What is Steem?
A Beginner´s Guide to Buying, Selling, Using, and Mining Steem:
An In-Depth Steem Guide by True Poker
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After a tumultuous year for Bitcoin and other leading cryptocurrencies, bulls and bears continue to spar. Bulls will point to rapid developments in the blockchain industry as well as growing support for cryptocurrencies in otherwise hostile markets–for example, traditional financial markets, where the CME has approved Bitcoin futures.
Bears will point to the fact that in addition to unsustainable price spikes, everyone seems to be hopping on the bandwagon, a classic example of irrational exuberance and bubble-like behavior. Once grandma and grandpa get in on the action, it’s time to run for the exit.
What both bulls and bears are forced to admit is that despite Bitcoin’s rise in popularity as an investment vehicle, hardly anyone is using it as a transactional medium. Both price volatility and opportunity cost–why use Bitcoin to buy things when it can notch 900% plus returns–have contributed to this phenomenon.
But this conundrum is hardly new in the blockchain industry. For years, developers have sought to create coins that meet the dual requirements of ‘investability’ and utilitarian value. One coin, STEEM, is a perfect example of how these two goals can be met.
What is Steem?
STEEM is a blockchain, defined as a ledger or database that keeps a history of all transactions that take place on the network. By design, STEEM’s blockchain is decentralized, allowing all users to view and audit the entirety of the network’s transactions. What’s more, no single authority or entity runs the blockchain–control of the blockchain is distributed throughout the totality of the network’s users.
Those interested in more in-depth discussions about STEEM can visit the coin’s reddit page. The page contains a wide variety of helpful posts, ranging from beginner level explanations to advanced technical forums. It is a great launching pad for further research.
How Do I Buy STEEM?
To buy STEEM, users must create an account with a compatible exchange like Bittrex or Poloniex. After funding the account with cash or with a credit card, users must first purchase either Bitcoin or Ethereum if they don’t have it already. Then, using Bitcoin or Ethereum, they can buy STEEM coins. Since there is no way to buy STEEM directly with fiat currencies, this extra step is essential.
Another way that platform users can earn STEEM is by blogging on the Steemit website. When users post or comment on Steemit, any upvotes they receive for their content is converted to STEEM dollars. One STEEM dollar equals the amount of STEEM required to reach $1 depending on the exchange rate. STEEM dollars can be converted into STEEM cons, which then can be converted to Bitcoin or USD. Thus, the platform financially incentivizes users to interact with articles, blog posts, and other materials on Steemit.
STEEM can also refer to STEEM power, which is a symbol of how much influence content creators have inside the platform. It is akin to status or reputation. Those that have a lot of STEEM power upvotes will have more influence on the platform. This means that their upvotes have a larger impact and award more STEEM power and STEEM dollars when interacting with others’ content.
How Do I Turn STEEM into Cash?
In order to cash out STEEM coins, users need to follow the reverse order of the steps above. First, they need to turn their STEEM coins into Bitcoin or Ethereum. Then, once the exchange has taken place, they must sell their Bitcoin or Ethereum for the fiat currency of their choosing, such as USD or Euros. Once the funds have been successfully transferred to a traditional bank account, the money can be withdrawn from at ATM.
Those who have accumulated STEEM dollars via upvotes on the Steemit website must convert their STEEM dollars to STEEM coins. From there, they can convert their STEEM into Bitcoin and then their Bitcoins into dollars.
How to Use STEEM
STEEM coins serve two primary functions. The first is as an investment vehicle. In this case, it is very similar to its cryptocurrency peers. Users can purchase STEEM coins from an exchange, hold them in their wallet, and hope that their price appreciates in value. When a user decides that it’s time to close out their position, they simply sell their coins on the open market and receive their gains (or take their losses). One reason that people invest in STEEM coins is because they believe the STEEM platform will be a profitable contribution to the blockchain community.
Trading cryptocurrencies like STEEM is different from trading fiat currencies because unlike fiat currencies, STEEM is free from central bank control and regulation. This means that exchange rate fluctuations caused by ever-changing monetary policy don’t directly affect STEEM coins.
STEEM’s second use is as the platform token for STEEM’s content publishing platform. The platform is a blockchain-powered rewards system that financially incentivizes the content publishing community.
Users, after a thirteen-week vesting schedule, can vote with STEEM tokens to promote content they find useful or interesting. With a one-STEEM, one-vote ratio, individuals who contribute to the community incentivize other users to publish their content. The rewards system encourages posters to share content, as their posts could earn them STEEM tokens. Users who have the most influence, measured by account balances, have the most influence over contribution scoring.
By creating monetary incentives for publishing content, the STEEM platform accomplishes two objectives. First, it encourages users to post content that will attract more participants. In turn, these publishers will be rewarded with STEEM coins. Second, it promotes information and content that is truly useful and interesting. With so much worthless information available online, STEEM has created a way to highlight only the most helpful posts through its reward-based platform.
What is STEEM Mining?
Traditional cryptocurrency mining is the process where groups of transactions, called blocks, are verified and added to the decentralized ledger. Validated blocks are then added to a larger chain of validated blocks, thus the name ‘blockchain’. Miners are compensated with coins when they solve a block. They also have access to mining calculators which can be used to calculate the profitability of the block in question.
Miners can choose to mine solo or in mining pools. Solo miners don’t have to split the mining reward with any other users. However, their processing output is generally much lower than mining pools. When mining in a pool, the aggregate computing output is generally higher, but the reward is lower on a per user basis.
In this traditional sense, STEEM coins are not mineable. However, as described above, STEEM can be earned by posting and commenting on the Steemit content creation site. The site financially incentivizes interaction, thereby spreading the reach of important articles, posts, and discussions. In this sense, Steemit is a social network powered by STEEM coins and tokens. Users are paid for the newsworthy content they post, whether individual blog posts or comments on other posts.
How to Mine STEEM
Technically speaking, STEEM coins are not mineable. The network operates on a ‘Proof-of-Brain’ protocol, whereby STEEM users are rewarded for using their brain, i.e. publishing upvote worthy content like blogs and articles. The play on ‘Proof-of-Work’ and ‘Proof-of-Stake’ shows how the end result of the Proof-of-Brain protocol is the same–by contributing meaningful content (analogous to the ‘work’ and ‘stake’ in PoW and PoS mining), users can earn STEEM coins as they receive upvotes, similar to being rewarded with coins when mining a block.
How will STEEM Scale?
Blockchains, despite their multifaceted, unique features, all have one thing in common–they have trouble scaling. And with a platform that depends on growing user interactions and posts, scalability is a particularly important topic for STEEM’s development crew. Per the white paper, the STEEM network is built on Graphene technology, which is able to support over 1,000 transactions per second, and can potentially scale to 10,000 transactions per second. This means that as demand increases, STEEM should be able to operate smoothly without facing a huge transaction backlog. Its blockchain is well-suited for future growth.