Is Steemit a scam? Where does the money come from?
That gets asked a lot.
Edit: For the record, I don't think Steemit is a scam, just check my wallet.
RE: The first phase of the Steem FAQ and Wikee: Consolidation of Knowledge
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The first phase of the Steem FAQ and Wikee: Consolidation of Knowledge
Steemit is an autonomous user-owned platform, the hard cash comes from liquidity-providers, investors and traders on exchanges.
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I like that it's eloquently and succinctly stated, but I don't know if I like that answer.
Yes, it is where the value of Steem comes from, but it's not where the Steem Dollars and Steem Power are coming from.
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like all cryptocurrencies, its value is attached to its price on the market (haven't mastered out yet the vest concept... which is probably like gas in ethereum)
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I get that it's where the market value comes from. But it doesn't answer how the value is transferred to the user. I think there needs to be something added to the answer: "That is where the value of Steem comes from. New Steem currency is always being created and some of the newly-created currency is then transferred to users who add value to steemit."
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Steem gets value by grabbing attention of many people and selling that attention to those who buy it or earn it. (The answer above is pretty good too)
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The answer needs to reduce to a lease on transaction bandwidth to be complete. Anyone who isn't a top poster or curator is effectively paying a membership fee to avoid individual vote/post fees. This can be hidden if there is growth or inflation, but when there isn't the platform will shrink/die unless there are people with recurring buys set up
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Where does the money come from? / 19.6.16 / @steemrollin / https://steemit.com/steem/@steemrollin/steem-where-does-the-money-come-from / A detailed explanation of where the money comes from & how it's not a scam.
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Where does the money come from? This is a decentralized, incentivized content and curation ecosystem based on token seignorage with set and specific rules. The "money" at its base is actually a set of game tokens, which are distributed to creators and curators as rewards for successfully playing the game. What makes the system robust, however, is that the tokens have a real-time value because they are traded on markets. The markets allow the tokens to demonstrate their subjective value. This way, when one has 1 Steem token, that person can know what the value of their token is worth to other people. It's similar to how someone playing a video game could obtain a rare item by playing the game. If they have that rare item, then they could potentially sell it on video game item markets. Steem can be thought of as a game system for content, where the rewards people earn are video game tokens that have real market value and are easily tradable for bitcoin and USD.
Further background for understanding is that Steemit is a website much like Reddit, however, it is different in that it pulls its information from a blockchain and cryptocurrency database called Steem rather than a centralized, private database. In this way, Steemit is also analogous to other blockchain-based businesses such as Blockchain.info, which pulls its data from the Bitcoin network. Regarding its difference from Steemit, Steem is a cryptocurrency and the blockchain database that rewards posters and voters for bringing new information to the community. It is an independent entity from Steemit. The Steem networks' rewards paid to bloggers and curators is mining seignorage and it works the same way miners are paid to secure the Bitcoin network. Rewards paid to bloggers do not come from Steemit Inc nor from investment in Steemit Inc. There has been more than $3 million dollars worth of Steem tokens rewarded by the Steem blockchain to these creators and curators. Steemit does not and will not ever pay the contributors of the Steem network for curating and creating content. Steemit is not a middle man to any of the blockchain processes and the technology remains completely open source and transparent for anyone to audit and verify (Many software engineers are currently leveraging the open-source code to build their own applications on Steem. There are more than sixty so far.). Claims that there is somehow a scam or that money is from coming from new investment in Steemit are categorically false. Rather, the natural inclination of the platform Steem is to continue building and improving an incredibly exciting social media network that is decentralizing the value of the web and genuinely improving the lives of thousands of people around the world.
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A scam is where someone requires your money first in order to be a part of... Steemit gives you money rather for signing up and doesn't require you to invest any to be a part of. All you need is your time, to share your unique and original content, to potentially get even more. How is that a scam? :)
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Yes I know. I don't think Steemit is a scam. I just thought it was a good question for the faq.
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Yes I know. I don't think 'at all' Steemit is a scam. I just thought it was a 'reasonable answer to your question' for the faq :)
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Yep, it's all good.
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Not necessarily, people fears to spend time expecting to earn money and when is time to cash out, they can't. Also, the "buy STEEM POWER" thing might sound like scam, because it is supposed to earn you more cash.
-- develCuy
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I think when people ask:
Where does the money come from?
they usually mean this:
Who is gonna be on the other side of the trade, when I cash out and sell my Steem Dollars?
And I'd suggest the shortest answer to be something like this:
Behind the Steem Dollars (that you get for posting & commenting) are actual shares in the Steem system. So when you cash out you receive "real" cash for your Steem Dollars, but at the same time you give up some of the shares in the Steem system. And there are people who would like to buy those shares from you.
Why would they want to do buy those shares?
The shortest answer is that they believe (or speculate on the fact) that Steem (with its Steem Dollar) will one day become a ubiquitous momentary system and there will be millions of people buying and selling stuff for Steem Dollars (which effectively is nothing else than "repackaged" Steem) and, as a result, there will be demand for it as a currency just to sit in people's wallets. It's the same vision Bitcoin (or any other crypto-currency) investors have. It's a speculative bet.
So the answer really boils down to this: on the other side of the trade are long term speculators/investors who see in Steem a ubiquitous monetary system of the future.
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Answer for non crypto geeks:
The money for blog rewards comes from distributing 5% each year (or now 7,5%?) of the market capitalization of the steem platform. Just imagine Mark Zuckerberg would sell 5% of his Facebook stocks each year and distribute the dollars to great posts. Why should Mark Zuckerberg do that? Because he hopes to attract great content providers, which then attract more people to read it and use his platform. The more people join and use his platform the more his platform becomes value the more he can distribute. Mark Zuckerberg dosnt do this yet, but the decentralized steem platform does this.
But what is happening now if no users will join anymore? In the long run the plan is that steem dollars become a stable easy to use currency. Currently mainly banks create new currency units through borrowing money. Instead of giving out new currency units as credits like banks do currently, the steem platform distributes them for great content. So if steem dollars will become widely used there is a lot to fairly distribute.
For crypto geeks:
In Bitcoin each year Millions and Millions worth of new coins are distributed through ¨wasting¨ a lot of energy.
Instead of wasting energy the steem platform distributes them as a reward to great content providers.
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This one was clever
8-17 / @nonlinearone / https://steemit.com/steemit/@nonlinearone/steemit-is-a-scam-the-top-7-reasons-why-steemit-is-a-scam / Satirical explanation of all the reasons Steemit is a scam, which ultimately points out why it's not.
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Great post. Humor is often a much more convincing strategy than rational arguments.
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Yeah, he did a really good job on it. Was a fun read.
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Thanks @anotherjoe
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It is good to just wonder and ask questions
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This is a good question that needs to be answered in the simplest way ever! This is infact the first question anyone asks when you tell them about Steemit.
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