STEEM – A blockchain-based social media rewards platform
June saw the cryptocurrency market cap steer past $100 Billion with most of the cryptocurrencies enjoying an unusual surge. One such token, which was restored to its former glory during the same period was ‘STEEM.’ Post its launch, STEEM hit the $400 Million mark in market cap during July 2016. The price of STEEM tokens went quickly from $0.24 to $ 4.63 marking an 1800% rise in the value of the cryptocurrency. However, with no cap on the supply of STEEM in the long run, the price and the market cap of the digital token dropped to lower bounds of $200 Million.
Unlike other tokens which derive their value from their limited supply or intermediary burning, STEEM derives its value from its usage. Hence the drop was expected with the dilution of tokens. However, the cryptocurrency has picked up the pace in adoption and is currently competing with the Top-20 cryptocurrency projects. Let’s dive deep into how STEEM is all set to disrupt social media rewards platform and its modus operandi.
What is STEEM?
Steem is a blockchain-based social media platform where anyone can earn rewards. The social news service which runs blogging and social networking website on top of Steem blockchain is ‘Steeimit.’ The concept is similar to other blogging websites or social news websites like Reddit, but the text content is saved in a blockchain. Using a blockchain enables rewarding comments and posts with secure tokens of value (Steem).
Users can upvote posts and comments, and the authors who get upvoted can receive a monetary reward in the form of Steem tokens. People are also paid for curating popular content. Curating involves voting comments and post submissions. Hence it can be safely said that the performance of Steem tokens, in turn, depends on their utility and the adoption of Steemit platform.
How is STEEM profitable?
As pointed out earlier, Steem tokens don’t have the inbuilt feature of limiting the supply to derive value. However, the unlimited supply turns out to be profitable for the digital token class as it paves the way for better adoption. When users publish popular content on steemit, as measured by upvotes, they receive steem tokens. Other users react by sharing, upvoting, and commenting on the content.
Steem tokens reward this content creation and participation. Since there is no cap on the number of tokens, everyone gets paid irrespective of the value of tokens making it a useful social network. This factor improves adoption of the platform, thereby promoting the underlying digital asset.
One might think that in the long term since the supply is infinite, the Steem token cannot act as a store of value. However, there are guard rails to ensure that the value of Steem tokens doesn’t fall too low due to this inflationary supply model. Every 3.3 years, all the steem tokens available will be divided by 10, and their value will be multiplied by 10, thereby maintaining the market cap while making sure that the dilution won’t reduce the value. Hence the tokens are profitable with the nature of the network promoting better adoption.
Launch dynamics of STEEM and its performance
Launched as disruptive social media platform where users can generate revenue streams, STEEM was an instant hit in the crypto-community. The digital asset experienced an early hard fork in July 2016, post which the payouts drove the adoptions in quick time. The cryptocurrency hit $400 Million market cap in the same month, where the price of each token was trading above $4.
Currently (at the time of writing this post)the tokens are trading around $2 with the market cap soaring around the all-time highs of $500 Million. The token is traded on Poloneix, Bittrex, Livecoin, OpenLedger, alcurEX and HitBTC exchanges. On OpenLedger, the Steem trading pairs available encompass traditional fiat currencies like USD, EUR, etc. and also a host of tokens (OBITS, ICOO) in addition to Bitcoin and Ethereum.
Steem’s success as a digital currency will be more a reflection of Steemit’s success as a platform as opposed to the economics of the coin itself. This is an excellent example of a digital currency whose value will be closely affiliated to its utilitarian value as a social networking and sharing platform. Basing on the increasing usage statistics of Steemit and its brilliantly designed rewards platform, Steem’s value is sure to go up soon.
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