Social network Steemit distributes $1.3 million in first cryptocurrency payout to users

Steemit, a blockchain-powered decentralized social network, distributed Monday $1.3 million in cryptocurrency to users of the site, who are paid for posting and voting on content.

The payout is the first for Steemit, which rewards content creators, curators and consumers with its native digital currency. Half of the supply was handed out in Steem Dollars, with one token worth about one USD, and the other half in Steem Power, a vesting currency that fuels voting power on the network. Steemit paid out 10 percent of the Steem cryptocurrency market cap.

Steemit’s public and distributed blockchain, called Steem, automatically distributed the payout, so the company itself does not have control over the distribution.

Steemit CEO Ned Scott

“The way it works is quite great for the users, where the better a post performs, the more the poster and voters earn in Steem Dollars and Power,” said Steemit CEO Ned Scott to CoinReport. “The algorithms for this are all at the protocol level and are quite complex, but it’s pretty simple at the website level: just post, get appreciated by the community and earn Steem.”

Steemit and its cryptocurrency are certainly getting a lot of appreciation. In the first 24 hours following the payout, Steem’s volume doubled to $26 million, according to a press release provided to CoinReport. Website traffic also doubled, while new account registrations tripled. This growth follows a 1,600 percent increase in community size from May to June, which was Steemit’s first month of operation, then doubling from June to July.

“User growth is validation for the model … [it] means we’re on the right course, it means we can expect to see Steem in more people’s hands,” Scott said. He explained that posts are rewarded approximately 24 hours from the time they start getting “steemed” (tagged or categorized).

“The payouts can happen anytime and are currently being distributed across every hour of the day, which is great for users because they’ll get to see their rewards notifications around the clock,” said Scott. He added, “It’s great to see the Steem network scale and push into 50,000 transactions per day, which means it’s seeing activity on par with the Ethereum network and one sixth of the Bitcoin network.”

Steemit is attracting people from all walks of life, most of whom have learned about cryptocurrency before, both male and female. According to data provided by Scott, more than 50 percent of posts on Steemit’s #introduceyourself steem, the most popular tag on the site, have been written by women. (User tracking charts are available on steemle.com, a third-party application developed using the Steem blockchain).

“It’s refreshing to see Steemit begin fostering diversity and on-board new people who otherwise wouldn’t take interest in cryptocurrency,” Scott said. “The current state of the community’s blogs includes many cryptocurrency and technology posts, but we see everything from memes to books about artificial intelligence.”

In a previous conversation with CoinReport, Scott described the current state of Internet communities as “imperfect,” stating that “among the sometimes great content, there are trolls, less then helpful comments and poor dialogue.” Steemit is designed to keep its platform unblemished by such imperfection, all the while refuting censorship.

“It essentially comes down to opportunity, cost and reputation,” said Scott of Steemit’s model. “Every moment a user isn’t contributing positively, they’re losing opportunity to earn, but also, because the blockchain data is public, a user’s reputation is impacted and makes other users less likely to engage in bad behavior. User moderation can also flag inappropriate comments, which then can be hidden from the user interface, but never removed from the blockchain itself.”

In the press release, Scott said, “Attempts at censorship can be proven by anyone with a blockchain explorer or another front-end application built on the Steem, so users can feel free to post how they really feel. This freedom is what empowers the Steemit community, and it’s one of the major ways we’re different from centralized, controlling and manipulative social media networks.”

Asked to elaborate on this point, Scott told CoinReport, “Networks such as Twitter and Reddit have been getting lots of attention for deleting comments for controversial perspectives. That sort of moderation is not possible on Steemit because nothing is deletable from the blockchain. It’s not in Steemit’s best interest to hide those comments either because users can easily point to the blockchain and the website to know exactly what had been hidden – that sort of behavior will open doors for competition on the same Steem blockchain.”

Images courtesy of Steemit via PR firm Wachsman PR