Steem boasts three second block times and demonstrates this by seamlessly processing 1000s of transaction from their user base of over 300K in Steemit. To put this into perspective, the more widely build on blockchain Ethereum has a block speed of around 15 seconds. The Steem blockchain is built with Graphene database technology, which was designed by one of the Steem creators Dan Larimar during his earlier project Bitshares. Graphene gives the ability to process hundreds of thousands of transactions per second.
Creators of Steem identified fees as a barrier to entry into the crypto world and went about finding a solution. They were able to offer a fee free platform by incorporating dynamic fractional reserve, which instead of charging micropayments for transactions, in very simple terms, adjust the “bandwidth” of Steem to fit with demand instead. This sounds great for anyone wanting to run an application with hundreds or even hundreds of thousands of transactions. However, it is yet to be seen if this approach can actually cope with the, somewhat unknown, future demand.
To be viable, long-term blockchain technology needs to be scalable as user demand increases. The above mentioned Graphene database and fast block times provide Steem with huge promise in this area. Another critical part in the equation of speed and scalability lies in delegated proof of stake (DPOS). This is a hybrid of proof of work and proof of stake models, with a constitution tied into every transaction to boot. Quite complex to grasp, but is capable of increasing speed, and supposedly in a very secure and fair manner.
Rather than have an initial coin offering, Steem creates the currency it uses, or you could say they print the money. This is where the water gets a bit murky as the Steemit community plays an important component in this equation. The individuals in the community have been the catalyst in using and have been distributed most of, the currency. One could argue that Steemit was created to drive Steem and the two appear to have formed an inseparable grafted union.
The generation of the currency is created using a decreasing inflation model. In 2016 new tokens were created with a yearly inflation rate of 9.5%, this decreases at a rate of 0.01% per 250 000 blocks, which is theorised to equate to about 0.5% per year until it reaches 0.95% by approximately 2040.
These tokens are a recent addition from the Steem team and are designed to operate much in a similar fashion to the popular ERC-20 tokens available from Ethereum. They allow a user friendly approach to building on the platform. These tokens were launched by Steem Chief Executive Officer Ned Scott during February 2018 https://smt.steem.io/
Probably worth mentioning here is that Scott now leads the Steem charge. Chief Technical Officer Dan Larimar left the project to build the EOS blockchain, which unsurprisingly is very similar. In February 2018 a public clash between Steemit platform “Whales” (Steemit term for powerful players), Larimar and Scott, signalled a turning point in their relationship from one of friendship to one of rival competitors in the crypto race.
Steem is a blockchain developed to run real-time applications for zero fees. Probably the most well-known of these applications is Steemit, a social media platform launched by the creators of Steem. Steemit lets users reward and be rewarded for content creation, using a somewhat complex system involving three exchangeable currencies; Steem, listed on exchanges; Steem Backed Dollar (SBD), also listed on exchanges, but roughly tied to the US dollar; and Steem Power, which exists inside the Steemit application, but is redeemable for either Steem Dollars or Steem. The name Steem was chosen by creators as a play on the word Esteem.
Steem has proven itself a leader in the crypto currency world and is one of the most efficient and scalable blockchains available. Zero fees and the recently launched media tokens will no doubt increase appeal. Perhaps the biggest challenge to Steem, at the moment, comes from Dan Larimar with EOS, and we should see some exciting moves play out this year. Steem is certainly worthy of a closer look and joining the Steemit community or reading their white paper is a great place to get a handle on some of the complexities. https://steem.io/SteemWhitePaper.pdf
