Steem is a digital token or cryptocurrency that was developed exclusively for the Steemit social media platform. Steemit harnesses the power of blockchain technology to offer incentives to those who use the network. Users that contribute by sharing posts and curating content are rewarded with the Steem token. The process of earning Steem is much like getting up votes on Reddit. Some cryptocurrency insiders have predicted that digital assets tied to social networks could eclipse Bitcoin in value.
The History of Steem
Steem was first published in a whitepaper that appeared in March 2016. The token exists as the fundamental unit of the Steem blockchain. There are also Steem Dollars and Steem Power, but these are purely reward units that can be redeemed with the Steem token. Once tokens have been converted to award, they become spendable for various merchandise. This is a cryptocurrency that is meant to be spent and not held for the purposes of investment, although investment value may develop over time.
The Beta version of the platform lasted until July 4, 2016. It now receives regular updates like most cryptocurrency code. It’s evolution is, of course , tied to the popularity of Steemit.
Steem Dollars are issued as rewards for sharing content. The value of each Steem Dollar is equal to $1 USD. The purpose of this unit was to insure that its recipients would not be affected by the fluctuation of Steem’s value on currency exchanges. The promise behind Steem Dollars is that an individual will receive that same amount in USD value each time they redeem the units. This does not change depending on the value of the primary digital asset. However, the requirements to earn Steam Dollars can change at the discretion of Steemit.
Users can, in fact, hold on to their Steem Dollars and even profit from doing so. The reason for this is that the units earn an annual interest rate of 10% which is a respectable return. The downside is the limited opportunity to spend the units at the present time.
Steem Power is a measure of influence. The more of these a user holds, the more power they have in the Steemit universe. Those users who have a lot of Steam Power will find that their votes in the platform have more weight. Powering Up or Powering Down is possible, and the latter involves converting Steam Power into the Steam cryptocurrency.
Steam Power (SP) cannot be cashed in at once. This would cause the entire economic system of the Steem blockchain to collapse. Therefore, users are compelled to cash in SP gradually over a two-year period.
About 70,000 people currently hold accounts with Steemit. By default, this makes them eligible to receive Steem tokens. The number of active users is much lower, though, and this makes the cryptocurrency appealing on a certain level. It is very possible to enter the platform in its infancy, and that could provide a big advantage. There is also no limit on the number of Steem tokens that can be created, and the platform has a built-in inflation rate of 100% annually. There is a certain amount of growth that is guaranteed with the token.
There was a brief period in time when Steem passed the important threshold of a $200 million market cap, which placed it third after Ethereum. The enthusiasm over the coin has been tempered a little over time and this has caused the coin to decline, but there are multiple reasons to assume that it could rise once more to a significant value. A primary reason of this is that social networks are massively popular today. Steemit could continue to attract more users and this would likely increase the value of its cryptocurrency.
Mining Steem is actually possible and feasible for the cryptocurrency enthusiast. It requires some dedicated computer hardware can consume a significant number of resources. This can be a deterrent to the individual who explores cryptocurrency as a hobby.
Another thing that individuals should be aware of is that mining will produce Steem Power and not the Steem token. SP is only useful in the context that it grants users more influence on the Steem platform. The developers have published a complete Steem mining guide which walks users through the process of mining the coin.
Those who have an interest in mining other cryptocurrencies like Bitcoin and Ethereum might want to check out a mining collective as an alternative. Genesis Mining is one such service that allows individuals to pool their resources by purchasing mining contracts which confer a certain amount of hash power. The company maintains all of the mining hardware at secure facilities around the world and users do not have to pay upkeep. Everything is included in the price of the mining contract.
When tokens are earned, the rewards are shared by all members that have participated in the contract. It can be a lucrative venture when pursued over time, and it lets individuals participate in mining without the need to buy expensive equipment.
Steem Use and Acceptance
The Steem website has an entire section that is devoted to ways in which owners of this cryptocurrency can spend Steem. One of the first ways in which the token can be spent is to use it at sites like Peerhub. This website lets users list items for sale and be paid with Steem and other cryptocurrencies. It works a lot like Ebay but only digital assets are accepted as payment. Some of the items available on Peerhub include clothing and artwork.
It is also possible to trade Steem on an internal market that is a part of the platform. Users can trade their Steem against Steem Dollars. The price of each fluctuates as it would in any financial market. Another use for Steem is to earn it and hold it as an investment. The SBD tokens are attached to the US dollar as described earlier, so these are a fairly safe investment. Their value can still go up or down, though, and users should be aware of the potential risks.
Actual Steem tokens can vary wildly in their value from day to day. In the early part of 2018, the tokens have been worth around the $3 USD mark. They have also been valued at mere pennies in the past. Trading cryptocurrency can be volatile ride, and users should expect that values will regularly increase and decrease.
There are a couple of gambling games which can be played with Steem tokens. One of these is Steem Dice and another is a Steem lottery. Custom avatars can be purchased with the token for use on the Steem platform, and it is also possible to simply cash out the tokens for fiat currency. The problem with this is that doing so will first require the individual to transfer Steem to an intermediate cryptocurrency. For example, users would need to turn their Steem into Bitcoin and then cash it out with the help of a cryptocurrency exchange.