Steemit — An Incentivized Social Media Platform or a Scam?
No doubt, the world has seen a number of innovative, obscure, and often suspicious looking social platforms popup on the web in recent years. The latest to hit the social scene is a platform called Steemit, who’s CEO Ned Scott, calls it an “incentivized social media platform” that pays its users with the digital currency Steem to post blogs on their favorite subjects. While I’m all for trying new social platforms, and I’m not discounting its worth checking out, I’m definitely approaching the platform with extreme caution, as there’s a few details about it that just don’t add up. As the old saying goes, if it sounds too good to be true, it probably is. Whether or not that happens to be the case with Steemit is left to be said, but there’s a few things you should know before jumping in and assuming you’re magically going to get rich from it.
For starters, Steemit pays users based on the engagement their blog posts garner from the platform’s audience, specifically from thumps up on posts. The more thumbs up your posts get, the more likely you are to get paid. The platform has already made its first lump sum payout to users, a whopping $1.3 million dollars back on July 4th. Half of this was paid with the Steem currency, the other half with “Steem Power”, a platform specific currency that gives users more voting power.
The problem is, such a system that relies on thumbs up metrics to gage the worthiness and overall value of content is a system that’s likely easy to game. Anyone could simply register with as many virtual IP’s as possible and thumbs up their own content in mass.
Another cause for concern is the fact neither the platform nor its CEO can explain where they’re pulling revenue from. While Scott stated they had a quote, “Super Angel Investor”, this doesn’t explain much to the public as far as how much capital they received, and how exactly they’re earning revenue. How does a platform that has no source of revenue of other than investors afford to pay out millions of dollars to its members when there’s no money coming in?
I’m highly skeptical for the simple fact this platform can’t explain where its revenue comes from, and its magically paying people to blog.
On the hand, the digital currency utilized by the platform is currently rated as the 5th largest in terms of market capital, out of an estimated 657 digital currencies currently tracked by Coinmarket.
What’s more? Since the platform made its first initial payout back on July 4th, the Steem currency’s value has skyrocketed more than 1,000%, with one Steem being the equivalent of $1.75 U.S! That was the currency’s price on Tuesday July the 12th, when the Steem currency’s market cap hit the $158.8 million mark, a huge leap from its previous value on the 4th at roughly $13 million. Today however, Coinmarket cap shows the Steem currency at $4.23.
Are Incentivized Social Platforms The Future of Social Media?
Without a doubt, Steemit isn’t the first social platform to offer incentives for people to jump aboard. TSU was the first of its kind to offer payouts to its user base, although there’s striking differences between the way’s TSU and Steemit both operate. With TSU, the platform pays users a cut of ad revenue share, along with a cut of revenue from those who used their short links to sign-up for the platform. But Steemit is totally different, as the platform is powered by a digital currency that’s easily converted to Bitcoin.
As far as TSU goes, I’m yet to see one person who’s ever earned anything more than a few dollars from the platform at most.
On the other hand, with Steemit, the platform has routinely paid out substantial sums of money to its users, often in the thousands range for a single account.
One thing to note about the idea of incentivized social media is that, where there’s money, there’s also the potential for rampant fraud, as well as mass spam. When TSU first launched, our social networking community on Google+, Strategic Social Networking, got hammered with short links from the platform as users hoped they would get others to join so they could earn more revenue.
TSU really looked more like a pyramid scheme than anything to be honest. In fact, those short links were so out of hand we banned any links from the platform itself to keep spammers out of our communities.
Does this mean that incentivized social media can’t prevail? No, definitely not. In fact, bloggers and independent journalists have long been on the lookout for more viable ways to monetize on their account, especially in a world where third-party ads are typically blocked by ad blockers, and ad revenues as a whole have been sliding off a cliff for years. Back in the glory days of blogging, bloggers used to make good money from things like Affiliate ads and Adsense, but I know from personal experience that those once tried and true forms of monetization are sliding off a cliff and are soon to meet their demise.
Why You Should Be Skeptical:
Upon first glance of Steemit, I noticed the profiles that were earning money were typically earning thousands, and often had post after post with hundreds of dollars of tallied revenue on hand, while other accounts had nearly as many if not more posts of the same quality, yet they had almost no revenue at all. One has to wonder if some of these profiles are merely sock puppet accounts formed to create the illusion of easy money. It all just sounds way too good to be true.
Also, as I mentioned earlier, the platform itself can’t seem to explain how it earns its revenue or where it actually comes from. We know from the recent news stories across the web that Steemit invested heavily in the Steem currency, which has risen sharply in value in just a matter of a few short weeks; but if this just so happens to be their only viable source of revenue, that means they’re essentially gambling in hopes of earning revenue.
One attempt to add credibility lies in the fact The platform is powered by Steem’s open source block chain, in which Steemit’s CEO Ned Scott insists the entire platform can be replicated on any front-end application, and viewed using any block chain explorer. Scott insists censorship is easy to prove for this reason, and so users can feel confident to post how they really feel.
This could be a good thing as, the public is definitely getting tired of being censored across social platforms where they often have no valid way to determine if the platforms they use are blocking their opinions or not. Some platforms like Facebook appear to be quite overbearing when it comes to controlling the visibility of users, their ideas, and the content they post.
The Potential For Fraud:
Digital currencies have long been the subject of fraud. From the hundreds of millions of dollars worth of Bitcoins that magically disappeared from Japan’s Mt. Gox exchange, to the many unknown and often shady digital currencies that come and go, and often manage to make investors money disappear when they do.
The fraud that took place with Mt. Gox is also worth noting, especially considering the fact it was handling roughly 70% of the world’s Bitcoin trades at the time it folded. How does this relate to Steemit and the Steem currency? Investors appear to be pouring money into the digital currency on a large scale. One Steemit user stated they’ve already invested $20K of their own money into the Steem currency so far.
Let’s face it, many have already had their Bitcoin wallets get burned, and financial institutions appear to be treading with caution when it comes to digital currencies as a whole.
Why Aren’t Others Offering Incentives?
Besides the incentivized platforms, other social networks like Empire.Kred have long embraced a virtual currency system they use within their platform, that believe it or not, once upon a time had some serious marketing power! Previously known as Empire Avenue, the newly minted Empire.kred platform uses a virtual currency called Eaves that can be used to invest in other members upon the platform’s virtual stock market. Eaves can also be used to run “Missions” where users are paid with the currency to check other members content across the web.
There’s some stark differences between Steemit’s model and Empire.kred’s though. While Steemit uses a digital currency that’s easily convertible to Bitcoins, and subsequently U.S dollars, Kred’s virtual currency doesn’t appear to have any real world value. While there currency only has value within their platform at present, it’s possible things could change in the future, especially if more incentivized social platforms continue to popup across the internet.
Unlike Steemit, Kred has a few things that could really add value to their virtual currency, including the fact that some of the world’s top bloggers currently utilize the platform to help measure their influence and social impact across the web, and even major players like Nokia and Intel have accounts there.
All being said, the entire idea of incentivized social media is still in its infancy for sure, and its likely someone will eventually get it right. While whether or not Steemit is actually legit is left to be said, there’s one thing that’s for sure, either the platform is set to forever disrupt the world of social media in incredible ways, or its the world’s biggest scam. When the day comes that an entity can make incentivized social media work, it’s more than likely we’ll see a massive shift of social users follow.
Written and published by Daniel Imbellino — Co-Founder of Strategic Social Networking and pctechauthority.com. Many thanks for reading. Be sure to check out Strategic Social Networking Community on Google+ to connect with tens of thousands of IT professionals and learn effective strategies to grow your social presence online. You’re also welcome to follow Strategic’s Brand Page on Google Plus for the latest social media stories.
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Additional References and Resources:
Steemit.com (Steemit’s official website)
Digital Currency Steem Soars 1000% in 2 Weeks! (The Guardian)
Social Platform Steemit $1.3 Million To Members (Econo Times)
Social Media Block Chain Steem (Payment Week)
Coin Market Cap Data on Steem Currency (Coin Market Cap)
