What is the future role of HBD? Many of us are optimistic about what it can evolve into. In the stablecoin world, we are seeing not only tremendous growth but a lot of changes.
This means that what is current might not be the case in a few years.
Technology evolves and it best keep in mind that cryptocurrency is, at its core, technology. There is no greater evidence of this than the stablecoin market.
What started out as a simply create a token and back with a USD is now evolving into something more advanced.
The idea of Hive Backed Dollars (HBD) as a stablecoin carries with it some powerful properties.
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Market-Based Currency
Bitcoin maximalists believe that Bitcoin will fill every role. They mistakenly believe there will be a global payment system based upon that cryptocurrency. To them, it is the answer to all our problems.
Their complaint is the idea that central banks can print endless amounts of money. Never mind that this is factually not true since the major central banks do not print the nation's currencies, there is another challenge. These individuals believe the solution is fixed money. Of course, this goes against free market conditions.
Throughout history, fixed money always led to tyranny. With that system, the golden rule enters. As the total amount of money cannot change in the long run, those with means can accumulate as much as they desire.
At the same time, it is impractical. To believe that economies operate in such a simple manner is mistaken. The idea is to have monetary distribution, where supple meets demand. This is the most basic of free market principles. This is known as money equilibrium.
The demand for money is not static. There are times when economies are growing at a terrific rate and more money is required. Of course, the opposite is also true. Hence, money needs to be elastic so as to expand and contract as required.
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Community Driven Currency
Our present system seeks to do this yet fails miserably since it is the commercial banking system that generates the currency. In a credit-based system, this is done through loans.
However, a major issue arises. Banks are always going to operate in their own self-interest. Therefore, when things get back, they are going to tighten lending, thus reducing the supply of money, not expanding it. For all the huffing and puffing the Fed does, it cannot force banks to lend. In other words, it is completely out of their control.
With the Hive Backed Dollar, there is no central entity that is making the decision about the money supply. Instead, this is completely up to the community. While we are in the early stages, we can see how this can grow into a powerful mechanism.
The fact anyone can generate HBD shows the market is in control. When the totality of people want more HBD, they will convert HIVE to expand the supply. Naturally, the reverse is true.
At the moment there is little demand for HBD since use cases are minimal. Nevertheless, if this expands over time, we could see the need for more HBD.
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Base Layer Currency
Most of the stablecoins that exist, especially the early ones, were established by centralized entities. There were companies, labs, or foundations that created the project. We also see how many of these reside on the second layer.
With HBD, we are seeing a token that resides at the base layer. This is crucial. That means the "control" comes down to the distribution of power across the blockchain. This is altering things greatly.
Whereas the regulators are looking to make companies like Circle come under the banking laws, the same does not hold for a blockchain. This is especially true when that does not have a foundation or company that is behind it.
Operating at the base layer creates a barrier of protection. Since there is no centralized entity, regulators are simply powerless. The token creation and distribution is based upon the code. This is accepted by the block validators, of which nobody controls. Anyone is free to not accept the code. However, if the consensus is to upgrade to it, that detractor is essentially outvoted and the update goes through.
HBD is an algorithmic stablecoin. This means that it is really operating based upon the protocol laid down by the development team. Here we see how it is truly a technology and not just a bit of financial wizardry. It is all run according to the blockchain software.
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How Much Money Is Needed?
This is a question that many try to answer. Unfortunately, it is impossible to get right. Anytime entities try to plan what the demand is going to be, they get it wrong.
The reality is there is no way to know. Economies are complex systems that go through different phases. There are good time as well as drawbacks. Recessions are a part of the economic cycle. The business cycle is what drives this. For all the think tanks and academia believing we can evolve around this, it is still in force.
Therefore, we need a monetary system that can expand and contract to meet the conditions set forth by the market. HBD can accomplish that.
When demand is high, more can be created to expand the supply. If demand weakens, which it inevitably will, the conversion out of HBD will contract the supply to meet that condition.
And all this is done without any meetings or minutes to report.
The Hive Backed Dollar (HBD) is very powerful tool in the creation of our online economy. Since the digital world expands at a rapid pace, it is best to have a currency that can help to feed that growth. The fact that money equilibrium can be set any time of the day is something the existing system is lacking.
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And @hivelist will play a major role in this in case this new economy will demand a web3 Amazon
Hivelist as the new Amazon would be very interesting. Since they accept HBD, that is a nice sink if it can grow and get a lot of products on there.
We will see how it all evolves. The savings program is generating more HBD as people build up their savings in there.
It is all growing, we just need to do more. This starts with attention.
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We really hope this will be the case. About to really start with the marketing soon. Going to be checking out and using Listnerds allot for this.
Listnerds and Hivelist can be a winning combo!
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HBD does not have a very important function for the Hive blockchain. It has no function other than "Proposals". It helps change in the internal market, but this is not so important.
The circulating supply of HBD is very low, whereas the Hive supply is high. The number of Hives in circulation can be reduced and the amount of HBD increased.
A user who sends Hive to -null- account can be given HBD based on the Hive/HBD price.
At this point, you are right. The use cases are missing. That is something that everyone who is running a project needs to take a look at.
This is true about HBD although I would not agree about HIVE. At the moment, yes there is a lot but since it is tied to RCs and operation on chain, if there is a significant growth in users, we are going to see that dry up very quickly. Just as some of the DApps who expect growth how they feel about that. Get a few Splinterlands going, especially one that has a lot of onchain activity outside Custom JSON and you will see a problem.
The HBD problem is fixed by offering more projects that create it. I have written about both Hive Bonds and Hive Certificates of Deposit. They would help to generate more HBD organically.
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I think Ragnarok has plans to solve this.
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It is going to be one of the applications/games that utilizes HBD. That is a great step although it is still a long way from going live.
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for now it works like an internal sell contract.
I believe the future of hbd is in progress with the growth of it willing to expand soon and many individuals are investing to own more of the stable coin which is awesome.
Stablecoins arent really an investment since they, by definition, should not have a great deal of volatility. In the early days, this is unavoidable but the goal is to get it pegged.
Stablecoins are meant to be used. It is why the non-stablecoin market is quickly evolving into a speculative, stock type game.
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I believe that stable coins will be an instrument to converting asset to cryptocurrency. Thus, it is important that HIVE has its own stable coin.
I wonder what additional usecases there can/will be for the HBD in the future. That said, being a stablecoin is a huge use case in and of itself, as it removes some of the inherent crypto volatility.
!1UP
It is suppose to. So far, HBD has not done that. We will see what happens after the hard fork. This is going to raise the haircut level.
A run up, permanently, in the price of $HIVE would help on that end.
As for use cases, hard to tell. I would presume it would increase the demand, thus necessitating more to be printed.
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Should I save in HBD or HIVE. I thought HBD is a stable coin in hive blog and it have interest with HBD Saving. But Hive can grow up to the hight price and Hive power can get curation rewards. So what should I do.
$HIVE in savings does not pay interest; $HBD does.
It depends upon what you are concentrating upon. If speculating, $HIVE is the way to go since it has upside. However, $HBD is about fixed income. So if just looking for a solid return, the HBD in savings pays 12% annually (claimed monthly).
So it depends upon you approach at any given moment.
For me, I am putting HBD in savings to grow it as a baseline return for my portfolio.
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Ok ! Thank for sharing your idea.
No problem. Getting to know all the different pieces on Hive can be overwhelming. A lot of moving parts.
But once they are understood, it becomes clear how powerful all this is.
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Agree it !!! Now I start to learn about the hive engine and leodex. But don't know too much. Can helpful some second layer token ? It had a lot of second layer token.
Sorry for my english skill. I just try to say with english.
Hive-Engine and Tribaldex are basically the same. They read the same data just different frontends. You can add Leodex to the list for that.
A lot of H-E tokens are not very good in my opinion. LEO is a layer 2 token obviously that trades on there, so not all are bad.
The value is we can get rewarded in many different tokens for the same post. There are also funds like BRO, SEED, and LBI which can offer returns.
So we see a lot of variety at the second layer which is to be expected. One popular token is obviously SPS which is related to Splinterlands.
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Thank sir. I only know SPT token can get from splinterlands game. How can I get sps from splinterlands.
First I read that as "exiting system" 😊
Good thing you read more than once. LOL
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I think there is definitely a need for algorithmic stable coins to avoid the current financial system. Just take a look at all the news about Tether and other stable coin providers being hit by the regulators makes me wonder when a court ruling might go against them. At the same time, I have seen those stable coins block addresses so it's not as free as people might think.
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I am not even sure a court ruling is required. My bet is the USG makes them come under the banking laws. That would require the likes of Circle to be in compliance.
And that means additional costs. I do not know their business model so I have no idea how they make money. Yet it is the drawback to regulation: the money required to be in compliance.
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HBD for now is my go to savings account. 12% APR beats the 0.05% my back offers on most savings accounts.
Other than that, if I was to make any services or projects that required a payment method I'd probably only accept HBD. Simply because it'll make my life easier in terms of accounting and stuff. I know it's 1$ worth of hive no matter what.
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It certainly does beat the traditional return. Of course, in terms of returns in crypto, it is not great. Yet it is low risk and solid. So it is a portion of my portfolio as a baseline return.
Plus 12% over a number of years will really add up.
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Thanks for these continued great posts about HBD. I get a little more excited every time you put another one of them out. I think I finally hit my savings goal this morning. Now it is a bit addictive though and I just want to keep stacking more and more!
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Low risk and paying 12%, hard to beat. The compounding on that over the course of 5 or more years is very good.
So I agree, hard to break the habit of continually adding. No reason not to in my opinion. I keep it building even though there are more opportunities out there.
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The stability that comes into the economy of Hive via HBD is just amazing. With its near constant value around the $1 value, investors really have less to worry about. COntent creators on the other hand can be rest assured that Hive price jerks doesn't zero a oending reward.
That is the idea of a stablecoin, to remove volatility. While we are not there yet with this token, we are heading in that direction. Hopefully we can tighten it up even more.
I look forward to seeing what else we can do with it. There still needs to be a bunch of HBD created. It still looks like the chicken or the egg to me: we need more HBD but we also need more use cases.
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HBD as a stabecoin is one of the best currency and I hope with time, more people would bank on this rather than those notes that central banks issue.
Lets have a see!!
of course, I found this article informative. Hive Backed Dollars (HBD) as its name implies gives much backings to earnings on here on hive . One can’t help but notice it’s unique ability to expand and contrast to different conditions the market offers . That’s really worthy of a stable coin !
I enjoy reading your posts explaining this as this is important to understand. Looking forward to the next hardfork then to see how this volatility can be resolved.
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All I can to all this is, I use HBD. For Splinterlands right now, and if I can for upgrading Listnerds.
I hope to have a future use for it soonish. I just bridged Skippy to Hive from BSC and it is transferable. Looking to develop a SKIPPY HBD stake in the future to continue to power it's LP and retain stability and functionality
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I think the best use case of HBD is to provide the stability to the Hive price to some extent. When the hive is down people do convert their HBD to Hive and all is done on the internal market which is actually good for the Hive ecosystem as a whole.
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Yes its can't be calculated exactly that how much money required to build and surely economies are really complex system and I really agree with this point you have mentioned. As always well explained blog!
The thought of regulators being powerless makes me smile. Galt's Gulch, baby! !BBH
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. Keep up the fantastic work