We spend a fair bit of time discussing the Hive Backed Dollar (HBD) and how important it is going forward. This is something that truly should get to the top of the list for improvements on Hive. The timing is lining up for an alternative to the existing market and HBD can take advantage of it.
Stablecoins became a huge industry. It is estimated to be $155 billion. Of course, this does not rival the money market world which is in the $5 trillion range. However, considering this relatively new, it is a giant step forward.
The announcement by Facebook that it was going to bring out a stablecoin was a moment which woke the establishment up. After changing the name to the DIEM, the project since is abandoned by the company, opting to sell it off. Nevertheless, the impact is still being felt.
While governments around the world wrestle with cryptocurrency, it seems the Biden Administration is intent on handing the stablecoin market over to the bankers. This is a move that is designed to hinder the progress of cryptocurrency and bring it under control.
Here is where the opportunity is opening up for coins that are like the Hive Backed Dollar.
Source
Issuers Fall Under Banking Regulation
Make no mistake, this is going to happen. The government is already looking at how to address the stablecoin issue. It is a hot topic in Washington, one based upon faulty premise.
They want to use the idea that somehow stablecoins are a threat to the stability of the financial system. As stated, this is roughly a $155 billion market. To believe that it could de-stablize the financial system that is in tens of trillions is absurd. Nevertheless, that is what they are using.
The issue was the hot topic in a report put together seeking a pathway to follow.
Far more significant was a report published in November by the President’s Working Group, an inter-agency group of the country’s most senior financial regulators, including Yellen. Titled “Report on Stablecoins,” the document called on Congress to pass laws requiring stablecoin issuers to operate as banks and to restrict their “affiliation with commercial entities.”
What this means is that companies that issue stablecoins, such as Circle, will have to be registered as banks. This puts them right in the scope of someone like Jamie Dimon and JPMorgan. It is easy to acquire another bank since that is within the regulations.
It is no secret that the Biden Administration has been very aggressive with cryptocurrency. The Securities and Exchange Commission takes a hard stance anytime it can. We see the same approach by the Fed. For this reason, people in cryptocurrency have no reason but to conclude that attack is immanent.
According to one individual who advised regulators, this is a well-thought out strategy.
“It’s a very thought-through doctrine about how to stop the crypto industry from growing too fast and too much,” says Maya Zehavi, a crypto entrepreneur and investor who has advised regulators.
Who exactly is behind the strategy? While many view the ambitious SEC Chair Gary Gensler as the architect of the Biden Administration’s anti-crypto policies, his influence has been overstated. It is instead Treasury Secretary Janet Yellen, Senator Elizabeth Warren, and a clique of Federal Reserve veterans who appear to be calling the shots.
According to Zehavi and others, the Biden Administration doesn't want to kill stablecoins altogether. Instead, the aim is to cull what these lawmakers perceive as "shadowy" operations like Tether while bringing "regulator-friendly" ones like Circle and Paxos under the umbrella of the U.S. banking system.
This has nothing to do with the stabilization of the financial system or protecting average individuals. It is simply a quest to retain power and hand innovation over to the banking system.
The question is whether the industry is going to stand for it or not. Obviously, it will be fought. However, let us be clear, the size and power of cryptocurrency versus the establishment is laughable. It is nothing more than a flea on the hind-end of a dog.
Therefore, the attack has to operate on a different level.
Source
Develop Out Of Reach
The reason why the Eurodollar system flourished for decades is because it was outside the reach of any central bank or government. For the first 20 years or so, few were even aware it existed. This was the international banks creating their own money in an effort to make more money. Ironic, it was a ledger-based system that was not regulated at all. Any agreements were between the two parties, who bore the full risk of anything going wrong.
While there were naturally some issues, this system grew into hundreds of trillions of dollars. The expansion was amazing, most likely playing a large hand in fueling major economic growth post WW2. It was only in the last few decades that things started to falter are the system was starved of USD. This caused a massive contraction which is creating problems in ways most are not aware.
Cryptocurrency is following a similar pattern. This time, instead of international banks, it is individuals who can establish "money". People are free to enter into whatever agreements they desire. For this reason, we see how quickly the industry is expanding. Bitcoin started a bit more than a decade ago. Within the last 5 years, we see a ton of projects that are all creating financial instruments that can be traded, bought, sold, or collateralized. It actually has a chance to provide the global liquidity that is needed.
Here is why stablecoins are such a threat. By putting them back in the hands of the bankers, the USD creation is controlled. It is the commercial banks who dictate when the money supply expands or contracts. The is the basis for a credit-based money supply. It is easy to see how, under this scenario, the stablecoins will only be expanded when banks make loans, similar to the USD.
This is, of course, not what the intention is. We are feeling the impact of a world where commercial banks control the money supply. It is starving people as economies get wrecked.
For this reason, the solution is to develop out of the reach of these institutions and the governments. They can regulate all they want, if something is truly decentralized and not under the control of any individual entity, there is little that can be done.
Hive Backed Dollars (HBD) are that. It is an algorithmic-based stablecoin. This means the elasticity of the money supply is in the hands of the community. Nobody is determining when to expand or contract the number of HBD available. If the demand increases, monetary equilibrium can be met as the community generates more of it. When the reverse is in play, the amount of HBD will contract.
For the moment, this is a token that cannot be regulated. Since no person or entity is behind it, as opposed to a Circle, regulation is useless. It is like trying to regulate open-source software. Simply, it cannot be done.
Time To Circle The Wagons
This is an old American saying that dates back to the early settler days. When people were embarking into new territory, they would circle their wagons as a defense against attack. Those of us in cryptocurrency are facing a similar threat.
It is very clear where the US Government and the current administration stands on this matter. They are going to do everything they can to reign in cryptocurrency and put it under their control. This means handing a large chunk of it over to the banking industry. We all know how that will work out.
For this reason, a coin like HBD is essential to the path forward. By improving upon this, we can start the process of building an assortment of products on top to further cement the power of the token. Just like the Eurodollar system to deposits of USD in foreign banks and build an entire platform, we can do the same. Over time, expansion will head is so many directions that it cannot be stopped. Projects such as UST are doing the same thing, showing that this is not a one-horse battle.
Essentially, the idea is to make an ecosystem like Hive a derivative machine. Since HBD is at the base layer, all the construction can take place on top of it. This will service as the foundation for an assortment of innovations. Some of them can be tied to the base-layer, to provide further stability by having "code is law" serve as the primary driver. This also serves as a defense against the attacks which are coming from the establishment.
It will also provide a mechanism that offers pristine collateral. When there is transparency with an asset along with liquidity, then collateralization is strengthened. We are seeing a world suffering from a lack of quality collateral. Here is another instance where cryptocurrency can solve a global financial problem.
With each move, the government and its associated entities are showing the need for a token such as the Hive Backed Dollar. If we want to retain and promote the freedom that comes with control over money, this is a vital step forward.
If now, we will see more funneled into the banking system which will only benefit those few who are already running things.
This is not what cryptocurrency is all about.
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As is nearly always the case I have to agree with you in the main. Most particularly I would paraphrase your post and say that those who have made careers out of ‘power brokering’ see crypto as a threat and are taking action to reign it in and control it as you point out.
One point I would argue is that law and regulation can have a significant detrimental impact. This has always been the primary tool of the power brokers. Such regulation can make it illegal to own, transact or otherwise work with crypto, at least here in America. As an example, think of the laws that regulated the price of gold and its ownership that existed for decades here (until the early 1970’s). When push comes to shove it’s all about control.
Fortunately laws and regulations can be overturned however the process, as things stand in the political arena, is much harder than preventing them in the first place. As you point out it is time to circle the wagons. What you so rightly point out is already being attempted is in fact an attack upon the fundamental rights of individuals. As such the actions being taken are in fact unconstitutional.
Your call to action in development within the Hive ecosystem and the cryptosphere in general is a critical part of any defense. However I would suggest a political counter attack is also necessary. I would argue that a significant segment of our community membership also need to come together and contend with the power brokers in a more direct political engagement. By challenging the constitutionality of current political action we can, at the very least, buy time for development in the ecosystem to become so entrenched that they can’t root it out. One of the great advantages of the cryptoverse is to serve as a counter to propagandized media and Hive in particular can allow for crowdsourcing as a means to build effective political opposition.
The work you do here is an excellent example of the power we can wield in counterpoint to the power brokers. The question I would ask is can we generate the collective will to defend the hard work so many have already undertaken and to protect our collective, inalienable rights?
Thanks for another delightful perspective and the hard work.
Blessed be
Certainly we are seeing political figures lining up on both sides of the aisle in favor of cryptocurrency. However, when it comes to that realm, we know that money tends to drive the show. We have a lot of fossils ingrained into the system like Biden, Pelosi, and McConnell who have no idea what any of this is about other than they have to stop it.
For that reason, while political can help, I think our true power is to develop around them. You dont win playing the game these constructed and rigged. Instead, we have to change the rules of the game in my opinion.
They are looking at slowing things down, we have to accelerate them.
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I think there shouldn't be such relation between a centralized instution and cryptocurrencies.
Everyday, we get to see some desperate moves by the governments to bring cryptocurrency under its sovereignty and control. It's appears banning crypto is not enough and now they're looking at handing the stablecoin market over to the bankers. If this happens then the aim of the crypto movement might just be thwarted because power still gets back to the government.
Just like you have cited above, decentralized and algorithmic-based stablecoins like Hive-backed dollars (HBD) and TerraUSD (UST) will be our only defence. It's decentralized so, there's no way they'll be registered as banks.
Hence, this is an opportunity for our native stablecoin to go mainstream because many investors will channel their money to algorithmic-based stablecoins whenever this agenda of the government goes live.
Now, my question..
In what ways can HBD be developed, stabilized and made more investment worthy?
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Use cases go a long way to expanding the entire value. We also need a lot more of it produced which would help stabliity. Having differing products which are based upon HBD, especially at the base layer could go a long way to increasing its success.
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Noted. Thank you!
On the contrary, I had the thoughts that low supply would have made it more stable. I guess I was wrong
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I did not only find it informative, but I also found it empowering.
All I der here is the government trying to play smart with the crypto economy.
The government is scared that the power is being handed over to people via crypto.
From what I read, it means that centralized stable coins might be regulated as time goes on. Am I right??
Anyways I feel the government think people forget history and try to play on the intelligence of the people.
I think it is safe to say we can expect cryptocurrency regulation. Personally, I dont think there is anyway it does not happen.
The key it so expand that which they cannot regulate, which is HBD.
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At this point you can seat back and wonder what do these governing bodies really want to see of the people . Its time they start bracing them selves for how smart crypto developers are and that they wont go down with out a fight.. sadly a slight mistake it these goverments can render them obsolete and crypto will take over and an imature stage when it would have been beneficial giving it the opportunity to grow and make certain its direction. Its high time the learn and know the only constant is change. Things wont always be the same and the revolution shall be televised
I think governments are going to be obsolete because they are not designed for the digital world. They were constructed when we operated in the physical realm only.
For this reason, it is up to us to help with their demise.
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We must have been looking into a crystal ball when we designed the #combination draw payouts to only work in HBD. I felt at the time long ago that HBD had a much bigger role to play in the Hive world.
In my conversations with other hive members I have also warned that the establishment will do all in their power to maintain the current status quo, via the regulation threat.
They will dress it up as caring that people don't lose their money and that regulations will also cure the terrorist financing threat. Sounds plausible but since when has the banks cared for their people?
Btw. Your remark "Time to Circle the Wagons" was called as a "Lager" over here by the early settlers in South Africa. They pulled a lager of their wagons as a defense against attacks by the hostile tribes.
The women and the children were taught how to load the rifles and each man would have a couple of rifles going during the attacks. A very formidable defense and I didn't think that I would hear mention of it ever again.
So indeed it is time to circle the wagons.
It is par for the course. They sell their ideas (laws) as caring and protecting but it ends up screwing. All they deliver is lies while enriching themselves and others at the masses expense.
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Totally agreed with you as they also have the habit of loaning people money for houses and cars and most anything else. As soon as the house owners become unemployed and cannot pay their bonds, then they are simply kicked out and the houses are taken back by the banks.
Not one cent of the payments over the years is returned to the defaulters.
So miss a few payments and see how the banks care for their people.
Even our charity is regularly bombarded by the banks with loan offers.
It is true, governments want to control cryptocurrencies at all costs, but with the sole intention of dominating absolutely all markets.
Let's hope that more people will see projects like HBD and use it to avoid unnecessary control.
We need to keep growing the numbers. This is where the difference will come in. It is time to develop around the governments to advance the cause of freedom.
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I believe HBD is a great choice but we definitely need better liquidity on HBD before the masses can pick it as an option. I know the HBD stablizer is good to at least set prices on exchanges and ecoinstant has also has a proposal for HBD/BUSD diesel pool funding. The other day, edicted was talking about how you could saw CUB out in the thousands of dollars without slippage with around a million dollar or so of liquidity.
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Liquidity is vital. That is something that is missing in HBD. We simply do not have the liquidity out there. That is one of the reasons for the volatility.
As for the proposal, I agree with the idea but not the timing. I dont think using the HBD from the DAO is enough. We need a great deal more.
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I think more is better but the DAO is good enough to start. If we can prove that we can peg things properly, I think other people will jump in after things look safer.
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Very interesting. I wonder what it is going to take for people to start getting HBD squared away where it needs to be for all of this. I have seen some comments that the developers aren't really interested in that. The current ones anyway. I could be totally wrong.
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I think HBD is very important to Hive's future, as I would hope should be indicated by the changes we've coded to improve it.
I haven't seen the comments you're talking about, so I can't comment on specifics of what you read. But it is true that I don't agree with every proposal made on how to go about improving it.
For example, I don't agree with subsidizing a HBD liquidity pool with the DHF, especially in off-Hive markets, as that just seems to be a case of subsidizing someone's external market (via the fees collected) and the traders who operate there (via the decreased spread).
Any good liquidity pool should be self-sufficient, IMO, based off the spread that it market makes over. This is certainly the case of the HBD stabilizer, for example, as it makes a profitable return for the DHF.
That was the thing that they were talking about. I apologize, I shouldn't have mentioned you without having all the info. Thank you for clearing that up. I appreciate it.
That could be the case although it seems like Blocktrades supports the stabilizer so it would seem he is onto that.
I cant say and it might be the case. It would be a shame if that is so since it has so much potential. But it would not be the first time someone powerful was dropped.
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They were having a discussion about it the other day in the Leo Discord. It might have been some of the more crazy stuff they were talking about though. I think blocktrades was mentioned specifically. I was busy at work so I was only half reading it. I apologize.
That's a bit scary and getting out of the original purpose of the stable coins! I'm getting more convinced with the HBD being the model for a regulation-free asset.
But I want to know your opinion about the recent proposal of incentivising the HBD/BUSD pool, will trying to stabilise HBD hurt its purpose or will make it even better?
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Nothing wrong with doing things to try and stablize the token. That is one of the first steps. However, I think the proposal is a bit early at this point.
To start, we need a lot more HBD out there. That is one thing that will help to stabilize it. The second is for more liquidity to be provided on the internal exchange. This is overlooked and not used to the degree it should be.
Finally, we need a lot more use cases for it. A LP is a use case, and we can do more.
The advantage to it is that we do have, it done, a bridge from Binance to HBD. Getting a hold of HBD is not easy. But for those on Hive, the internal exchange is there.
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Thanks a lot for sharing your opinion, I think, most hivians are taking HBD for a stable coin and a 12% APR saving coin. The more use cases are for HBD, the more it helps stabilizing it.
I was just looking for some decent posts on HBD to share with some crypto people and this hit the mark!
I think the rise of algorithmic based stables will definitely increase as the gov tries to regulate the non algo ones. Thankfully hive is a complex ecosystem already so we can capitalize on it I think!
Hive has some of the foundation in place. We need to keep expanding and pushing things forward. There is a lot already here that puts Hive much further along than many others out there.
One of the keys is that nobody controls HBD or how it is created. Plus with all the different witnesses along with different programmers, we are seeing the points of vulnerability reduced.
Here is where we need to keep the attention.
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Moving all attention to HBD too at this time might really be a good choice, but at times I keep on asking myself how long will all of this ideas last
I am not sure I follow.
What do you mean how long will these ideas last?
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Rather to the stability of the financial discrimination. Hopefully cryptocurrency (not just/only stablecoins) will put an end to the financial discrimination. Nowadays the Hungarian (and a few other) governments practicing this. They intentionally keep a lot of people (me too) under the local minimum wage.
Well the way out of the local minimum wage is to get involved in earning with crypto. Then the local economy is not relevant to one's earnings. Instead you are then tapping into a global ecosystem that pays out at a much higher rate.
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I can't believe that the attack on cryptocurrencies that had been predicted will come so fast and we are in the middle of it, well we have no choice but to look for places to cover ourselves because places like binance will be within reach of regulators once they operate as banks, I think Rune thorchain and hive are good places to cover their backs considering the hard hit that will come to always keep the industry under the same trends of the last years.
Greetings.
It was expected. There is no way the establishment was going to sit back and let everything be taken from them. For this reason, we need to be consistent with our attacks on them. It is time to outpace their slowness with our development. With millions of people involved globally, if we all increase our positions and activity, things will get overwhelming very quick.
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HBD is awesome for that especially with the @hbdstabilizer mechanism. A good (but maybe slightly dated) HBD article and its mechanisms can be found here: https://peakd.com/hive-167922/@kevinnag58/how-do-hive-backed-dollars-hbd-work-including-the-hbd-stabilizer-the-hbd-debt-limit-and-the-haircut-rule
There is a lot of potential with it to provide an easy to use, dependable and fast exchange network. It will be exciting to see what occurs!
There are a lot of advantages to HBD and what can take place. We have a nice foundation in place that allows for rapid development. The savings program was a great step forward yet one that is only a piece in a larger puzzle.
We need to start sending this thing in every direction as well as creating other projects on top of it.
This is where the true value lies. It isnt only having an algorithmic stablecoin but what is tied to it.
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I have been making most of my decisions around HBD (and its potential) for most of my blockchain journey and yeah the savings program is an awesome evolution! Hopefully more is yet to come.
It is a very good addition to the ecosystem. People overlook how important a low-risk DeFi token.
We have a project that is at the core level.
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https://leofinance.io/@kevinnag58/how-do-hive-backed-dollars-hbd-work-including-the-hbd-stabilizer-the-hbd-debt-limit-and-the-haircut-rule
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.
Tether had a number of rivals for years. USDC is actually making a ton of progress.
UST is also stepping up.
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We need HBD to be more stable in other to serve in it's full potentials,that's why more liquidity is required and proposals like this;
https://peakd.com/me/proposals/206
Needs every support it can get, for the betterment of this ecosystem...
That is true although there are different ways to stablize it. While a LP is one way, if there is very little HBD out there, which is the case right now, we are still dealing with a liquidity issue.
Also, the last of use cases also enter the picture. Right now very few use HBD for transactions. In fact, we still see people accepting Hive as payment over HBD. here is another issue that could use addressing.
I like the proposal I just think it is a bit early in the process.
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I believe people will use it more often if it were much stable with enough liquidity for instant conversion, the case with hive being chosen over it is this, it's easier to dump hive than HBD, my 2 cents...
It is really awesome to have HBD in the blockchain because it really helpful especially been a stable coin.
Well, so far, it hasn't been the best stablecoin. It is lacking, mostly in liquidity. For that reason, I believe a lot more has to be produced.
However, the relationship between HBD and $HIVE is amazing. That is really going to enhance the value of both over time in my opinion. It is one of the things that can send the value of $HIVE flying.
One actually compliments the other.
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Access to fiat will always be the easy place to apply control. In time we can build an environment where everything can be transacted in crypto across chains. Then the access to fiat door closes. Then they will control access to internet or electricity - next challenge is how to get that decentralised too.
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Didn't know that you have to be a bank to supply stable coins and must be why COTI are chomping at the bit being a bank already.
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If this is the case, one can simply increase his holdings of both HIVE and HBD and just smile about the threat coming from regulators that many in the cryptocurrency space are worried about. And instead of worrying, he should view such threat as catalyst that contributes all the more for the increasing demand of a truly decentralized stable token like HBD.
Is my deduction accurate? Am I following your logic?
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It is very impressive to see that, crypto and stablecoins expanding the dimension. And arguably very strange to see that its very bright ahead. Hopefully 👍
I have noticed that regardless of the geopolitical climate those that have amassed wealth seemed to be untouched regardless.
Reading your articles on HBD especially with that 12% APR for banked HBD, having as much HBD as possible, is a great way to build wealth.
Question
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