A Conversation with Ned Scott, CEO of Steemit

Posted On 05 May 2016By : Katherine FletcherComment: 0Tag:  Blockchain technology, Content-sharing network, Dan Larimer, Ned Scott, Social network, Steem, Steem Dollars, Steem Power, SteemitAlong with BitShares founder Dan Larimer, Ned Scott leads Steemit, a blockchain-powered startup  that rewards content creators and consumers with cryptocurrency for  sharing and upvoting quality content on a dedicated social media  platform. The New York-based firm uses a new cryptocurrency called Steem to  reward users who post content such as images, articles and commentary,  as well as users who source and upvote popular content. The earlier a  user upvotes content that becomes popular, the more the user is  rewarded. Steemit pays users half with “Steem Power,” a vesting currency that  fuels voting power, and half with Steem Dollars, which can be exchanged  for U.S. Dollars. CoinReport spoke with Scott, the company’s CEO, via e-mail to learn  more about the genesis of Steemit, how the platform works and his  interest in cryptocurrency. The following conversation has been edited slightly for clarity. CoinReport: What prompted you and Dan to create Steemit? How did you two come together to found the company? Steemit CEO Ned Scott Ned Scott: Dan and I are similar in that we are  motivated by the idea that we can improve the way of life for others.  The state of Internet communities is imperfect – among the sometimes  great content, there are also trolls, less than helpful comments and  poor dialogue – so there was definitely a problem to solve there in the  context of social media. However, when the idea of Steem and Steemit  really began to form we had been exploring several different  blockchain-based business models. We were looking at micro insurance on  the blockchain and a few other ideas, but ultimately, we kept coming  back to the idea that the most useful and powerful thing to leverage  around a cryptocurrency is a community. Steem was born out of ideas  about insurance and mutual aid: it was the idea that people would be  able to help each other peer-to-peer if they were struggling to solve  problems or needed assistance. It quickly grew into a much larger vision  and Steemit was born as a place where individuals get rewarded by a  community for posting and voting on content. That was back in January of  this year. I learned of Dan about two and a half years ago, which was about  eight months after I stumbled upon Bitcoin. I had been down the rabbit  hole learning Bitcoin when I came across Dan’s work on the Bitshares  project, and from there, blockchain really seemed to take up all of my  time. In mid-2015, I began moonlighting for Dan, bringing his technology  to different firms in New York. When 2016 arrived, I made my first trip  to meet Dan in person and we had a good match in personalities. The  ideas for Steem had just started forming and from there we put a real  business plan together and co-founded Steemit. CR: What was the process like to get the company and platform operational? NS: There have been many challenges, but it has been  exciting to go live as quickly as we have. Dan’s expertise and our  developers’ combined experience of more than 12 years working on  blockchain technology gave us the opportunity to leverage existing  technologies from other open-source blockchains and combine those  technologies with the code needed for Steem fairly quickly. The Steem  blockchain was an idea in January and main-net by end of March. Along  with that we were lucky to attract more than 150 early adopters to help  us “kick the tires” while Steemit was in alpha testing throughout April.  That number is growing, and watching people come together to support a  greater vision has been the most rewarding part of the process. CR: What key goals or outcomes do you have in mind for  Steemit? What value do you see Steemit adding to the social  media/content creation-curation space? NS: At Steemit’s core is Steem, the blockchain, and  we feel it is important we start with this because Steem is open-source,  transparent, un-censorable and available for anyone to leverage as they  see fit. The uniqueness of Steem, where posts, comments and votes sit  directly on the blockchain, allows Steem to be leveraged in a few new  and different ways, including blockchain-based attribution,  blockchain-based content rewards and blockchain-based reputation.  Eventually, we’d like to see all of its potential leveraged. With that,  our goal is not just to create a vibrant social media platform with  Steemit, but to see entrepreneurs from different walks of life leverage  and integrate Steem as a an open-source publishing platform. With that said, Steemit gives access to publishers and allows them to  monetize content without third parties and without ads. We feel this  has the potential to bring communities and creators closer together to  bring about a more valuable and connected experience across the social  media space. Our primary goal is to bring good people to the platform  and continue to build a more and more positive online community. CR: How is Steem produced? Is it mined like bitcoin? Is there a finite number of Steem Dollars? NS: Similar to how Bitcoin is produced by the  bitcoin blockchain to pay miners, Steem is produced to pay posters and  voters. The blockchain tallies votes for each of the posts and allocates  a portion of its reward fund to each of the posts with positive votes  and to the voters who submitted those votes. When the rewards are being  distributed, the blockchain converts the Steem to Steem Power, which  gives recipients more voting power and influence, and issues Steem  Dollars. The Steem Dollar is designed to always represent about five  percent of the Steem market cap. If price fluctuations cause the Steem  Dollar to represent more than five percent, the blockchain will  rebalance by using its core algorithms. CR: How do you calculate the allocation of Dollars and Power? What factors do you consider? NS: Steem allocates rewards at a set rate with  specific rules. In the eyes of the contributors, Steem rewards are  distributed daily to posters and voters who participated in creating or  finding positive content. The most highly ranked posts earn the largest  rewards. Steem rewards are allocated as 50 percent Steem Dollars (SMD)  and 50 percent Steem Power (SP). CR: How do users store Dollars and Power? NS: The users have control of their Steem Dollars  and Power similar to how they have control of Bitcoin. The Steemit users  are in control of their own accounts and passwords, which are  completely client-side, similar to Blockchain.info, and they also have  free, unrestricted access directly to the Steem blockchain. CR: How do users withdraw Steem Dollars into USD? NS: The user sends the Steem Dollars to an exchange,  who may send them USD in return. One of the fast avenues from SD to USD  in the early days could be something like SD -> Shapeshift -> BTC  -> Coinbase -> USD -> Bank account CR: How does Steem Power work within the platform? NS: Steem Power is a user’s influence. By holding  Steem Power, the user has gains exclusive power to earn within the  system. The more Steem Power the user has, the more influence they have  in determining the best posts. CR: Steemit’s website shows a ranked list of “witnesses.” What does it mean to be a witness on Steemit? NS: Witnesses on Steemit are analogous to mining  pool operators on Bitcoin. They are responsible for block production and  security of the network. CR: The press release sent to us said you’ll make your first major reward issuance on July 4th – what will that entail? NS: The Steem blockchain had been pre-coded to issue  its first rewards on July 4th, which means it is currently tallying  votes and posts, but it won’t reward the best contributions until July  4th. There is lots of interesting content showing up to compete to earn a  piece of Steem’s first and largest payout, which will account for 10  percent of the Steem market cap. One of our goals is to attract many  content creators and voters before July 4th to increase distribution  Steem during this important moment. CR: You expect significant user growth by the first major  issuance. What are you doing to facilitate growth? How are you marketing  Steemit? NS: Similar to how Bitcoin has been a movement for  more than six years and Ethereum has become a movement for developers  and institutions, we believe Steem can become a movement for the regular  person. Steem represents a very low barrier to entry for anyone with an  internet connection to earn cryptocurrency, and through outreach,  networking and education, our goal is to bring as many good people to  movement as we can. CR: Steemit will soon release a mobile app. Could you provide more details about this app? NS: Similar to other web applications converted to  mobile applications, Steemit would benefit from the mass adoption we see  from consumers in mobile technology. Our aims are to continue improving  our web app and roll out other forms of the app so that we can continue  tapping into what the community would benefit from most. CR: Dan said in the press release that Steemit “is the best  opportunity for the regular consumer to earn and accumulate  cryptocurrency.” What would you like the average consumer to know about  cryptocurrency? NS: Cryptocurrency gives people freedom to interact  wholly and completely with their peers. We want users to experience  Steem and how its value is based on their social network and  contributions to their community. CR: When did you first come across the concept of cryptocurrency? What is about cryptocurrency that appeals to you? NS: Dan first learned of cryptocurrency in 2009; his  mantra has long been that it’s a tool for securing our lives, liberties  and property. I came across cryptocurrency in 2013; I was reading an  article about it in Yahoo! and turned to my dad, whom I love very much  and who’s also been on Wall Street all my life, and I asked him what he  thinks about it. He said to me, “Son, I try not to pay attention to the  fads.” For some reason, it never felt like fad to me and I continue to  feel its potential to improve the world for billions of people who live  here. Images courtesy of Steemit