Last night Pieter, the guy over at @dewallenband and @dse, and myself attended one of our good childhood friends 23rd birthday party with about 6 of our other close friends. Inevitably Steemit popped up as a discussion topic since Pieter and myself have been talking about it a lot lately when we are in the company of our friends. A lot of skeptical questions popped up which we had a pretty hard time explaining to our friends. Pieter has a lot more experience and knowledge when it comes to the crypto world so he tackled most of the questions with me in the background adding my 2 cents to the answer every now and then. I've decided to reach out to you guys to help me convey the inner workings of Steemit to my friends in a way that doesn't make Steemit sound like some dodgy-too-good-to-be-true-scheme. Keep in mind that the majority of people in our circle have zero to very little experience and knowledge regarding cryptos. Here are some of the questions that popped up:
1. Where does the money come from?
This was probably the toughest question we had to deal with. I'm still a little unsure myself. Where does the money which is distributed on Steemit come from? I signed up for free and now I'm making real money without having to invest any money or do any physical work for my money? This question is especially hard to answer without it seeming too good to be true.
2. What is crypto mining?
The most basic answer to this question that I could find was that you(your computer) is rewarded for solving computational problems. This question can also get a little tricky when you have to go into detail with people who are not familiar with hash functions.
3. What's the role of a witness?
One of the answers I've gotten to this question was that the role of the witnesses is to run the servers which the STEEM blockchain reside on. Is there any incentive to become a witness and what is the difference between a witness and a miner?
4. What backs cryptos?
We all know that fiat currency is backed by the government and some time ago it was backed by either gold or silver. So what backs cyptos?
5. Isn't cryptos only used for illegal stuff?
This was one of the easier questions to answer since some well known online marketplaces such as Amazon and Steam have started to accept Bitcoin allowing it to step out of the dark corners of the deep web which initially caused it to be known as the currency of criminals.
I invite you all to help me answer some of these questions where there are uncertainty and to come up with an easy to understand analogy to explain Steemit to newcomers.
I do not guarantee and of my answers its only my personal understanding:
I have my own idea but I'm sure I am terribly misunderstood as I have read a few contradicting articles.
Above my paygrade to specify this.
Still a bit vague on this subject but I think they take the position of board of directors helping with the development (Decisions of hardforks etc) of the platform and running the blockchain.
Crypto worth is at first determined by the project it backs and faith of miners/people buying coins in the ICO sale. For example: A new coin is released and a lot of people buy it because they trust the business plan behind it, resulting in miners and active trading thus equaling value.
I think you have a clear idea of that one.
@pfunk could you perhaps shed some light?
Thanks for adding your 2 cents
"It's like an AA club. You come here to takes steps towards recovering from Facebook. But then you end up meeting beautiful gal (Steemit) that gets you back into your habit."
haha good one
Now, if I'm mistaken about any of this, someone please let me know, but I think I can answer most of your questions in a pretty straightforward manner.
Cryptocurrencies like STEEM gain their value from CPU-time, reminiscent of SETI@Home from the 90's; with a complex calculation that could take millions of years for one computer to process, but can be broken into smaller pieces, the time spent calculating each piece of the greater calculation holds value relative to both time, and the invested capital value traded for and with it.
With STEEM as the base token, SBD acting as a balance against the US Dollar, and STEEM Power serving as an investment of voting toward the community value of a given post, by creating or curating content you are essentially moving the social-capital half of the market, which merits value in the ForEx-capital half of the market.
Thanks, I appreciate the reply. I still have a lot of research to do myself. It's hard to convince people to join something when you can't really explain to them what they're joining.
This is why I have been looking into new crypto currencies that appeal to the masses. They make it very simple for the general public to invest into crypto currencies. I'm currently researching one that's in the ICO stage but it's very intriguing. You can manage your investment just like an ETF Fund and control the percentage of your investment in which currency with the click of a button... And it's all mobile based! Could you imagine have $1000 in an crypto wallet split among the coins of your choosing. Whenever you want to change your allocation you would simple adjust it within the application. I'm planning on doing a post for it in the near future. If you're interested please follow to stay tuned! I've followed you as well. Cheers!
Looking forward to your post, would like to know more about this.
Yup. Make sure you follow so you don't miss it!
Congratulations! This post has been upvoted from the communal account, @minnowsupport, by BennieBanana from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, and someguy123. The goal is to help Steemit grow by supporting Minnows and creating a social network. Please find us in the Peace, Abundance, and Liberty Network (PALnet) Discord Channel. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.
If you like what we're doing please upvote this comment so we can continue to build the community account that's supporting all members.