If you’ve ever started a blog, you know how incredibly difficult it is to monetize it. In fact, it’s so difficult that blogging nowadays is either seen as a hobby or as a way to establish credibility in a field. The best ways to monetize a blog are through advertising or through affiliate links. But to earn a credible income through advertising, you need hundreds of thousands of readers. Additionally, the rise of ad blockers makes earning revenue through advertising increasingly difficult.
In terms of affiliate links, some bloggers just don’t want to sell things on their blog. If you write philosophical essays on the nature of capitalism, you might not want to sell books or programs. And even if you do, there’s always a tenuous relationship between wanting to earn more money with your blog and promoting products you genuinely believe in.
This being said, more content than ever is being created. This is mostly because of the rise of social media, which has given everyone a voice. But these huge social media networks take all the profit, and don’t share that revenue with their content creators. So the end result is that, while some people earn six figures a year creating content, most people earn less than $100 a month, despite spending considerable time on their medium of choice.
Inundated by Content (courtesy of chamberofcommerce.com)
What if there was a better way? What if there was a way where content creators would be duly rewarded for their efforts? In fact, what if not only content creators, but content curators were rewarded too? After all, there’s value in finding good content in the online sea of rehashed information. That’s the central question behind Steem, the social blockchain.
What is Steem?
Steem was founded in March 2016 by Ned Scott and Dan Larimer. If you’re an avid DGaming.com reader, you might recognize Dan Larimer’s name: he’s the founder of BitShares, creator of the Delegated Proof of Stake (DPoS) consensus algorithm, and now the CTO of Block.One, the company behind EOS.
Steem is a social blockchain that aims to give content creators and curators a means to reward themselves for their effort. Steem has three main principles:
- The first principle is that everyone who contributes to a venture should receive pro-rata ownership, payment, or debt from that venture.
- The second principle is that all forms of capital are equally valuable. Time and attention are just as valuable as cash. This is called the sweat equity principle.
- The third principle is that the community creates value to serve its members.
The Steem blockchain uses a DPoS consensus algorithm and can handle many more transactions per second (TPS) than conventional PoW blockchains, such as Bitcoin and Ethereum. Considering Steem wants to power social media applications, where many people do many things at the same time, the Steem blockchain had to have a high TPS in order for it to scale.
Steem also has no transaction fees. Instead, it uses an algorithm that measures the average weekly bandwidth usage of users and allocates or caps bandwidth according to the load on the Steem blockchain. This makes sense, because Steem wants to reward its users for finding and creating content. Imagine if Steem would charge a few cents to upvote a post. That would discourage the vast majority of users, and defeat the entire purpose of Steem. Users expect certain things to be free, and transaction fees aren’t worth the monetary and the mental cost of something as simple as clicking the publish or like button.
The challenge for Steem is to build an algorithm that’s considered a fair assessment of the subjective value of every user’s contribution, an algorithm that can score each user according to this value and that can pay them out appropriately and in a way that cannot be manipulated. After all, users already manipulate Facebook, Twitter, and Reddit, and those social media platforms don’t reward their users with money.
To solve this, Steem uses something it calls Proof of Brain. It uses people’s votes to determine the value of a piece of content and to determine individual rewards. This counts both for votes on blog posts and videos, for example, but also for votes on comments. Steem sends micropayments to popular content producers, but also to those who vote on good content. Of course, as said above, those votes don’t cost anything, because Steem has no transaction fees.
But if its users don’t pay transaction fees, how does Steem finance itself?
Steem’s cryptocurrency is called STEEM (same word, just all in caps). The cryptocurrency started trading in late April 2016 and thundered from around $0.25 to a high of $4.34 in July 2016, pushing itself into the top five largest cryptocurrencies at the time and receiving attention from mainstream media. It collapsed shortly after and saw a revival halfway through mid-2017, soaring to an all-time high of $7.31 before falling down to what is $0.37 today and #41 on CoinMarketCap in terms of market capitalization.
There are three types of currency on the Steem blockchain: STEEM, Steem Power (SP), and Steem Dollars (SBD, the B stands for Blockchain). We’ve just spoken about STEEM: it’s Steem’s cryptocurrency that you can buy on all major crypto exchanges.
Owning STEEM is what’s called liquid ownership. You would be inclined to sell STEEM if the price rallies far beyond the price you bought it for. This is one of the main reasons why crypto investors jump from project to project: there’s always something shiny elsewhere.
But investors that have a long-term commitment to a project are incredibly valuable. It enables the project to make long-term plans, instead of trying to appease investors in the short-term. That’s what Steem Power is for. Users can commit their STEEM to a 13-week vesting schedule, turning it into Steem Power. This is what’s called vested ownership.
SP holders have more influence when curating and creating content, and they are also paid out 15% of the yearly STEEM inflation (more on that later). Transferring STEEM to SP is called ‘powering up’. Moving SP back to STEEM is called ‘powering down’.
The third and final type of Steem currency is the Steem Dollar. The SBD was developed to combat the by-now notorious volatility of the crypto markets. Why would investors trust a project for prolonged periods of time if the underlying cryptocurrency can swing 50% on any given day?
The SBD is a short-term debt instrument pegged to the US dollar. One SBD is approximately one dollar. How Steem ensures an SBD stays relatively pegged to the dollar is a complex question of demand and supply, and the Steem whitepaper explains in greater depth how it does so.
In December 2016, STEEM had an inflation rate of around 9.5% a year. This inflation rate will decrease by around 0.5% every year until the overall inflation rate reaches 0.95%. This is how Steem can pay out its users. 75% of those new tokens go to the reward pool, 15% goes to the holders of SP, and 10% is sent to the DPoS witnesses who power the blockchain.
Steem pays its content creators and curators with 50% SBD and 50% SP. Users can also decide to be paid out 100% in SP or not be paid out at all for certain pieces of content.
Decentralized Applications Built on Steem
If you’ve heard of Steem, you’ve probably heard of Steemit. It launched on July 4th of 2016 and was the first DApp built on the Steem blockchain. It’s a social media platform that pays out its users for creating and publishing content, and for voting and commenting on content that you like.
Steemit is inspired by Reddit and is organized along the same lines. You can click on tags and find a list of content specific to that tag. Different from Reddit, however, is the payouts you see next to each post (and next to the comments). It’s not uncommon for the most popular posts on the platform to earn well over $100.
This being said, it’s not easy to earn that amount of money. Don’t expect to publish a single piece of content and earn even a few dollars. Earning reasonable amounts of money on Steemit requires consistently posting and promoting excellent content that cannot be found anywhere else.
Steemit isn’t the only DApp built on Steem. In fact, I believe one of the strengths of the Steem project is that it doesn’t rely on a single, popular DApp to sustain the entire blockchain. The Steem blockchain has several DApps built on it that are remarkably popular, with five of the ten most popular DApps in existence being built on Steem.
Other popular DApps on Steem are D.Tube (YouTube decentralized), eSteem (a mobile social media platform), Fundition (a crowdfunding and collaboration platform), and Steem Monsters. I hadn’t heard of Steem Monsters before, and I wanted to understand how well-suited the Steem blockchain was for gaming, so I decided to give the game a try.
A Short Review of Steem Monsters
Steem Monsters is a decentralized collectible card game similar to Magic: the Gathering and Hearthstone, except that players genuinely own their digital cards and can buy or sell them without needing the permission of a centralized company.
Because the Steem blockchain is built with a DPoS consensus protocol and can handle many more transactions per second, the entirety of Steem Monsters is on the blockchain: assets, logic, game mechanics, you name it.
I hadn’t thought I’d say this, but Steem Monsters is probably my favorite DGame I’ve played to date.
You sign up with your Steem Connect ID that works across all popular DApps on the Steem blockchain. In order to start playing, you’ll need to buy a Starter Pack of cards, which costs only $10. You can buy this pack with many different kinds of cryptocurrency, but you can buy it with VISA, MasterCard, and AmEx too. This is refreshing, because it immediately removes the huge barrier that gamers without cryptocurrencies in a wallet would have to cross otherwise.
I happened to have some Ethereum, which I sent to the given crypto wallet. A few minutes later, I had thirty beautiful cards in my collection. There are two types of cards: summoner cards and monster cards. With the summoner card, you select the type of magic you’ll play with. The monster cards are the cards you choose to fight with.
At the moment, there are six sources of magic: fire, water, earth, life, death, and dragon. Each individual card shows the amount it costs, the damage it can deal, how fast it is, how much armor it has, how much health it has, and the specific abilities it has.
Players fight each other in practice or ranked battles. For each battle, you have to choose which type of magic you’ll play with and which monsters you’ll fight with. You place these monsters in the order that you think will have you win the battle. The more battles you win, the more experience you get and the more experienced the players you’ll have to fight, because their battle algorithm pits you against players with roughly the same amount of experience.
Eventually, you’ll start fighting players who have purchased or won cards other than the ones in the Starter Pack, encouraging you to either make better use of your own cards, complete quests that grant you new cards, or purchase new cards.
The game plays smoothly and is incredibly addictive. I found myself coming back to it every single day, and always played for longer than I promised myself I would (just one more game). I highly recommend anyone who’s interested in DGaming to try out this game.
Steem has had its fair share of controversies. It was hacked in 2016, laid off 70% of its employees in November 2018, and banned a user from its Steemit platform in the beginning of 2019. If Steem would’ve had Steemit as the only DApp on its blockchain, I would’ve had my doubts too.
But Steem is successfully diversifying away from Steemit. Steem Monsters is an excellent game, and Steem has many other DApps that have users who are actively engaging with their blockchain. This makes Steem a much stronger project than other projects I’ve reviewed, that might’ve had fewer controversies. If Steem continues to diversify, while also empowering the best DApps on its blockchain, I have no doubt the project will continue to grow and eventually thrive.