Positive Feedback Loop is a kind of situation where people/investors/HODLERS tends to use current prices to predict futuristic occurences, development and even further rise in prices. In other words, it can be using developments or a change in the upward movement of a commodity or project as a parameter to actually ascertain growth. Bullish trends for example are often treated with a positive Feedback Loop.
For example, when people begin to notice a bullish trend this is when they'll decide to invest in an asset and this is solely driven by the motivation that if they didn't buy in at that moment, then they might be losing a lot when the bullish situation gets overblown.
Positive Tendencies
It is the same with the increased tendencies of people to post on hive when the prices are increasing or bubbling, this is because they believe that their time would be worth more with the prices, it creates an emotional need driven by greed to see money in the bigger picture. However, in pure hive tokenomics this isn't the case.
The thing is, the higher the price of hive, the lower you'll be on payouts other than When it's lower, and you can accumulate cheaply by buying as well as earning through curation. However, in general, people's emotional attachment to equate time value with monetary value makes them see low prices as a bad thing, simply because they're not getting what they want, this makes them see worthlessness to a project that is actually doing well, developmental wise not really money wise.
Valuable Via FOMO
This is called Irrational exuberance. It's a situation where people drive the value of a product or an asset more than it actually is. This can happen due to the positive Feedback Loop. For example, when hive hit $3 so many people began predicting $20 meanwhile when it was $0.10 more than a year ago, many predicted it would go to $0.01. However, those two contrasting thoughts are not viable because they do not follow a realistic analysis of the market situation but the pure assertions of the former who is an optimist and the latter who is a pessimist.
However, the positive Feedback Loop creates an imbalance. When it comes to hive, people do not know that equating the dollar valuation to the time spent on the platform is totally misplaced and this is because, while there's no inevitability to hive doing massively well, there's a prospective profitability to those who eventually own and grow it as an asset irrespective of how low the prices might be and this is what is rather logical.
One of the Similarities of buying real-time assets and owning crypto is that the period of these purchases are instrumental to profiteering In real-time it might look like buying a commodity or assets rising in price is profitable, but this isn't true, firstly a lot of people are always experiencing FOMO at the same time when an asset begins to do well, so this eventually creates a certain kind of herd mentality which means people begin to buy assets based on the fact that there are a few charts, prediction and tendencies to show that it might do well in the nearest future.
One of the problems of this bias is that it's based on pure psychological factors, rather than an impeccable or astute understanding of how the market actually works. FOMO creates unrealistic value, especially when people are willing to spend on assets that might be touted to do big things. When people easily fomo it's more or less like being driven by the need to own more. The concern with this, is that when valueless things are beginning to be valuable based on scarcity created by positive Feedback Loop, there might be unexpected crash, making people to lose time and money.
For What It's Worth
The point is, positive Feedback is good, but staying in that loop can be disastrous. Truth is, positive Feedback can help us buy the hype because we're pumped up by the price and not really the value. As a potential investor or one who has got a nose for spending into things that can generally be worthwhile, sometimes we tend to overestimate our abilities by allow the feedback from the market to influence our choices.
So many times, a rise in price motivates people to buy so that they can make further gains. This is why it's Important to never be reliant on oneself or be the only source of information. It's Important to compare one's investment views and perspective with other views and sources, to know and understand the viability of our own bias.
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I wonder if we really get less HIVE as price goes up because our posts and comments are being paid in HIVE right? The USD fluctuates so we do get paid more in HBD. However I guess it might be true to an extent because more people tend to be active and voting so the pool is slightly smaller.
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No, the amount one generates doesn't decrease, in fact it actually increases, take a look at the vote sizes, curators have seen a huge increase in their vote weight, this helps balance the equation on how much Hive a post can generate with the same vote weight.
I think you are wrong on that. There is only a set amount of HIVE generated each day. A portion of this goes to witness, another portion goes towards content/curation and the last portion goes towards APR for staking HIVE. I don't know if a portion of this gets paid to the DAO but it may be possible.
So the pie of HIVE that we get distributed is a fixed amount and I believe this comes from the inflation on HIVE. So in a way, the total amount of HIVE distributed is fixed. People's votes are in terms of HIVE so when the price of HIVE goes up, it just means more HBD is printed and people don't really get more HIVE as a result. On the side note, more people tend to be active during high prices so we have compete with more people and thus get a smaller amount.
So I think your wrong when we consider things in terms of HIVE. If your thinking of things in terms of USD then that is just the result of HIVE going up in price and printing more HBD in return.
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I suppose I know a little about this, however, at times like this, curators get the bigger share of the pie
Curators get 50% of what they give to the authors. So if more people are voting and creating content, the amount we get paid out is slightly less. Overall it shouldn't affect how much you get by too much but it is smaller.
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Well, thanks for the explanation, it goes a long way
We get less hive as the price increases, so technically we don't earn more during the bubbles. However, a lot of people do not actually know this, or they do and still ignored building or buying when the prices were low because they felt it wasn't worth their time.
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I agree people tend to ignore it when prices are low but I don't think there is a large decrease in rewards from making content. Of course there are more people active so we share the rewards pool with more users but I don't think it affects our rewards too much.
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It's obvious, the more pricy, the less reward, trying to build something to sell for these people when the price is going up is totally foolhardy
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I observed this also, as the price of hive increases, there less reward on hive.
The value of hive is actually still equivalent to its current pricing whether it increases or reduces, it still remains the same.
It's best to buy more when the price is low or create some more content now because with time hive goes higher and reward of hive is still the same.
Thanks for this post, it just clarifies what I was thinking.
I know what you mean, but technically that is not true:
If the payout says 10$ it is 10$, whether the price of HIVE is high or low.
FOMO is real and can affect the way we think about a project.
You must understand and believe in the project you are going so that price will not make you lose out or make wrong decisions eventually.
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Unfortunately, price is what determines it for a whole lot of people and when they can feel that price going up, it makes it difficult for greed not to follow up. The lasting effect would be that we would miss whats valuable for whats pricy.
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Amazing piece. Sad, how even as investors who have been exposed to the market and its trends still allow the emotions of fear and greed control us. The value in a coin or investment lies in what it can archive for you and if not you how it will impact future generations. Hive is more than a game of collecting quick gains, but a piece of a cake that is going to be huge in the future. The world does does not know what's boiling underneath, I hope masses catch up before for profit corporates sway the course
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Even the best of us are consumed by greed, we Just try to keep it minimal to some certain extent.
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Very true.I have been learning and getting inspired a lot from your posts and postings...keep soaring #inspiration
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FOMO creates unrealistic value
So true! This is relevant in all areas of life and business. I believe in remaining constant and having your own attitude rather than following the herd. This somehow implies that one should keep a safe distance toward the crowds as the mentality of others can easily contaminate the individual's own judgement.
Sometimes the herd mentality is what propels a lot of shit coins, when people unrealistically spend on what isn't actually valuable, the money leads others astray into thinking they're investing in what is viable.
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Shib! Doge! All of the woof woof coins🤣🤣🤣
Makes me remember a situation I found myself some time back, this was a gathering where people were legit shilling all the shitcoins in the world and there they tend to believe they have the right mindset in investing, lol, all they have is the guts to gamble...
it's amazing to see how people on hive sometimes help me pick crypto gems in the raff like I read posts on matic and hero some time ago and bought some cheap now their on moon
Wouldn't that be awesome
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That's awesome 😎
I'd say I actually careless of the price of Hive compared to the amount I could gather around.
In times like this where price movements create hype, the unfortunate end holds the fact that the asset in discussion becomes scarce for the fresh investors while old holders get a handful of influence
I think as humans we generally flock to something that is doing well, so the moment a thing is doing well, people jump on it hoping to make a profit forgetting that it could just be hype or temporary.
greetings friends, your post is very interesting information about the nest, after reading your post I understand, thank you very much for the information, friend,
I believe that everything is proportional if the hive goes up in price they give us less hive and if it goes down they give us more, since the publications are quantified in dollars and that is what they give in hive is based, regarding your publication, your very good thoughtful analysis and congratulations.
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Your post has good content keep it up bro