When I first heard about the Steem blockchain, and Steemit specifically, I had 2 immediate questions. What is Steemit? And how can they pay me for contributing content? Steemit is the first social media platform to be built on a blockchain. Users are rewarded with cryptocurrency for simply contributing and curating content. Contributors receive a reward in the form of financial compensation just for being an active member within the community.
What is the Steem Blockchain?
Behind Steemit, there lays the Steem blockchain. Think of Steem (the blockchain) as a large database that provides 2 things for applications like Steemit.com. First, it provides a cryptocurrency, which is known as STEEM. Think of Steem as an accounting ledger within the Steem blockchain (similar to Bitcoin). The second thing that the Steem blockchain provides is a content management system (CMS). The CMS does just as its name suggests, it makes sure the content goes into the blockchain in a specific and structured way. The CMS offers 3 core features to users; blog posts, comments, and account names. You are likely asking yourself what makes this different from every other social media platform?
How is Steem different?
What makes Steem different is that the backend has a host of specialized instruments needed to make these transactions possible. Things that really have never existed in any other paradigm before. The most important thing about the Steem platform is that the database needs to be almost completely censorship resistant. Otherwise, the cryptocurrency is just not possible (it wouldn’t hold any value). In order to make the cryptocurrency aspect possible within the database, there needs to be redundancy, meaning you can’t have only a couple of nodes that control the network. The way the Steem blockchain handles the issue of redundancy is by utilizing a series of nodes (or computers). These nodes are operated by a selected and elected group of people. The nodes all communicate with each other in set algorithmic ways in order to make sure that all the nodes on the network are running the same version of the database. If any node is NOT running the correct copy of the database, they are kicked out of the network. Nodes don’t want to get kicked out, there is an incentive to stay in the network where they are rewarded with the cryptocurrency Steem for their honest participation. The Blockchain is programmed to pay the participating nodes each time they successfully keep track of the ledger. This ensures they don’t want to get kicked out (it would be the equivalent of a human losing their job or getting fired). The Steem blockchain is a system of incentives that propagates the network making the cryptocurrency possible. Steem is the first blockchain to make cryptocurrency available in this specific way. This particular consensus algorithm is known as DPOS or Delegated Proof of Stake.
How it Works…
The Steem blockchain has 3 components. The consensus mechanism (DPOS) and the currency (Steem), both of these ideas are common to blockchain technology. What Steem adds is the CMS aspect to manage the content, this has never been done previously on a Blockchain. The other interesting mechanism which differentiates Steem from other Blockchains is that a portion of the new coins that are mined (or produced) each day are distributed to the users of the platform who are producing blog posts on Steemit.com. How this actually works is: the user writes a blog post on Steemit.com, this registers that user in a node on the Steem blockchain. The new node is given the current database or ledger and eventually, it is caught up with all the other nodes. Through this process, the blog posts of the user are also updated to be stored on the blockchain permanently.
The blockchain now has data that has been supplied and verified by its users. It’s in the form of a blog post, comments, and votes on both blog posts and comments. The blockchain has algorithms built into it that relate the cryptocurrency to the text. This is weighted together with the concept of User Voting. Users can Upvote or Downvote content (with an upvote being similar to a Like on Facebook). The Blockchain takes all this information; the Voting, the content, and the scheduled release of new Steem, and it decides how to distribute to the end users. The diagram below should help to visualize how this process takes place.
The Vision of Steem
To simplify, Steem is a cryptocurrency system where the cryptocurrency is autonomously distributed to real people to incentivize them to do regular activities within the community. The concept of Steem is obviously new, but also very powerful. Steemit.com is the first platform to leverage the Steem blockchain, but in the next few years, you could see hundreds if not thousands of platforms leveraging this protocol and concept to facilitate the growth of a community.
The Vision of Steem is to use token technologies like Steem to tokenize the entire content web. Whether content creators or community builders, they will be able to leverage tokens to accelerate the growth of their company and the growth of their community. Potentially to do internal fundraising or to monetize their website and make their online community sustainable.
At this point, especially if you don’t currently use Steemit, I think it is normal to be asking yourself is anyone actually using this platform. It is definitely worth noting that over the past 2 years since it’s launch Steemit.com has seen incredible growth. When Steemit launched in 2016 it was obviously unknown. At the time of publishing this article, it is a Top 1000 website globally, with its top market being Korea where it is a Top 200 website.
I mentioned that the Steem blockchain is 2 years old and that Steemit.com was the first application to use Steem. However, at the time of this article that is no longer the case. Other applications and use cases have begun building on top of the Steem blockchain. The platform, because of the nodes system all the data is publicly accessible by anyone. All you need to do is create an account (which is essentially operating a node) and you get full access to the entire database with full Read and Write access. This concept opens up the opportunity for entrepreneurs to create their own interface that can connect to the Steem blockchain. They can leverage the features it provides which are the Steem currency and the CMS. To date, there have been over 350 applications built on the Steem blockchain. And in just 2 years of existence, it rivals Ethereum for the blockchain that has received the most attention from developers.
Steemit was the first and still the most successful of these applications, but there is one other that I will discuss and that is D.Tube. DTube is a look-alike competitor to Youtube. DTube has recently launched and their growth has been rapid over the past several months. Not only are viewers flocking to the new platform to view the content provided, they are starting to see a lot of content creators also start to look at D.Tube as a viable option to release their content. Steemit and DTube are just 2 examples, realistically this concept could reach to podcasts, movies, tv, etc.
I hope you found this article interesting and informative. It is admittedly a high-level explanation on the platform, in future articles I will dive deeper into the specifics. I would encourage you to join Steemit, and support decentralized applications. When you get there, you can find me @chainofblocks and I try to post on the platform once per week. Feel free to leave your Steem username in the comments so that I can follow you. A Chain of Blocks on Steemit