Steem Whitepaper 44 pages into 50 bullet points – a MUST READ if you truly appreciate Steemit

 I have been critical lately about how Steemit actually work and pay out for posters because I believe that we as contributors should understand the ideas of Steemit and be an active/valuable part of this community.     

I very much support the ideas of Steemit but I just don’t like that people are exploiting the system for money. That one can easily kill a tree, forcing it to yield fruit for our selfish demands.  

I thus spent hours reading through 44 pages of Steem whitepaper and summarize it to 50 bullet points here. 

I hope you all find this helpful, I requote 99% of what been written in whitepaper so that you get the senses of how Steemit founders conveyed their ideas. For points that you are unsure, just drop your question below and I will explain it in simple term   

The Steem community provides the following services to its members:   

- A source of curated news and commentary.

 - A means to get high quality answers to personalized questions.

 - A stable cryptocurrency pegged to the U.S. dollar.

 - Free payments. 

- Jobs providing above services to other members.     

1. Important principle is that everyone who contributes to a venture should receive pro-rata  ownership, payment or debt from the venture   

2. The challenge faced by Steem is deriving an algorithm for scoring individual contributions that most community members consider to be a fair assessment of the subjective value of each contribution

3. The fundamental unit of account on the Steem platform is STEEM, a crypto currency token. Steem operates on the basis of one-STEEM, one-vote.     

4. Readers no longer have to decide whether or not they want to pay someone from their own pocket, instead they can vote content up or down and Steem will use their votes to determine individual rewards.  

5. There are other forms of contribution that Steem recognizes and rewards using objective  metrics. Among these are: transaction validation, proof of work mining, liquidity rewards, and reporting of misbehaving block producers.     

6. SP is a requirement for voting for or against content. This means that SP is an access token that grants its holders exclusive powers within the Steem platform.     

7. SP balances are non-transferrable and non-divisible except via the automatically recurring conversion requests. This means that SP cannot be easily traded on cryptocurrency exchanges. Long-term holders are almost completely protected from the dilution used to fund growth.   

8. You will get paid partly in Steem Dollars (SD or SBD). which you can hold them and accumulate a 10% return, or you can sell or transfer them into Steem, Bitcoin, or other currencies.   

9. Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. Generally speaking STEEM should be held for short periods of time when liquidity is needed. Someone looking to enter or exit the Steem platform will have to buy or sell STEEM. Once STEEM has been purchased it should be converted into SP or SMD to mitigate the impact of dilution over the long-term.  

10. Minimizing Fraudulent Feeds:    SP holders elect individuals to publish price feeds. These elected individuals are presumably trusted by those who have a vested interest in the quality of the feed.  

11. Mitigating Timing Attacks:  Steem levels the playing field by requiring all conversion requests to be delayed for one week. This means that neither the traders nor the blockchain has any information advantage regarding the price at the time the conversion is executed.   

12. Minimizing Abuse of Conversions:  The blockchain decides how and when to create SMD and who should get it. This keeps the rate of SMD creation stable and removes most avenues of abuse.    

13. Liquidity:  Steem has an on-blockchain market between SMD and STEEM. Users can earn rewards by providing liquidity to both sides of this market. Every hour the account with the most LiquidityPoints receives 1200 STEEM.  The scoring algorithm is: LiquidityPoints = NetBidVolume x NetAskVolume   

14. Sustainable Debt to Ownership Ratios:  For every SMD Steem creates, $19.00 of STEEM is also created and converted to SP. This means that the highest possible debt-to-ownership in a stable market is 1:19 or about 5% 

15. Interest:  SMD pays holders interest. Someone who holds SMD without redeeming it is effectively lending the community the value of a dollar     

16. Setting Price Feeds:  The primary concern of Steem feed producers is to maintain a stable one-to-one conversion between SMD and the U.S. Dollar (USD). Steemit aims to support market participants confidence that they are unlikely lose money by holding SMD purchased at a price of $1.00. We fully expect there to be a narrow trading range between $0.99 and $1.01 for SMD under most market conditions.     

17. Subjective Contributions:  In effect, the criteria by which work is evaluated is completely subjective and its definition lives outside the source code itself       

18. Distributing Currency   There are two ways people can get involved with a crypto-currency community: they can buy in​ or they can ​work in. The first step in rewarding millions of users is to commit to distributing a fixed amount of currency regardless of how much work is actually done or how users vote. The next step is to reward everyone who does anything even remotely positive with something​. This is accomplished by ranking all work done and distributing proportionally to its value. The more competitive the market becomes, the more difficult (higher quality or quantity) it becomes to earn the same payout.   

19. Voting on Distribution of Currency: In order to realign incentives and discourage individuals from simply voting for themselves,  money must be distributed in a nonlinear manner       

20. Voting on Distribution of Currency: Eliminating “abuse” is not possible and shouldn’t be the goal. The goal of building a community currency is to get more “crabs in the bucket”           

21. Rate Limited Voting: voting power rapidly drops off during periods of continuous voting, and then slowly recovers.   

22. Delayed Payouts: To further prevent abuse, all payouts are delayed a stake-weighted average of 24 hours from the time each vote was cast.     

23. Payout Distribution: One of the primary goals of Steem’s reward system is to produce the best discussions on the internet. Each and every year 10% of the market capitalization of Steem is distributed to users submitting, voting on, and discussing content.the vast majority of the rewards will be distributed to the most popular content. Steem weighs payouts proportional to n2​ the amount of Steem Power voting for a post. The impact of this voting and payout distribution is to offer large bounties for good content while still rewarding smaller players for their long-tail contribution     

24. Rewarding Parent Posts:  Good discussion requires back and forth posting. When you reply to someone else, they get  50% of any payout you receive in that thread   

25. Payouts:  When a post receives a payout it takes the form of 50% SMD and 50% SP. The Steem Power give the user increased voting and transaction power while the SMD gives the user an immediate benefit in a stable currency     

26. Consensus in Steem: People have three options to overcome censorship by the top 19 elected witnesses: patiently wait in line with everyone else not in the top 19, purchase enough computational power to solve a proof of work faster than others, or purchase more SP to improve voting power.     

27. Mining in Steem: Steem separates block production from solving of proof of work.   

28. Mining Rewards require Steem Power:  After the first month, Steem miners are paid in Steem Power (SP). SP is liquidated through  the two-year process of “powering down   

29. Mining Algorithm:  The mining algorithm adopted by Steem requires the miner to have access to the private key of the account that will receive the rewards.   

30. Botnet Resistant:   Steem has many properties so that It should be more profitable and less risky for botnet operators to use their resources for other activities than mining STEEM.     

31. Mining Pool Resistant:    Miners have a total of 3 seconds to receive a block, solve the proof of work, and get the  transaction to the next block producer. Much of this time will consist of network latency      

32. Eliminating Transaction Fees:  Micropayments Don’t Work, Fees are a Barrier to Entry Changing Fees Over time a network must adjust fees   

33. Sybil Attacks: the inability to censor users is one of the main selling points of blockchain technology   

34. Bandwidth Instead of Micropayment Channels:  The solution to the problems with micropayments is in implementing ​dynamic fractional   reserves. Under this model the blockchain will automatically adjust the reserve ratio for the     

35. Account Creation: In order to maintain a reasonable user experience with a minimum number of hung  accounts, all new accounts should start out with a balance 10 times the minimum required  to transact weekly

36. Justifying Minimum Balances: The STEEM used to pre-fund an account is Powered Up in the new account (i.e., converted  to Steem Power).   

37. Adjusting the Reserve Ratio: attacker attempting to spam the network shouldn’t be able to disrupt service 

38. Performance and Scalability:  The Steem network is built upon Graphene, the same technology that powers BitShares.  Steem is capable of handling a larger userbase than Reddit. Steem is able to process 10,000 transactions per second without any significant effort devoted to optimization.     

39. Allocation & Supply:   STEEM grows at a rate of approximately 800 STEEM per minute due to the  combined effects of the various Contribution Rewards and a constant annualized growth rate of 100% for the combined effect of the Contribution Incentives and the Power Incentives. The overall effect is a doubling of the STEEM supply each year     

40. Impact of Token Creation Rate:  the price will mostly be impacted by a change in demand for holding STEEM long-term.       

41. Impact of Token Creation Rate Greater than Ninety-Percent: According to the tool for estimating future inflation included with the Steem source code,  Steem by contrast will achieve an instantaneous annual rate of approximately 12% after just 1 year (not including the effects of SMD operations).            

42. Accounting In Steem: In order to compensate for the ever increasing precision, the STEEM network performs a  10:1 “reverse split” every 32,000,000 blocks (about 3 years). At this point in time all balances of STEEM are divided by 10 and all prices are multiplied by 10       

43. The Power of Steem: A single vote provides little curation value, but billions of votes is very effective curation. Content without curation is of limited value       

44. No Micropayments, Tips Optional:   Steem bypasses micropayments completely because when a user upvotes a post it is the  community that pays the bill. The same amount of money will be spent whether the user  upvotes a post or not and the funds will not come from the voter. Steem pays people to figure out who should be paid! This kind of thinking is revolutionary.       

45. Value is in the Links:     Curating content is expensive and time consuming while being near impossible for computers to perform in the absence of links. Steem rewards users who are among the first to find and link to new content.   

46. Solving the Cryptocurrency Liquidation Problem: Merchants give users a way to quickly convert their cryptocurrency into tangible goods and  Services Another way that people can liquidate the small amounts of cryptocurrency they receive from participating on the Steem platform is through ​tipping other     

47. Censorship:  Steem is a decentralized network that is operated by miners in jurisdictions around the   world. All user actions are publicly recorded on the blockchain, and can be publicly  verified. This means that there is no single entity that can censor content that is valued by  STEEM holders.   

48. Solving Organic Discovery via Search Engine Optimization: Most cryptocurrencies generate little value for those who are not actively using the network.  Steem, by contrast, generates content and encourages users to share it     

49. Shifting Toward Blockchain-based Attribution:   Under blockchain-based social media, a creator or author would always be able to point to a  public record and timestamp showing proof of their content origination

50. Replacing Advertising with Blockchain-based Content Rewards: Advertising represents a double-edged sword: With ads, a creator can make money most easily. Without ads, monetization is difficult but the content is richer.     

Conclusion  

Steem is an experiment designed to address challenges in the cryptocurrency and social   media industries by combining the best aspects from both.