It definitely works from a psychological perspective. Games use it all the time - not just Minecraft - I love RPGs like Fallout and they use it a lot. I played Fallout New Vegas and Fallout 3 multiple times to get as many of the achievements as I could. Fitness devices use similar principles - I've collected so many badges on my Fitbit. It really works well.
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Yes, that little "pat on the back, job well done" feeling is quite satisfying. As long as you don't get saturated by it. I completely ignore trophies on my PlayStation as I've just gotten so many of them by now.
Steemit is great but actually a little bland feature-wise compared to other more established social media sites. We don't even have avatar pics. Reddit at least has flair. I'd like to see little badges next to usernames to indicate achievements.