(in reply to the #bitcoinpizza conversation)
My answer to friends and family who ask me, "But where does the money to pay Steemit content authors and curators come from?" starts with a pizza.
May 22nd, 2010: The first ever purchase using bitcoin took place to the tune of 10,000 bitcoins for a pizza. Bitcoin, if you're not familiar, is a decentralized cryptocurrency. Today, that same amount of bitcoin is worth $6.5 million because right now each bitcoin is traded on open markets for around $650 each.
What Is Money?
Money, at its core, is a ledger. It's a way to keep track of value transfered from one person to another. Blockchain technology (the stuff that runs both bitcoin and steem) is a global, secure, proveable, decentralized ledger. In a sense, it's the best form of money every invented.
Many people around the world recognize this and want to move a portion of their value store into this ledger. That's why bitcoin is currently selling for around $650. It might also be why steem is selling for around $3.50. Until the marketcap grows by several orders of magnitude, both bitcoin and steem will be highly volatile, so expect these numbers to change a lot. Value, in an economic sense, is determined at the moment of exchange and both these tokens of value are being exchanged right now at these rates. The technical specifics of how the blockchain contract creates new tokens of value is beyond what I'll explain here, but, in my opinion, it makes more sense than what the Federal Reseve does on a daily basis because the blockchain protocols are completely open for anyone to investigate.
Is Steem Money?
When a post or comment on Steemit has a $ value next to it, a portion of that value is a real, liquid reward which can be converted to USD fairly easily. After 24 hours, 75% of the reward goes to the author and 25% goes to the currators. Of that 75%, 50% is given out as Steem Power (which is similar to a vested stock) and 50% is given out as SBD (Steem Backed Dollars). You can transfer SBD to either Bittex or Poloniex, sell for BTC (bitcoin), and then sell that BTC at various exchanges like Coinbase for USD or your currency of choice.
So that's where the money comes from. It's not just the value of the content or how many users join Steemit (though those things are important also). It's about tokens of value which, on the open market, people are willing to pay real money for.
So why not create an account and post some content to see what happens? A couple friends of mine found Steemit via my Facebook posts and so far have done very well:
Will you do this well? Probably not. Could you get lucky and upvoted by an influencial member of the community? Maybe.
Either way, that's my current thinking on where the money comes from. What are your thoughts? Also, check out the #bitcoinpizza conversation which this post is a reply to.