In May, Wale Ifemi was living on one dollar a day in West Africa. A month later, he joined Steemit, a new social-media platform that rewards users with its own cryptocurrency. The more “upvotes” – likes, essentially – a post gets, the more it earns. By August, he had made the equivalent of $41,000 – plus another $18,000 after posting his story about this transformation.
It would be understandable if your first reaction to hearing about Steemit would be to think it’s a scam, or too good to be true. I felt the same way. Then I posted just four sentences, along with a copy of an angry letter that Phil Collins once sent me about a concert review I had written. It received 463 upvotes, and made $10,452 in the site’s cryptocurrency, called Steem, which can be converted into bitcoin.
“If you look at companies like Facebook, Twitter and Reddit,” says Ned Scott, who co-founded Steemit earlier this year, “they’re taking our time and our work and our creativity and our energy, and leveraging that along with our private data to create profits for their shareholders. But with this point system – this ‘magic Internet money’ – the users can get paid for creating and curating content.” Steemit, which currently has more than 100,000 accounts, has distributed the equivalent of more than $4 million to users in four months, and it’s not alone: There are at least half a dozen other sites, like Synereo and Yours, based on slightly similar models.
Like most money, Steem’s value is based on the unspoken agreement among users that it has value. If you create a piece of paper or an Internet token, and enough people start trading it for goods, services, or other commodities, then you have your own currency. But for it to work, people have to believe in it.
This means that users must not just have faith in the future of the currency, but also trust that the supply is limited, predictable and incorruptible. This is why Steemit was built on a blockchain, an online public database where information can’t be deleted or tampered with.
What’s particularly clever about this setup is that, since all users end up with Steem, they automatically become investors with a stake in the growth of the currency. They’re allowed to withdraw only half of their earnings immediately; with the rest, users are given interest on what they save, and the monetary power of their upvotes on the site increases.
Of course, Steemit is easier to use than to understand. And whether the ambitious venture succeeds as a social-media platform and bootstrapped currency, the disruption isn’t likely to go away.