Imagine writing a nice post for your friends on social media on something you have experienced that day. You put some effort in it, put in a nice quote, make a meme and post it on your social media. It turns out your friends like it so much, that they want to share it with their friends. And their friends with their friends. Before you know it your post goes viral and millions of people have liked or shared it. This off course sounds amazing, but what do you get in return? You get some likes and appreciation, but that often fades away faster than you can enjoy it. Moreover, many funny posts or memes are shared without acknowledging the maker of this post and claim it as their own. To tackle this problem, Steem, came up with a new social media platform, Steemit. Steemit believes that the users of the platform should be rewarded for their contributions to the platform. Therefore, on their platform you can earn rewards for the content that you post on the website.
How does it work?
Steem is a social network site where you can earn rewards as a publisher or as a curator. The website is developed using Steemit Blockchain technology and STEEM Cryptocurrency. The content that is written on the social media platform is written to the Steem Blockchain, where it is stored in an immutable Blockchain ledger. Users in turn get rewards for posting content or acting as curator in the form of digital tokens called Steem.
Everyday new Steem tokens are added to the so called community rewards pool by the Steem Blockchain. These Tokens are given out to users, based on the amount of votes that their content has received. Moreover, active users that have a high amount of tokens in their wallet get additional recognition by giving them so called “Steem Power”. This gives them the power to decide where a larger portion of the rewards pool is distributed too. (Steemit FAQ, 2019)
Below video gives an clear overview of how Steem voting works:
As described above Steem tokens cannot only be rewarded by posting, but also by acting as a curator. Below there is a list of how a user can earn their digital tokens:
- Posting: If you post and share it with your fellow users you can earn so called upvotes. The higher the amount of upvotes you deserve, the bigger portion of the rewards pool you will get.
- Voting and curating: If you vote for a post before it becomes popular, you can earn a curation award. The amount you will receive for curating is dependent on your amount of Steem Power.
- Purchasing: STEEM or steem dollar tokens can be purchased on various market exchanges
- Vesting: By Holding your tokens to get extra steem power, you can earn extra tokens as reward for holding.
(Steemit FAQ, 2019)
This platform sounds as a dream come true for many contributors of the web, earning by simply posting or voting. However, the dream has not completely come true yet since there are some negative side effects causing the platform not to live up to its full potential. Below graph 1 shows that there is steep decrease in the amount of active users in the past month, indicating that people are no longer actively contributing to the platform. This decrease in active users can be described by the following problems.
One of the problems Steemit recently encountered is that of the fluctuating crypto market, which can cause the valuation of the company to diminish tremendously. A few months ago, CEO Ned Scott Posted and announcement saying Steemit had to let go 70% of its employees and that they would focus on keeping the cost of infrastructure that is running Stemmit.com low (Scott, 2018). This sudden reorganization is due to the crash in cryptocurrency prices in 2018. The value of Steem decreased from 8USD in the beginning of 2018, to only 0,30 USD at the end of the year, causing a large decrease in the cash flow of the company. (Zachary, 2018) This is off course a huge danger for the Steemit platform, being reliant on such a unreliable currency.
Other problems are more related to the set-up of the platform. By giving extra power to users that have a high amount of Steem tokens, you create so called whales that have total control of the platform. (Masters, 2018) They have more voting power and power over the division of the Reward Pool, and thus have high control over what gets rewarded. This makes it extremely hard for new users to enter to platform and gain a substantive part of the payout.
Another important aspects of a platform is network effects, meaning that more users will generate more value for each other. For Steemit however, more users does not automatically generate extra value for the users, because there is also a form of competition on the platform. If more people will be part of the platform it will become harder to get large amounts of upvotes, and thus rewards. This causes the amount of reward to be spread more evenly over many contributors, making the amount of reward almost dismissible. By doing so the platform creates a trap for itself where more users actually discourages the effect of rewarding contributors.
A side effects for this increased difficulty to get upvotes is that Voting bots have been developed. You can pay these voting bots to create additional up votes on your article, and by doing so increasing your rewards. (Masters,2018) Articles do no longer get rewarded for their quality, but are more dependent on the amount of money people are willing to invest in voting bots. This diminishes the quality of the platform, since it cause low quality articles to also reach high amount of appreciation. Moreover it is causing prominent users to leave the platform, since it results in unfair competition (Skoll, 2018).
Steemit, Yer or No?
So, the idea of being able to earn rewards for your content sounds great but it has been shown that creating such a platform is harder than it sounds. Money always triggers a form of greediness, making people focus more on earning more rather than creating valued content. This causes cheating and collaboration which does no good for the quality of the platform. If you are still looking for a platform where you get more recognitions for you contributions, (but no money), check out Reddit. Do you really want to monetize your content you can always become an influencer on Instagram or Youtube.
Arcange. (2019). Steem Statistics – 2019.01.01. Retrieved from https://steemit.com/statistics/@arcange/steem-statistics-20190101-en
Masters, C. (2018). Losing Steem: One of the Most Active Crypto Projects Cuts Staff. Retrieved from https://cryptovest.com/news/losing-steem-one-of-the-most-active-crypto-projects-cuts-staff
Steemit FAQ. (2019). Retrieved from https://steemit.com/faq.html#Can_I_earn_digital_tokens_for_commenting
Skoll, M. (2018). Why I Left the Steem Blockchain. Retrieved from https://medium.com/@heymattsokol/why-i-left-the-steem-blockchain-bb0214a451b8
Tomlinson, S. (2017). An explanation of Steemit Voring Power – retrieved from https://www.youtube.com/watch?v=FLsPI65HzPI
Zachary. (2018). Steemit Lets Go Over 70% of Employees, Blames Bear. Retrieved from https://bitcoinnews.com/steemit-lets-go-over-70-of-employees-blames-bear/