Longcaller

Steem

Steem powers online communities.

Social media not only helps to connect with other people. It also helps to publish and distribute content. Websites like Facebook, Reddit, and Youtube provide a platform on which users create content. This content is then shared with the creator’s network and with the relevant communities. For example, on Facebook, a famous writer can share his experience or tell about an upcoming book. On Reddit, an experienced gardener can make a guide on a specific topic and then discuss it with other community members. It’s the same on Youtube, Twitter, Tumblr, and many other sites that thrive on user-generated content.

Steem serves the same purpose of publishing and distributing user content. Steem is similar to Reddit: it has niche communities, and the discussion is done in threads. Each user can post, comment, and vote content.

Unlike Facebook, Reddit, and Twitter, Steem is running on the blockchain. That allows not only to create a decentralized, censor-free network but also allows to reward participants in a fair way. All those users who contribute to the network and therefore increase its total value, have a right to receive coins in return. That way, members are incentivized to create and curate quality content.

Some users create content. Others curate it by voting the posts up or down. That way, the quality content is rewarded in a decentralized way. Steem calls that a Proof-of-Brain algorithm. Its essential feature is that it is users, not the computers, who evaluate the contributions of others to the network.

There are three types of tokens in Steem: Steem, Steem Power, and Steem Dollars.

Steem is the base token of the system. It represents the ownership of the network. Everyone who has Steem tokens has a right to use the blockchain’s functions.

Steem Power (SP) is the vesting token. To generate SP, one needs to lock his Steem for a long period of time. Users can spend SP to curate content on Steem by upvoting and downvoting content. In return, they receive Steem based on their contribution to the content discovery and content quality. SP is also used to vote for the Witnesses.

Steem Dollars or Steem Blockchain Dollars (SBD) is a stable coin on the Steem network. It is pegged to the dollar. The principle is similar to Dai stable coin: users can issue a debt based on how much Steem they have. The debt parameters are adjusted by the blockchain to control the supply and demand of SBD and keep its price close to 1 USD.

Steem uses Delegated Proof-of-Stake (DPoS) to produce new blocks and reach consensus. The block production is made in rounds. Each round, 21 Witnesses produce blocks, one block per 3 seconds.

Witnesses are elected based on the amount of SP they receive from voters. 20 witnesses are selected from the top 20, and another one is selected randomly. Aside from producing blocks, witnesses work as oracles, providing the price of Steem and SBD on exchanges. They also support or decline hardfork changes, setting the vision for platform evolution.

Steem is fast and scalable, thanks to the DPoS algorithm and platform architecture. It used Graphene in past but now switched to ChainBase. Both technologies are theoretically capable of handling 10,000 transactions per second and more. For comparison, Reddit users make about 250 actions per second. Steem can handle that and much more.

Steem is zero fee network, i. e. there are no actions that require paying a fee, and all transactions are free. There are no fees, yet the spam is punished and can’t bloat the network. This is possible thanks to the dynamic fractional reserve. It allows each user to take actions based on how much coins they have. What makes it effective is that in the absence of network congestion, users have a higher amount of bandwidth per share. That way, when the network load is low, users can make a lot of transactions having little Steem. When the network load is high (for example, if an attacker tries to stop the network from working properly), each user that has enough stake coins will still be able to make transactions.

Steem is a social media platform which treats the content as first-class citizen. The text of each post is permanently stored in the blockchain. Not only that allows to access the content in a trustless way, it also opens possibilities to the copyright industry. Each post has a timestamp and is protected by the consensus of all nodes. It is almost impossible to either change or remove that content, same for the timestamp. Having a piece of content stored in blockchain under one’s account name can be a good evidence of the authorship.

Steem has a steadily decreasing inflation, each year creating less and less new coins. The initial inflation rate was about 10%, and it’s decreasing at a rate of about 0.5% each year, up to about 1% annual inflation rate.

Newly created tokens are split between reward pool (75%), SP holders (15%), and block producers (10%). Reward pool is split between content creators and curators.

In Steem, there are three types of account keys. The first one is a posting key, which serves “social” purposes. It is used for creating posts, commenting on them, voting for the content, resteeming (reposting content on Steem), and for following and muting other accounts. The second one is an active key, which is used for coin transferring, converting Steem into SP and back, voting for witnesses, trading Steem and SBD, and resetting the posting key. Finally, there is an owner key, which is used to reset any of the three keys and to prove ownership during account recovery.

Timeline

  • March 23, 2016: Initial commit on Github. github.com
  • March 24, 2016: Launch of the network. bitcointalk.org
  • May 9, 2016: Official thread on Bitcointalk. bitcointalk.org
  • June 19, 2017: The Hardfork 19 was accepted by witnesses. steemit.com
  • July 9, 2017: Release of Steem Bluepaper, the simplified version of Whitepaper. steemit.com
  • September 28, 2017: Announcement of Smart Media Tokens (SMT). SMTs can power Steem-like communities. steemit.com
  • December 18, 2017: Steem handled 1 million transactions in one day. steemit.com
Hi. I write articles like this each week. You can subscribe and get them delivered to your email address.