When it comes to cryptocurrencies, we usually stick with the majors and avoid the smaller alt coins and the, what we consider to be riskier, ICO market (Initial Coin Offering). That was until we discovered Steemit. This alt coin aims to combine the cryptocurrency with blogging and social media.
We usually stick to the cryptos which can be traded on plus500, as we enjoy the leveraged trading and the fact that we can use just a small fiat deposit to trade. We haven't found a way to trade Steemit like this, but we found the concept interesting. It's so interesting, that we decided to write a streetonomic full review of Steemit.
What Is Steemit
We decided that the only way to learn more about Steemit and how it works, would be to sign up and give it a try. So we created an account and started using Steemit as a new member.
Steemit is a blockchain database that combines features of blogging and social media with cryptocurrency. It offers earning potential to content creators and curators alike. Think of something like Reddit or Tumblr, except the rewards are shared with the users. You can earn 'Steem' by writing content, through comments or though voting on existing content.
The amount of Steem you can earn is based on the Steemit algorithm. We read the Steemit Whitepaper and the Steemit Bluepaper, and still feel like we only have a vague understanding of how it works. For a start the wallet is broken into subsections you'd expect it all to be Steem, but it isn't. You can earn:
Steem is the coin traded on exchanges. All values of Steemit coin are derived in someway from the value of Steem. The price of Steem over the past year is shown in the chart below:
This is a vested interest in the Steem network. The more Steem Power you hold, the more influence you will have in the network. One interesting thing about Steem Power is that you can't trade it. If you want to sell it, you need to first convert it to regular Steem tokens. According to the whitepaper converting from Steem Power to Steem will take 13 weeks.
The main advantage of holding Steem Power, is that it gives you greater influence. When you comment or vote on content, your influence will be proportional to how much Steem Power you are holding. In other words some votes are more equal than others. We can't confirm this but holding more steem power might also improve the odds that blogs you publish will earn some Steem.
Another advantage of holding Steem Power, is that you can earn interest and grow your balance. When new Steem is issued, 15% of it is allocated proportionally to those holding Steem Power. In this regard, holding Steem Power is similar to owning hashrate on a mining based coin. The more Steem Power you hold, the greater your allocation of newly issued Steem.
We like that holding Steem Power gives you more influence and greater potential to earn newly minted coin. We don't like the 13 week time lapsed withdrawal this is something which would put a lot of people off altogether! The incentives alone should be enough to keep people invested in Steem Power. The drip feed withdrawal process might prevent people from investing in the first place.
Steemit considers Steem Dollars (SBD) as their version of debt, or convertible notes. Steem Power on the other hand would be their version of equity, or partial ownership of the network. Steem Dollars (SBD) are designed to give the cryptocurrency stability. The goal is to keep the value of one Steem Dollar at close to the US Dollar as possible.
Steemit will allocate Steem Dollars and pay interest on them in a way that influences the exchange rate to stay within the acceptable range of $0.95 to $1.05 US. We have chosen to overlook the irony of a cryptocurrency pegging to a fiat to add value.
In order to stymie corruption, Steemit bases the exchange rate of SBD to Steem on a 3.5 day moving average price. This mechanism is designed to prevent people from intentionally gaming the market and profiteering off short term price manipulations.
When you earn Steem from blogging, commenting or voting, you will be paid partially in Steem Power, and partially in SBD. The ratio should be close to 50/50, but the algorithm will adjust this in order to keep the SBD exchange as close as possible to US $1.
If you want to convert your SBD to Steem, there will be delays. We had a small balance of SBD, which we wanted to move to Steem Power (hey might as well build the influential power with small balances). It was a little annoying that the process will take 3 days, as shown below:
The whitepaper explains that the delay in converting SBD to Steem, is to prevent market manipulation. However we once again worry that by reducing liquidity, Steem is making themselves less attractive to new investors.
Can You Make Money With Steemit
As a brand new user with only the initial allocation of Steem Power, we decided to test Steemit the only way we knew how. We wrote a blog post, shown below:
Our blog post (about the Playstation 4 with VR), earned $6.19 from 45 upvotes in the first 7 hours. That was around 8 days ago. The current earnings are shown below:
As we can see, after the first 7 hours, the page did not get any more upvotes. This is probably normal as most content will only get attention while it is new. After that it is quite likely that it will become a needle in the haystack of similar content. What is interesting here, is that the total earnings have gone up by $0.90 even though there have been no new likes.
This is most likely because of the change in the price of Steem from when we posted the blog until we got paid. Once you have earned Steem, you will have to wait 7 days until it is shown in your wallet. During the 7 days between us writing the above post and getting paid to our Steem wallet, the price of Steem moved from around US $0.90 to over US $1.20.
This delay is probably designed to encourage people to become long term Steem investors. However we believe that it will do more harm than good by discouraging writers who aren't happy with the 7 day payout lag, as well as the withdrawal lags that will follow.
You might notice that as the Author, we received $5.34, with the remaining $1.75 being paid to curators. One thing we do find interesting, is that there were 45 upvotes, but it's only showing 20 pageviews. This is probably due to people who upvote the post based on what they see in the feed, but don't actually click to view the full content.
We were a little disappointed that pageviews appear to have not value with Steemit. If we look at the very first post we wrote (about trading Bitcoin), we see the results below:
As we see here, the post with 80 views has earned $1.90, where as the one with only 20 views, earned $7.09. The reason is because one had 45 upvotes while the other had only 6. So the key to earning with Steemit, is writing content which people will upvote (but not necessarily read in full). With this in mind, we attempted a third post with Steemit, the results are shown below:
This post about our experiences with USI-Tech had 54 upvotes (only 6 pageviews), and has only earned US $0.05. Despite having more upvotes than all other Steemit posts we've written, it has the lowest earnings. This could be because it didn't get the right kind of likes. As we saw it's possible to earn $1.90 from just 6 upvotes. The difference is that at least one of those 6 upvotes came from someone who is holding a lot of Steem Power.
So making money with Steemit is possible. However you have to create the type of content which appeals to people with Steem Power. You need lots of upvotes from people who are holding influential Steem Power. I guess it's not that different to the real world. You can make a lot more money if you create something that appeals to rich people.
What We Like About Steemit
We like the idea of Steemit. A social media / blogging platform which rewards the users who add value to it. It is possible to make money with Steemit, but don't expect fast returns. It's more likely that you'll have to put in some time and effort creating content and writing lots of comments.
If you want to generate an income with Steemit, then we recommend that you first spend time building Steem Power. You could buy Steem and convert it to Steem Power instantly, but you can also earn it but creating quality content and curation. Steemit is an opportunity to turn ideas and opinions into profit.
One thing you might have to do is take some time learning to write with the correct Steemit markdown. This is the code you will need to use to tell the system how you want your final post to look. There is a preview panel below where you type, so you can check how it looks as you go, but you need to know the code if you want to put text in the center or if you want to make something bold etc.
Another thing you will need to know in advance is that because Steemit uses the blockchain, once you've published a post, you can't change it. You can't edit your posts to take out typos, or to make updates or changes. If you accidentally post a blog more than once (which we did), then you can't simply delete the unwanted copy.
The permanency of posts is good if you want to be sure that your posts remain in tact and free of third party censorship. However as the author, it would be nice to have the ability to edit our own work. It's not a huge deal, it just means that with Steemit you need to be very careful to make sure that everything is right before you publish.
What We Don't Like About Steemit
You could probably guess that we don't like the lags. Steemit has built several delays into their system as a way to reward longer term Steem holders. Unfortunately these strategies could dissuade new members from joining. People might become long term investors because of the influence rewards of Steem Power, or the potential to earn interest from SBD. They should not be forced into it by simple processes which take several days, when other coins can complete them within hours.
Another thing we didn't like about the Steemit model, is that we didn't really see anything that was designed to help bring money into the system. Apart from people buying more Steem on the open market, we don't see any other sources of cash inflows. The whitepaper says that they want to share the value of their network with the members. Our problem is that they aren't capitalizing on the value of the network.
How Can Steemit Bring Money Into the Network
One option, which we think may be quite unpopular is advertising. We know that the type of people who are into cryptocurrency usually aren't the type who like having ads on their screens, but it might just be necessary. The whitepaper uses Reddit as an example of a platform Steemit wants to emulate. If they want to share the value generated by having all these members and pageviews, they have to first cash in on it. How does Reddit, do this? Well here's a screenshot from Reddit:
If Steemit did have advertising, it wouldn't be difficult to share a portion of the earnings with members. If they use something like Google Adsense, they could even monitor precisely how much advertising revenue each post generates, and share a fixed portion with the creators and moderators.
Steemit already has space for adverts, so we wouldn't be surprised if we start seeing them in the right hand panel in the near future. The right hand side of a Steemit screen is shown below:
Steemit already has a nice chunk of blank screen in a spot which commonly has advertising on other websites. We believe that advertising would lead to money flowing into the Steemit network and if done correctly (in a way that avoids corruption), it could make more money for all Steemit members.
Our Final Say
Steemit is free join, so we think it's worth signing up. However given the delays in accessing your Steem, and the fact that you need a lot of Steem Power to gain influence, we don't think you should sign up with the intention of turning a profit. There are lots of ways to write blogs and earn a bit of cash, we use advertising to keep our content free to users.
Steemit is a fun concept and if you like sites like Reddit, then you'll probably enjoy this too. Even though the earnings start off pretty small, it's still fun to see some returns on contributions we have made so far. Given that Steemit is still in the Beta phases there could be changes ahead (hopefully improvements). We believe that the Steemit community has the potential to grow and if they find a way to bring money in, it can become a very popular platform for content creators from all over the internet.
We'd love to hear what you think about Steemit in the comments section below, especially if you can share your own experiences with Steem.