In the course of the past couple of months, there has been a lot of talk and discussion about the growth of Hive's own ”Hive Backed Dollar” (HBD) and its potential/promise as a stablecoin for the greater world.
To WHAT do we open the door?
I can see why this all is exciting, because it's always exciting to ”chase the big numbers,” and earn a hefty return on your investment.
Maybe I'm being "unpatriotic" here, but it already makes me slightly nervous that the HBD interest rate was raised from 12% to 20%... but WHY?
Chasing the big numbers can be a very dangerous proposition that often leads to ruin, rather than riches.
Just to clarify, in this case I am thinking of the term ”chasing big numbers” as what happens when a company, or an organization, or an individual grows impatient with the often laborious process of organic growth and declares ”we have to do something!” And typically that "something" takes the shape of something big and flashy... that people also tend to conveniently overlook the long term cost of.
It's easy for us to get stuck in our little microcosm of the world of Hivelandia, or even the microcosm known as cryptocurrency, but the history of business is literally littered with the wrecks of organizations that lost sight of their core idea and went off in search of "big numbers…" usually because somebody else in their industry was suddenly going off on a wild tear.
The great Peter Lynch — founder and steward of Fidelity Investments’ highly successful ”Magellan” mutual fund for many years — was fond of using the term ”di-WORSE-ification” instead of diversification to characterize what tends to happen when an organization loses sight of their core mission because they decide ”more growth is needed — NOW!”
So why is this really a problem?
Well, if what you are offering is fundamentally really good, resorting to competing with the "bargain basement fire sale merchants" — on their terms and turf — in order to draw a crowd can be disastrous!
Why?
Because they are just looking to make "a quick buck now" and move on... not to build a solid foundation for the long term.
With Hive, presumably what we're all looking for — in an ultimate sort of sense — is to become large and successful. But the problem with trying to become large and successful too quickly is that it tends to attract a lot of what you might call ”fast money.”
Here today... gone tomorrow
Fast money definitely represents the typical character profile of those who chase "big numbers," but fast money is also very fluid, has little loyalty to anything other than seeking the next profit opportunity, and will leave you just as quickly as it came to you.
When you back up a bit and project that forward over the longer term, "fast money" represents little more then those sudden upspikes we can see in almost any crypto chart or even recent wunderkind IPO stock chart.
Fast money can definitely make your balance sheet look super impressive — for 24 hours, or maybe a couple of weeks, or a couple of month — but it can also make your balance sheet look like a trainwreck when that fast money moves on to the next grand scheme out there... because they suddenly posted an even bigger number.
A lot of it is no more than simple psychology: People tend to expect exactly what you promise them.
So if you promote your nice four-star restaurant by offering "Free beer and BBQ" to draw in lots of people... you will get LOTS of people looking for free beer and BBQ, and as soon as they realize that an actual dinner will cost $40 a person, they'll be taking all their excitement and ruckus with them to the next place offering free meals... while you suddenly find yourself "playing to a nearly empty house."
So what's the MESSAGE, here?
Make sure the people you draw to your venture... be that your own new business, or Hive... are actually the people you WANT. If you're looking for long-term builders don't cater to "big number chasers," no matter HOW alluring their numbers might be!
Thanks for reading, and have a great weekend!
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Created at 20220603 15:05 PDT
0558/1804
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I understand your concern, I had the same feeling at first, but fact is there is so little of HBD in circulation there’s no way big money can come in fast. That’s just the sweetest part of it. As the supply dries up, maybe the interest rate should be lowered, at least that’s what my take on it is.
I'm by no means opposed to the idea, as long as there isn't some change to the code that suddenly releases many millions of HBD into the system.
I concur. I did start switching to 50/50 post rewards instead of my preferred 100% when the announcement hit, but the last crypto sale led me to sell off a lot of HBD for HIVE, because the staking is where I see the most long-term value. Do we want people here for a quick buck, or long-term? But on the other hand, the 20% return could help encourage people to accept HBD as a marketable currency instead of just offloading it immediately for Bitcoin, so I can see the argument for encouraging an ecosystem for it.
HIVE and HBD are completely different.
The first has speculation while the latter is fixed income.
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Indeed, they are definitely very different. But they remain interdependent in the sense that if it is more attractive to hold HBD than Hive (in people's MINDS, regardless of the market movements) people will sell Hive to buy HBD... and vice versa.
I look at it from the building value and where it is driven to.
Development needs to take place to build value for HBD by building value for $HIVE.
Of course, we also have to take the steps to build value for HBD on its own.
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HIVE is also power on the platform regardless of price though.
That is true. There is utility with it.
However, when looking at the reason why most are investing is different.
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As a content ceator and active curator, I value HP. I also think HIVE itself is undervalued against the dollar right now because Bitcoin took a hit and dragged altcoins down with it, but I acknowledge I could be wrong here. I know I am gambling on market changes, but I suspect HIVE has a bigger upside even compared against compound interest in the next few years.
If I were to go inactive for a period of time, I would consider a change in my holdings. I might power down some HP, buy HBD for the 20% interest, and delegate more to Ecency and OCDB for an return on HIVE above and beyond the interest rate there.
I am on 50/50 post rewards, as well. I am also slowly building a savings balance in HBD. And I reckon I'll keep doing that for as long as I feel inclined/have time to actively post.
The thing that concerns me in a curation only scenario is that you (meaning "any random person") can earn more from holding HBD than from staking Hive for curation rewards. So where's the incentive to buy Hive? And if that incentive is lessened... where's the counter-pressure on the BUY side of the market to offset those who are always selling every cent they earn here?
We need a lot more HBD. If you look at the present float of HBD, even at 20% per year, it will take about 20 years to get to 1 billion HBD.
If you think that makes HBD a legitimate stablecoin, I would disagree. That is still a small fraction of what it takes to a legitimate force in this world.
So this is the first major use case for HBD, creating more HBD, which is badly needed.
We also have other use cases being formed. This means we are going to have to get even more out there. So the belief that this is just a fly by night, get some fast money in, that is not how I see it.
It is laying the long term foundation for HBD as a legitimate stablecoin.
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As long as it remains an organic process and people (including witnesses) continue to regard it as a long term proposition, I'm a little less worried about it.
So HBD is really likely to be more of a hybrid than an actual stablecoin.
One of the great challenges in the Cryptosphere — and I have brought this up many times — is that we need more use cases that involve USING a token to make money via projects (i.e. the PROJECTS make money, not the TOKENS... like Splinterlands, where a substantial part of the picture is the game having "stuff" you need to buy, using a token), rather than just holding the token as the way to make money... regardless of whether we're talking about Hive, HBD, or anything else.
As long as Hive stays clear of going down the "flimsy" road of some of the stuff I see... that amounts to little more than vaporware backed by unicorn sparkles, promising a 60% APY... paid in rainbow poop!
Without a doubt, I agree 100%. There needs to be a lot more business building as opposed just monkeying around with tokenomics.
Certainly HBD requires a lot of long-term work. This is where the idea of centering it as collateral (loans), derivatives, and funding/investing.
Utility is overlooked in crypto. The key to HBD's success is making $HIVE a success.
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