steemit — Hive

Steemit

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

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:
Source: coinmarketcap
Source: coinmarketcap

SteemPower
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.

Steem Dollars

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:
Steem-withdrawal.png
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:
Posted on Steemit
Posted on Steemit

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:
steemit-payout.png
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:
results from our Steemit post about trading Bitcoin
results from our Steemit post about trading Bitcoin

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:
Our Steemit post about USI-Tech
Our Steemit post about USI-Tech

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.