Here’s an excellent little primer on what Steem is and how it works.

Here’s Ned, the founder of Steem Inc., on how Steem works and how it is useful for creatives and those who are seriously engaging on social media.

Now, some things have changed since the creation of this video from, namely a new mechanism called resource credits.


A Freemium Blockchain

The reason we call Steem a freemium blockchain is because users are not charged for the transactions they perform. Ever. Instead, holding Steem (in the form of Steem Power) gives users the ability to perform a certain number of actions like posts, comments, votes, and token transfers. They have acquired a “stake” in the technology, and with that stake comes the privilege of performing some activities “for free.” That means developers who build applications on the Steem blockchain don’t have to pay fees, or force their users to pay fees, every time their application gets used. When combined with Steem’s 3-second block times, the result is the type of user experience internet users have become accustomed to, but with the benefits of a blockchain and cryptocurrency-powered platform.

Introducing Resource Credits

While that system functioned well for the first 2 years of Steem’s existence, helping it to grow to 1 million plus accounts and 60,000 accounts transacting daily, it wasn’t sufficiently sophisticated to support the scaling required for mass-adoption due to the aforementioned inefficiencies and the unpredictable user experiences that resulted from design choices that were built into that system.

Improved UX

One problem with the bandwidth system that seriously hampered user experience was that one’s bandwidth would change in response to network traffic. When network traffic and resource consumption was high those with little bandwidth would simply be unable to transact. When traffic was low they would spontaneously regain the ability to transact. The problem is that traffic is inherently unpredictable, so what you would be able to do would be equally as unpredictable.

The RC system completely reverses that dynamic. A user’s RCs do not adjust dynamically based on traffic. If you have 10 RCs one minute, you will still have 10 RCs the next minute. Thanks to these changes, users can now be shown exactly how much they can do on the blockchain from one moment to the next despite the inherent unpredictability of traffic. The algorithm governing the system is designed to ensure that adjustments are made smoothly so that user experience doesn’t change dramatically over time.

Furthermore, since the RC system provides developers with more granular data on how much resources each transaction will consume, they can create more predictable user experiences. This can be accomplished by building interfaces that allow users to see exactly how many transactions, and what kind of transactions, they can perform given their current Steem Power, assuming they want that additional information.

If that wasn’t clear enough, here’s a video describing how Resource Credits work on the Steem blockchain.

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