Steemit is like Reddit but with money for upvotes. Bear with me. I’ll explain what I mean. Bottom line: it’s supposed to be a mechanism to get paid for content and get your content seen.
Let’s start with upvotes, the Internet Points you can get on Reddit. If you don’t know, they are a lot like “likes” on Facebook. Are Reddit upvotes worth anything? At first glance, no. They are fun to get. They validate our activities. They prove that we did/wrote/shared something that people like. But they can’t be easily exchanged for dollars. That would defeat the intrinsic value of “I got these internet points because people liked my fresh memes.” Right? Maybe…
A highly upvoted Reddit account can actually be sold to someone who wants to look like an experienced redditor (it’s against the rules, but possible). Maybe a content marketer wants to look more legitimate. He knows that a new Reddit account is suspicious. So he buys an experienced account to look authoritative. If he’s willing to pay $250 for an account with 15,000 upvotes, we could establish an exchange rate between upvotes and dollars. So, the idea that upvotes are “worth” money is not totally crazy.
How could Reddit monetize upvotes? Imagine if Reddit servers awarded redditors “influence points” when they got upvotes. Redditors could spend influence points to promote content in the page rank. But here’s the smart bit: redditors could also sell their influence points for cash to the highest bidder.
This would be a nice thing for redditors (who could make money) and marketers (who want to buy influence). The problem is preventing “counterfeit” influence points. An influence point market presents a big temptation for Reddit to generate lots of influence points and offer them for sale directly. That would depress the price. That would be “influence inflation.” Plus, a hacker might be able to award themselves Reddit influence points and then sell those points for cash.
There needs to be a way to be a way to restrict the creation of influence points and to validate that they are legitimate. Enter a cryptocurrency (like bitcoin) called Steem. Cryptocurrencies can’t be forged and have a blockchain to guarantee transactions. Steemit users can use Steem to buy Influence points called “Steem Power.” Steem Power can also be earned by getting upvotes. Steem Power be sold (after a vesting period of 2 years) for Steem. Steem can then be exchanged for cash/bitcoin.