![](https://steemitimages.com/DQmbXHgoxGtL22GFx86rZDNrcwMaGi9AzyA789XYy2Ev8kB/image.png)

<H1>CryptoKitties</H1>

Everybody is talking about [CryptoKitties](https://www.cryptokitties.co/). CryptoKitties is pioneering a new form of economic activity called crypto-collectables, but as more users rush to purchase their adorable new digital pets, the Ethereum network is struggling to manage the surge in transaction volume.

<H1>How is Ethereum doing?</H1>

According to http://blocktivity.info/, the Ethereum blockchain is currently maxed out at 100% capacity. There are more than 21,000 unconfirmed transactions sitting there, just waiting to be processed. Many users are unable to purchase their kitties, because the network doesn’t have enough capacity to let the transactions through.

![Screen Shot 2017-12-06 at 12.46.30.png](https://steemitimages.com/DQmdkmYBo4KaMhYkPtJccp7xET987XfhUUdCjwJFkFx3q19/Screen%20Shot%202017-12-06%20at%2012.46.30.png)


<H1>How would Steem do?</H1>

Steem is already processing a similar volume of transactions per day without breaking a sweat. All transactions are getting processed in 3 seconds, and the network is running smoothly. It has already set the record for the most transactions processed in one day, and it could easily handle several magnitudes more transactions per day without running into limitations.

<H1>What about fees?</H1>

Every transaction that is processed by the Ethereum blockchain requires a transaction fee (called Gas) in order to pay the miners to include the transaction in the block. 

On the Steem blockchain, there are **zero fees** for transactions to be included in a block. All transactions--whether that is transferring tokens to another user, posting content on steemit.com, or upvoting content from one of your favorite authors--are 100% free!

<h2>How is that possible?</h2>

The Steem blockchain uses Delegated Proof of Stake (DPoS), which is very different than the Proof of Work (PoW) protocol used by Bitcoin and Ethereum, but still achieves the desired outcome of consensus. 

Witnesses (instead of miners) are assigned to produce a new block every three seconds. The witnesses are paid a small fee per block they produce out of the low (roughly 9%, and decreasing every 250,000 blocks) yearly emission of new STEEM tokens that are generated. Because the witnesses are 100% compensated through the new tokens created through token emission, no fees need to be charged to the end users for individual transactions. 

Because the system uses bandwidth rate limiting (explained in the  [Steem bluepaper](https://steem.io/steem-bluepaper.pdf)) users are prevented from overloading the network with unlimited free transactions.

<H1>What else can Steem do?</H1>

Because Steem witnesses are not required to run million dollar mining rigs to keep up with a highly inefficient PoW algorithm, they do not need to be paid nearly as much as BTC or ETH miners, or use nearly as much electricity. This allows the Steem blockchain to run much more efficiently.

Instead of directing 100% of newly created tokens to pay for miners, only 10% of the approximately 9% the tokens created every year through token emissions is paid to the witnesses. The rest of the new tokens are awarded to content producers and curators for creating and upvoting quality content, and to vested token holders as a reward for staying invested in the network. 

This is what allows us to create this amazing platform where users are paid by the blockchain for the value they create! Not only that, but publishers, entrepreneurs, and developers will gain an entirely new tool for leveraging the Steem blockchain to improve their businesses and platforms with the launch of the Smart Media Tokens protocol. 

<h1>Smart Media Tokens</h1>

In early 2018, the Steem blockchain will be launching “Smart Media Tokens” (SMTs). SMTs will allow content platforms and communities to launch their own customized Proof-of-Brain tokens, with real-time fee-less transfers, on the Steem blockchain. Along with built-in smart contracts that enable fundraising opportunities like ICOs and Founders Tokens, SMTs will allow anyone to tokenize their platform and bootstrap the value of their coin by leveraging all the lessons learned from Steem and [steemit.com](https://www.steemit.com). More details can be found in the [SMT Whitepaper](https://smt.steem.io/smt-whitepaper.pdf). 

While the many platforms that will integrate SMTs will no doubt dramatically increase the number of transactions occurring on the Steem blockchain--especially if they involve adorable animals--the Steem blockchain was built from the ground up to handle the load. 

*Team Steemit*