the Steem token 32nd among the 1,358 cryptocurrencies it tracks, with a market
capitalization of $475 million. In addition to Steemit.com,
Steem powers other sites such as busy.org, utopian.io, d.tube and a growing list of third-party applications.
The rise of the cryptocurrency comes at a time when
publishers and content creators are struggling to earn any money at all in
online publishing — and new revenue model is thus long overdue. Between 2000
and 2015, print newspaper advertising revenue experienced a shocking
from $60 billion to $20 billion, according to The Atlantic.
The problem does not stem from the fact that readers don’t
appreciate the professional news industry (even if it is widely
criticized) — it’s that publishers struggle to monetize
online publishing. And while publishers were busy trying to get print
advertisers online, Google and Facebook ate their breakfast, lunch and dinner
to the tune of a combined 63
percent share of all online advertising. Whatever value might have been
left for publishing websites has been further
decimated by the popularity of ad blockers.
Meanwhile, the online publishing industry has also become financially
problematic for writers and other content creators because many websites like The Huffington Post expect writers to
write for exposure
in lieu of money.
Steemit is trying to reverse these trends using blockchain
and cryptocurrency technology, first with its own social media site and next
with Smart Media Tokens. On Steemit.com, content creators post on a Reddit-like
site, and they earn cryptocurrency whenever the community responds well to a
Currency moves automatically in response to user actions,
using Steem’s “Proof-of-Brain”
algorithm that aligns incentives between application owners and community
members to spur growth. For example, when a user “upvotes” a post, a tiny
portion of the currency in the “rewards pool” is allocated to the poster’s
account. The rewards pool receives 75 percent of all new tokens, which mint at
a decreasing rate that started at 9.5 percent per year of the total pool in
Currency travels as Steem Dollars (SBD) or STEEM. Members
are incentivized to hold STEEM, because there is a direct correlation between
their STEEM holdings (known as “Steem Power”) and the weight of their upvotes. Higher
“Steem Power” means members have more influence over the allocation of currency
when new content is posted.
Members are also rewarded for upvoting, and the timing of
their votes is tied to their rewards: The resulting reward is greatest if a
member is one of the first upvoters of a subsequently popular post. This
incentivizes timely, proactive social media participation.
Because rewards are allocated from the rewards pool and not
from members’ digital wallets, upvotes cost members nothing and can in fact increase
“The mechanics of the cyptocurrency we created basically
distribute new tokens to people who are blogging and curating blogs,” Steemit
CEO Ned Scott recently
told “The Crypto Show.”
SMTs will run on the Steem blockchain in a similar manner,
but they will be customized for any participating website. Each site will
create its own currency, rewards pool and token exchange system; and sites can
interact with each other to create helpful incentives for readership and
participation. Because SMTs are a cryptocurrency,
settlement happens instantly without any transaction fees, and publishers will
be able to raise money through initial coin offerings (ICOs).