Steem Blockchain [CapiPedia]

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======Steem Blockchain======
The Steem blockchain is a social media and content-focused [[blockchain]] designed to reward users for creating and curating content. Launched in 2016, it pioneered the concept of a "social economy" built on a decentralized ledger. Imagine getting paid for your witty blog posts, insightful comments, or beautiful photographs, not in 'likes', but in actual [[cryptocurrency]]. That's the core promise of Steem. Unlike traditional social media platforms where the platform owner reaps all the advertising revenue, Steem aims to distribute value directly to its community members. It operates using a unique consensus mechanism that rewards participation, effectively turning social engagement into an economic activity. The platform hosts various [[decentralized applications]] (dApps), with Steemit.com being the most famous, functioning as a decentralized alternative to sites like Reddit or Medium. For investors, Steem represents an early experiment in Web3 social economies, offering a fascinating, if cautionary, case study in tokenomics, community governance, and the volatile nature of network-based value.
===== How Steem Works: The 'Proof-of-Brain' Concept =====
While many blockchains like [[Bitcoin]] use a [[Proof-of-Work]] system (where miners solve complex puzzles) or a [[Proof-of-Stake]] system (where users stake their coins to validate transactions), Steem introduced a novel concept called **Proof-of-Brain**.
Proof-of-Brain is a social consensus algorithm that distributes rewards from a daily token pool to users based on the popularity of their contributions. In simple terms, the more upvotes (or "likes") a post or comment receives, the larger its share of the reward pool. This system creates three primary roles:
  * **Creators:** Users who publish content (articles, images, comments) and earn rewards if the community finds it valuable.
  * **Curators:** Users who discover and upvote good content. If a post they upvote early becomes popular, they also receive a portion of its rewards. This incentivizes active participation and quality discovery.
  * **Witnesses:** The equivalent of miners or validators in other blockchains. Witnesses are responsible for producing blocks and securing the network. They are elected by the community through a voting system.
This model attempts to leverage the collective intelligence of the crowd to allocate resources, rewarding what the community itself deems valuable.
===== The Three Currencies of Steem =====
The Steem ecosystem is powered by a unique three-token system, which is crucial for any potential investor to understand.
==== STEEM ====
STEEM is the fundamental, liquid cryptocurrency of the network. It can be traded on exchanges, transferred between users, and is the base unit of account. The network creates new STEEM tokens daily to fund the reward pool, leading to a system of managed [[inflation]].
==== Steem Power (SP) ====
This is essentially "staked" STEEM. To increase your influence on the platform (making your upvotes worth more and increasing your curation rewards), you must convert your liquid STEEM into Steem Power through a process called "powering up." Steem Power is illiquid and requires a multi-week "power down" process to be converted back into STEEM. This mechanic is designed to encourage long-term commitment to the platform, as users with more "skin in the game" have a greater say in how rewards are distributed.
==== Steem Dollars (SBD) ====
Steem Dollars were designed to be a [[stablecoin]] soft-pegged to the value of one US dollar. The idea was to give content creators a stable asset to hold, protecting them from the volatility of the STEEM token. However, like many early algorithmic stablecoins, the SBD has historically struggled to maintain its peg, providing a valuable lesson on the complexities and risks associated with such assets.
===== A Value Investor's Perspective on Steem =====
From a value investor's standpoint, Steem is a highly speculative asset that defies traditional analysis. There are no factories, no cash flows, and no P/E ratios to calculate. However, it offers profound lessons about value in the digital age.
==== The Governance Crisis and the Hive Fork ====
The most critical event in Steem's history was its 2020 governance crisis. After the [[Tron Foundation]], led by Justin Sun, acquired Steemit Inc. (the main company developing on Steem), a conflict erupted between the new owner and the established community Witnesses. Fearing a centralization of power, a large part of the community executed a [[Hard Fork]] to create a new, independent chain called the [[Hive blockchain]]. This fork copied the Steem blockchain's history but excluded the stake controlled by the Tron Foundation.
This event is a stark reminder of several key risks:
  * **[[Governance Risk]]:** Even in a "decentralized" system, control can be co-opted. Understanding who //really// holds power is paramount.
  * **Network Effects are Fragile:** The "value" of a social platform is its community. The Hive fork proved that a community can migrate, taking the network effect—and thus the value—with it.
==== Key Takeaways for Investors ====
For an investor grounded in value principles, Steem serves as a powerful cautionary tale.
  - **Speculation, Not Investment:** Investing in a platform like Steem is a bet on future network adoption and token utility, not on present-day cash-generating value. It falls firmly in the realm of speculation.
  - **'Intrinsic Value' is Elusive:** While one could argue the "intrinsic value" lies in its content library and community, the Hive fork demonstrated that this value is not permanently attached to the underlying tokens.
  - **Analyze the Incentives:** The entire system runs on a complex web of economic incentives. Before investing, you must ask: Are these incentives sustainable? Do they encourage genuine value creation or just short-term reward farming?