What is Steem?

Wednesday 31 August 2016

A little late in the day, I’m asking: what the heck is it?

There’s a lot going on in the crypto world. Too much to follow everything. When something like Steem smashes into the scene, it can be tempting to ignore it - only to find a month later that it’s bigger than ever.

Steem falls squarely into that category for me. Like bitcoin, I let it pass me by a while, and when I looked again it was huge. It’s a simple idea, and not even one that’s especially new. Post content online and get rewarded with crypto. It’s not a model that seems to have been particularly successful in the past; it’s been tried and the problem is getting people to pay for posts they value. Steem (and the Steemit content platform) seem to have cracked that nut by taking a different approach - at least, that’s how it appears at this point. One of my friends mentioned that someone she knew had earned $10,000 with her first post (she’s more famous than me, but still…). So I figured I’d find out what it was all about.

Steem works on the basis of something that could be called Proof-of-Upvote (PoU), or ‘subjective Proof of Work’ as they call it. Post valued content, people will upvote it on the Steemit platform, and you’re rewarded with Steem Dollars (which are broadly pegged to real dollars). It’s a lot more complex than that, involving different kinds of payments and smart contracts to get the job done, but that, in a nutshell, is what it’s all about.

Ok cool, but... I have some questions

Up-front, I’m making it clear I’m approaching this as neutrally as possible. I’ve heard some criticisms about Steem, and some may even be valid. I don’t understand quite how it works economically, since the money has to come from somewhere for the whole thing to be long-term viable (i.e. you can’t just keep minting new coins to meet your obligations without actual financial demand for them, or else you turn into Zimbabwe). And I’m curious about the fiat pegging thing, since I’ve looked into the various ways of pegging crypto to real-world value quite extensively, and it’s not easy. The market certainly liked the idea - Steem soared in value and despite a ‘correction’ remains near the top of the crypto pile. But I have my concerns because there's that nagging doubt I've got that you don't get something for nothing, and if you try then you might get away with it for a while but you're likely to experience that Wile-E-Coyote cliff moment sooner or later.

If you’re going to sign up for Steemit, you’ll need to use your Facebook or Reddit account - which does seem a bit of a limitation at this point. In subsequent articles I’ll be looking at some of the more technical aspects of Steem, as well as tracking its overall progress. For now, it’s a development I’ll be watching with interest, if healthy scepticism.

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