Steem project purpose and description
What is Steem?
Steem is a cryptocurrency that powers the Steemit platform – an incentivized blockchain-based social media platform created by Dan Larimer in 2016. Larimer is also the founder of BitShares.
The Steemit blockchain allows users on it to create and curate content, the same way it happens in other platforms such as Hacker News and Reddit, and get rewarded in Steem.
Unlike other social media platforms, Steemit is built on blockchain technology that allows it operate in a completely decentralized manner. In his words, Larimer indicated that there is no censorship, no central authority, no data vulnerability, no downtime, and no data abuse. But how does Steem, interact with the Steemit platform to deliver complete decentralization? Steem is guided by three core principles;
- Every person who contributes content should receive payment for it. This is the same principle used in many startups to reward shareholders when they go public. In the Steem network, all the contributing members are rewarded. When a user creates content that delivers great value and attracts a lot of people, he is rewarded with Steem.
- The second principle is that every form of capital is highly valuable. This implies that people who contribute their time, resources, and attention to generating and curating content are as valuable as those who contribute cash. Call it sweat equity principle.
- The third principle used at Steemit is that the community generates value to serve its members. This is the same ideology demonstrated by health sharing plans, food co-ops, and even credit union that serve community members as opposed to selling services outside the respective communities.
What is the problem that Steem Solves?
To have a clear grip of what Steem is, you need to take a closer look at the problem it solves. The problem that Steem seeks to solve has plagued the content niche since the discovery of the internet. The publishers have always found it very difficult to monetize their work articulately.
For many years, content creators were left with limited opportunities to raise cash from their work. In many cases, they were forced to engage advertisers, affiliate marketers, and sales funnels for financial rewards. These middle-entities have become so competitive to the extent that content creators have been left with very small margins.
The overall impact is that the content generator is demotivated so much and no longer commits to delivering high-quality work. Publishers are forced to bow to corporate interests in order to eke a living. In the same way that Satoshi Nakamoto crafted a solution against banks with his Bitcoin, Larimer coined a creative solution to the content marketing problem using Steem.
How does Steem Solve the problem?
To address the problem, Steem came up with a simple yet highly effective idea of decentralizing content. This means eliminating the middle entities so that publishers and viewers can enjoy a peer2peer association.
- Posting: When you create content and upload it on the Steemit platform, the community upvotes it and earn you a reward from the Steemit Reward Pool. Note that if the content is not valuable, it can also be downvoted.
- Voting and curating content: As a reader in the Steemit network, discovering content that goes ahead to become popular will also earn you a reward from the reward pool. Note that for curation and voting, the rewards that one can get depends on the stake he holds on the network.
- The Steemit platform employs a meritocratic model where those with a greater stake have the opportunity to cast more votes.
To make the idea of content generation, discovery, voting, and reward work, the Steemit platform uses three main types of currencies. The three forms of coins that help to extend the Steemit beyond the blockchain niche.
- Steam: This is the primary coin in the Steemit network, and the other two options fully depend on it. The cryptocurrency was released in 2016 and is increased every year with 100%. Steem can be bought in the main crypto markets.
- Steem Dollars (SD): This is the coin considered to be more stable in the Steemit network. The value of one Steem Dollar to the conventional USD is 1:1. The content creators and curators are paid in Steem Dollars.
- Steem Power (SP): This is the third coin on the network that is used to symbolize how much influence that one has on the Steemit platform. The more the Steem Power you hold, the more the votes you can cast for content in the network.
What makes Steem better than it’s competitors?
The blockchain network niche has been growing rapidly resulting to stiff competition. However, Steem stands taller than many other cryptocurrencies because of its unique architecture and application. Here are the main things that have kept Steem well ahead of others in the industry.
- There are three coins operating in the same network
The idea of running three coins in the same networks is perhaps that most unique think that makes Steem better than all. While people can still use Steem (the principle coin) for standard operations the same way they are used to with Bitcoin, Ripple, and NEO among others, the additional coins have helped to drive greater value to the network.
For example, the Steem Dollar helps to stabilize the value and protect users against high volatility. This implies that you can save in Steem Dollars without worrying that the coins will lose value in the highly volatile crypto market. Most competitors such as Bitcoin and Ethereum only feature one coin.
- It employs Delegated Proof Of Stake
The Steem network employs Delegated Proof of Stake (DPoS) which is an advanced model of Proof of Stake (PoS). Some of the top competitors that employ POS include NAV Coin, Stratis, and Reddcoin. The issue with POS is that a lot of weight is placed only on those who have a lot of the funds. This can raise the danger of 51% attack, lower the speed of transactions, and even raise the cost of transactions. Steem addresses this by improving PoS to Delegated Proof of Stake where those with stake select delegates to be involved in adding new blocks to the public ledger.
- It has addressed the issue of volatility to attract more users
One of the primary problems faced by many cryptocurrencies is high volatility. The prices of most cryptocurrencies are highly volatile responding to issues in the market with extreme swings. For example, partnerships, new laws, entry of new operators, and other factors easily send the price of cryptocurrencies up or tumbling. Steem introduced the Steem Dollar whose value is tied to the USD at a ratio of 1:1 to address the problem of volatility.
- It focuses on a niche that is less explored
Unlike many cryptocurrencies such as Bitcoin Cash and Litecoin that were primarily designed to help with sending value, Steem has a new role; to disrupt the content generation, discovery, and use. Now users can come to Steem to send value, save, publish content, discover content, invest, and vote for posts.
- Sending value on Steem network
Most cryptocurrencies were created to help pull down the cost of sending value. They have achieved this target with a great margin. However, Steem has managed to cut the cost to nil. If you are sending value on the Steem network, you will not be charged.
How can Steem be categorized?
Steem is a fully decentralized and next-generation cryptocurrency that foresaw and crafted workable solutions to most blockchain issues. As early as 2014, Larimer had already noted the dangers that faced the content marketing niche. But he took the opportunity to also address the future threats of high volatility in cryptocurrencies.
- The network does not have a central authority controlling its operations.
- Its blockchain network relies on nodes spread in the system which implies that data vulnerability is fully eliminated.
- The solutions adopted by Steem have addressed issues such as volatility and cost of transactions that were not at critical stages by 2016 the way they are today. In his view, Dan Larimer believes that Steem has the solution to most issues being experienced in the crypto world.
Steem and Security?
Steem was created when major blockchain security issues, scams, and threats were hitting the peak.
In 2011, Mt. Gox was hacked and over 740,000 Bitcoins stolen while Cryptsy Exchange was attacked in 2014. While one might argue that most attacks were perpetrated in the exchanges, they greatly irked Dan Larimer and his development team forcing them to work on lasting solutions.
- Timing attacks: The Steem development team understood very well that users access to information online is faster compared to the blockchain because the latter relies on the nodes adding content to it. This implies that people who have access to this information can use it for their benefit at the expense of the community. To address this, a sort of playing field was created.
Steem requires that all conversion requests are delayed with 3.5 days. What this implies is that neither the blockchain nor the trader will have an added advantage over the price at the time of coin conversion.
- 51% attacks: The open nature of acquiring coins in some decentralized platforms, especially those employing PoW (Proof of Work) consensus models have resulted in domination by a few individuals. This raises the threat of 51% attack. However, Steem has addressed this problem by adopting the Delegated Proof of Stake consensus model that helps with equal distribution of the coins. This model in eliminating the threat of 51% attack completely.
- Voting abuse: In the Steem system, those with more Steem Power have more votes. But this can easily be abused through negative voting. To address the issue, Steem uses Rate Limited Voting that allows users to only read and evaluate a given quantity of work in a day. If they go beyond that rate, it is considered a red flag for automation.
- Advanced encryption: Encryption is the bottom line of cryptocurrencies targeted at making it extra difficult for attackers. Whether it is the nodes spread in the Steem network helping to confirm transactions or attackers, it is very difficult to break into users’ accounts to steal their identity.
- Regular core code updates: Like other cryptocurrencies, Steem is not immune to targeted attacks through bugs and malicious codes. The development team appreciates that its code is closely followed by hackers targeting to crack and siphon away the user’s assets. To fix these gaps and keep the network as safe as possible, Steem development team releases regular updates. Some of these updates include Steem 0.19.3 released on March 15th, 2018 and Steem 0.19.10 of 11th July 2018.
When you join the Steem network, it is prudent to appreciate that the revered model of total decentralization also comes with one disadvantage; there is no consumer protection. Everything is done through consensus. Therefore, mistakes such as sending Steem to a wrong address are irreversible. This implies that you will also need to do your part to stay safe in the Steem network.
- Never share the private keys with a third party.
- Ensure to triple check the public address of the target recipient when sending Steem.
- Pick the cryptocurrency exchanges for trading Steem with a lot of care. Only go for those that have advanced security measures such as 2-factor authentication and use of cold storage.
- Avoid visiting risky sites from the same computer used to access Steem network.
- Do not forget the rule of the thumb when working online; backup everything.
Examples of Steem’s use cases / applications.
When Steem was created, there is no doubt that Larimer had a clearer grip of the blockchain niche than most developers and users. This applies even today. Steem comes with the following use cases.
- You can use Steem to purchase other cryptocurrencies especially in crypto-to-crypto only platforms such as Bittrex and KuCoin.
- Use the coins to make direct purchases either in online or conventional stores downtown. Most e-commerce stores are embracing cryptocurrencies and you should be able to make directly when you see a label such as; Steem Accepted Here.
- Steem has become a great option for investment. Most people opt to buy and hold waiting for the price to go up before selling for a profit.
- Some people have resorted to Steem and Steemit as sources of income. They create content for a pay, discover content for pay, and trade Steem in the markets for profit. However, it is important to appreciate that trading is based on prediction and price can move either up yielding profits or down resulting in losses.
- Steem is a great place to save or hide investment from third-party seizures. Because the value of Steem Dollar is tied to that of USD, you can rest assured that it will not be affected by price volatility.