Hive Valuation - A layman's attempt to put a value on Hive

This will be my best attempt at a valuation of Hive. I did one of these valuations back when the chain was new in 2016 (when it was known as Steem), but since so much is changed, including the name, I thought a new assessment was in order, as much for my own thought process on this investment as for others to contemplate and give me feedback on. I was chatting with @nathanmars on Twitter about this and I came up with some decent numbers I'd like to share here. For the rest of this post, my valuation will use data pulled from Coingecko about circulating supply and current price/market cap. Right now Hive is trading at about $0.43, which is a nice quadruple return if you bought just a few months ago, but for those of us who have been here long term, this seems like a severe undervaluation. Below I try to build a case showing why I think this (note that the sentiment is 93% positive on how visitors to the site feel about Hive).

My original valuation focused on comparing to other social media platforms, which are valued according to their stock. Reddit was the one being compared, since Steemit was actually named in homage to Reddit. If we still went with that one, it would be difficult to compare since it's a privately traded company, but Reddit has similar traffic to Twitter, so we can look at that as our target. Twitter is valued at a market cap of $53.09 billion according to Yahoo! finance as of this writing. If Hive were to take that market share from Reddit and then valued at the same $53 billion valuation of Twitter, each HIVE token would be worth about $142.

Personally I don't think Reddit is a great site to compare Hive to any more because as a blogging platform, it looks and feels nothing like Reddit. It's got its own vibe but can most easily be compared to traditional blogging sites on the legacy web, so I looked for some numbers on traffic there. I found some recent info on First Site Guide that I'll use here. They claim that in 2020 there were 31.7 million bloggers just in the United States alone. Grabbing those users would be absolutely huge for traffic to HIVE, and since they're all active bloggers, they'll all be interacting with the blockchain at least a few times a month, so let's assume at least one visit per week and multiply that by 4 for a conservative number of visits, which puts us at 126.8 million visits a month, just from people who like to blog.

That's only bloggers, not casual users nor active curators, so we need to look at the number of visits that bloggers in general generate in traffic to their blogs. For those numbers they give info on the top 20 blog websites, which likely generate most of the traffic, so I'll just use this number without extrapolating since I don't have any other source data. This works out to almost exactly 300 million visits per month, which is a pretty sizeable number of potential users, so now we're up to about 426 million visits per month from blogging activity, just in the US.

Next we have games that run on Hive like @splinterlands. Since Splinterlands is a Role Playing Game (RPG), we can just look at the total number of users who consume that kind of media as our market. Since I don't know much about these games, I'm just going to go with D&D as a reference point. I found some good data at Dungeon Vault, where they say there are an estimated 13.7 million active players world wide. Again, we can expect at least 1 visit per month for such users, so we can say that equates to approximately 54.8 million visits per month. This is probably a gross underestimation of the total market for RPG games and how active those users would be, but I figure if we can grab the most passionate users, D&D tabletop folks, this is going to be a solid yet conservative bet.

Probably the application with the most potential on Hive is video sharing, and the most promising DApp right now is @3speak. We know from looking at companies like YouTube and TikTok that probably some of the highest traffic and best engagement is on VLogging sites, so I'm going to look at web traffic there. According to YouTube, they generate a whopping 2 billion (!) visits per month; and according to Business of Apps, Tiktok has 689 million user visits per month internationally and Douyin (Chinese version of TikTok) generates 600 million user visits, for a grand total of 3.3 billion user visits per month from just these two video streaming platforms. I'll stop there since these probably account for the majority of this type of traffic on the internet, and well, it would be very time consuming to get a more comprehensive view. This is just a quick and dirty thought exercise rather than a precise assessment.

If we add up all the previous user counts, forgetting about the international bloggers and users of other types of DApps that can be run on Hive that I don't even know about or haven't been dreamed up yet, we're looking at a market that consists of 3.8966 billion user visits per month by my estimate. Now it would be a little overly optimistic, to say the least, if we were to think that Hive is going to snatch up all of that market share, so we need to go with a percentage. Let's say we get just 10% of all those users and the traffic that it represents, which would get us to 389.66 million user visits per month. What's that worth? Assuming that our engagement is worth the same as a company like YouTube, which I found at Howie Mann that they estimate it to be worth $170 billion. At 2 billion visits per month this values each site visit per month at $1.176 per (this seems high, but a video site tends to get high engagement and people tend to interact for long periods of time, so those particular eyeballs are worth a lot to advertisers). Going by that our Hive valuation at 10% market share could put us at $458 million, or $1.23 per coin.

Now looking at that number, I still think it's low, and here's why. YouTube's valuation represents a number that a centralized company can extract from its users. It doesn't include what its worth to its creators (probably at least as valuable as what the company itself values it as) and the users themselves who interact on a daily basis (maybe also equal to the other 2). This is also not to mention that my visit numbers on the VLogging sites are conservative, because a view is probably more equivalent to a visit to a blog, and many people watch multiple videos per visit. Those things said, Hive is worth maybe 3-4x that above number on user traffic alone, or $3.69-$4.92 if Hive gets just 10% of the above markets, which are not an exhaustive list of its potential traffic generating applications mind you.

This is also not to mention Hive's utility as a store of value and a means of exchange. We know from the recent run up in Bitcoin that the cryptocurrency aspect itself has immense value. The crypto market cap total right now from CoinGecko is $1.8 Trillion with a capital T, so there's a ton of value potential right there. One of the major limitations of Bitcoin is its scalability as a payment system. It's just too darn slow and expensive to run to be used for that purpose right now. I don't think Bitcoin is going to go anywhere as the dominant "digital gold" that it's increasingly seen as, but as something you're going to buy snacks at the convenience store with? Probably not. So in addition to the absolutely fantastic value proposition mentioned above, we've got this lightning fast and feeless transaction coin that far exceeds the scalability of any of the top 10 coins right now (up to 10,000 transactions per second). Right now Ripple (XRP) is being looked at as a possible solution to the scalability problem (it can do a mere 1,500 transactions per second lol), but it's a centralized coin that sort of defeats the whole purpose of a cryptocurrency in my mind. Well, that coin is valued at $21.6 billion right now. If Hive were to take the number 7 spot from it on the crypto market cap list, we'd have a $58 coin on our hands.

Now, are any of these valuations good ones? The answer to that is: I don't know. As everybody who has studied economics seriously knows, value is subjective, which means anything could happen. Suffice it to say that given the above analysis which can put us anywhere from about $1.23 hive all the way up to $142 Hive in the extreme (as in, extremely unlikely, but still a small possibility). We do these kinds of analyses and comparisons to look at potential. Whether the coin achieves even the $4 mark this bull market is really dependent on whether the users here can do a good enough job of promoting Hive and whether the DApps that people try to interact with can scale like Hive can. Again, this is in addition to whatever creative DApps pop up in the future to run on Hive and wow us with more great functionality. I conclude this post by saying we shall see, but I'm optimistic.

Disclaimer: I'm just some guy on the internet with an opinion. This is what I think and what I will do. I have a stake in Hive (which you can see by looking at my publicly displayed wallet), and I do not claim to be an expert on finance nor cryptocurrency. This is not to be construed as financial advice. You need to do your own research and make decisions for yourself about whether this is a good idea for you, and you are ultimately responsible for that decision and its consequences, whether they be good or bad. That said, I wish you all the best of luck.