Steem is a cryptocurrency that was launched in March 2016 and is used to power the Steemit platform. The cryptocurrency and the associated platform ran in beta testing mode through July 4, 2016, at which point they were made live to the public.
Through Steemit – a blockchain platform making use of social media structures – users create, vote on, and curate content as they would on other social news services. Those users are then rewarded in Steem tokens for their work based on the voting process.
Steem is also related to Steem Power and Steem Dollars. These three terms are distinguished from one another as follows: Steem is the token which is available for purchase on various cryptocurrency exchanges and is used to buy into the Steem organization and website. Unlike some cryptocurrencies which have fixed maximum supplies or which rely on mining, the total number of Steem tokens double each year.
Steem can be converted to Steem Power. In doing so, the holder of Steem Power tokens receives additional Steem tokens as they are created. Steem Dollars, on the other hand, are a stable store of value which is closely tied to the value of the U.S. dollar.
Steemit is based on a concept similar to social news websites like Reddit. One distinguishing element of Steemit, though, is the fact that the text content generated on the site is saved in the underlying blockchain database, allowing it to be linked to reward tokens. Users on the platform have the capacity to upvote and curate content. Users who receive sufficient upvotes will receive a monetary reward in the form of the Steem token or as Steem Dollars.
The amount of influence any particular voter has is tied to the amount of Steem Power tokens held by that voter. Similarly, Steemit users have distinct reputation figures. A default account begins with a reputation of 25 points, and external votes help to shift that figure up or down. This process helps incentivize users to act with proper etiquette among the larger Steem community.
When a user converts Steem into Steem Power, the new tokens are then locked in place for two years. In most cases, though, Steem users convert their Steem tokens to Steem Power willingly. 90% of new Steem generated throughout the year is distributed among Steem Power holders, while the remaining 10% of new Steem will go to those users voting on posts and contributing to the Steemit platform.