete example.
Vote! Vote! Vote!
People aren’t voting non-stop for everything because every time someone votes, his voting power goes down 0.5% and then it gets regenerated as time pass 0.5% every 36 minutes. So someone can vote around 40 times in a day wait 36 minutes in between each votes and be voting with 100% of his voting power each time. 100% voting power from someone who own 32 million Steem Power isn’t the same as 100% voting power from someone who own 1 million Steem Power.
Curation Rewards
The equations that govern the distribution of the curation rewards among who voted are a bit complex. I feel like looking at details of the payout for a post will give you the best understanding.Now if someone wanted to see the details of the curation payout for a post or comments, take any Steemit.com link and change it to Steemd.com. Rshares are related to the voter’s Steem Power they hold and their voting power which is explain above. Weight % is the % of the total reward each voters will be getting. You can only see it if no payout for this post haven’t been made yet. You can find the authors % of curation reward on the last line of the white rectangle. The line’s called author curate reward.
Steem, Steem Dollars and Steem Power
Steem Dollars are Steem tokens worth 1 usd of Steem. If Steems are worth 50 cents usd and you have 1 Steem Dollar you can exchange your 1 Steem Dollar for 2 Steems. What are Steem? Steem are like Steem Power except they don’t double in number every year, they don't influence voting power and they aren’t locked like Steem Power are. Steem Power are locked and can only be change to Steem at a fix rate over 104 week. This is done automatically when you chose to so, it's called powering down. Steem Power are being change into Steem every 7 days. Changing Steem to Steem Power is called Powering up and the opposite, changing Steem Power to Steem is called powering down. If you have $2000 worth of Steem Power and wanted to sell. You would power down $2000. $2000/104=$19.2 every 7 days. If the price of Steem were to go up during the days you’re powering down, you would still benefit from the price rise. If Steem as gone up 100% one day you will be getting the same amount of Steem for your Steem Power but Steem you would be getting would be worth 100% more, or close to $38 in this case. Steem Dollars also have an interest rate paid in Steem Power of up to 10% a year. More on these tokens are available in the Steemit Whitepaper.
Steem Power
Steem Power double in number every year, like I said earlier. Steem don’t double every year. For this reason, Steem should only be held when someone wants to sell, otherwise holding Steem will penalize the holder. Let’s say, you have 100 Steems, one year later you would still have only 100 Steems. On the other hand if you have 100 Steem Power, 1 year later you would have approximatively 190 Steem Power, the other 10 Steem have gone to reward users. In effect, Steem Power qualities encourage Steem users to hold Steem Power rather than Steems. This result in people not being able to sell large quantities of Steem at once. This then leads to greater price’s stability.By the way, post reward are paid 50% in Steem Dollars and 50% in Steem Power while curation (upvote) rewards are paid a 100% in Steem Power. This again assure greater price stability.Steem and Steem Dollars can be sold or bought on exchanges. Steem Power on the other hand can never be sold or bought. They are always lock, until they are powered down to Steem, then some of them are unlock every 7days for 104 weeks as stated above. Finally Steem Dollars can be bought or sell for Steem or Bitcoin. To change your Steem Dollar to Steem Power you have to go through Steem. Steem Power can only be acquired through powering up and through post and curation rewards.The relationship between these 3 tokens and the whole Steem’s ecosystem, the ecosysteem, are multiple. They are symbiotic and the details so vast, they will the subject of many posts to come.