What is Steem and Steemit? I recently came across Steemit, a Reddit-esque platform which seems to be running on the Steem blockchain. It looks like it is paying its users to post and curate content. However, it looks rather leery that essentially a lengthy blog post could have a pending payout of over $3900. Even taking into account the exchange rate of about 0.25 USD/Steem, that is a good pay for writing articles.

So I wonder - what's the catch? What is Steem and Steemit all about? Is the platform really paying people hundreds of dollars to post articles, or is there something fishy going on?
Steem content is rewarded based on a voting system, described well here:

https://steemit.com/steem/@smooth/voting-is-a-popularity-contest

Not that payment is made in Steem not fiat and Steem value will fluctuate over time. 

The developers were able to mine a huge portion of the total Steem supply due to the relative complexity if the mining process at launch.  The fairness of the process has been a matter of debate:

"First, they did a typical instamine/flashmine/freemine scam (yes scam) where they released

(1) no compiled wallets
(2) no instructions to build
(3) incomplete and inaccurate instructions to mine

This wasn't bad enough. After the first 12 or so hours of mining, all their miners crashed, exposing that they were mining to 100 different witnesses to hide the fact that they (he) was one entity. The devs wouldn't have been caught except that their mining instructions were wrong, and no one else was mining because, even if they couldn't get the client to build, they entered mining commands that caused them to get no blocks. The devs will claim this isn't on purpose, but check the original thread. You'll see that no one mined a block when the dev's miners were down.

Then, as I have stated many times, when their miners crashed again, I mined a significant amount of steem that night in their absence. To prevent my vesting that and driving the price of vests up on them, they relaunched to ensure COMPLETE CONTROL AND CENTRALIZATION.

After the relaunch, no one would challenge them on mining because if they did, the devs would just relaunch this scamcoin again. So, no one who pays attention (and the people who have the means to procure whatever hashes they want are also the people who are paying attention), would challenge them on the hashes. As they hoped, no one did and they completely dominated the hashes for 1 week."

https://bitcointalk.org/index.php?topic=1427230.0

The "stealth" mining by developers raised a lot of Steem which are now being deployed in part to attract new users.

"At the conclusion of the pure-PoW mining phase, all of the coins from the developer mining accounts were merged into the transparent 'steemit' account, with a stated plan to sell them off to pay for development and distribute them for free to new users (each new account requires 10 STEEM funding). These actions have occurred and are transparent on the blockchain."

https://bitcointalk.org/index.php?topic=1513252.msg15232327#msg15232327