HBD A Scam? Most People Do Not Understand This At All

in LeoFinance10 months ago (edited)

There was a bit of a controversy stirred on Twitter about the Hive Backed Dollar (HBD). Evidently someone took to calling HBD a scam. This got the Hive army going, creating some pushback.

What we have is someone who evidently has no clue about HBD yet, simply due to the 20% APR, it has to be a scam. This should come as no surprise because we have many on Hive who claim that this is unsustainable.

Sadly, what this reflects is a misunderstanding about money, economies, and how the financial system works. We see this all over the Internet, people taking nuggets of information and believing that is the totality of how things operate.

Over the past 18 month, we discussed HBD in great detail. The idea that the 20% rate is a scam is utter nonsense. Yet, so is the idea that it is unsustainable.

People's views make them believe something that is not reality. One of the problem is few take the time to think about the development of an economy from the ground up.

In our discussions about HBD, we delved into some of the particulars.


HBD Scam

Here is the atypical exchange on Twitter. Before starting I will admit I know nothing of this person. However, it is the usual "I am an expert so let me guide you". I would presume he talks about cryptocurrency while thinking he understands money. That appears to be the norm.

So let us look at this situation.

He concludes its a scam, based upon a 20% APR. In this guy's mind, that is impossible. How could 20% inflation rate in a currency be anything but a scam?

Of course, to even begin to answer this, some question might be asked?

They are:

  • what is the present circulating supply of the currency?
  • how much of it is freely circulating?
  • what is the velocity tied to this currency?
  • what derivatives were created from this?
  • how wide is the currency distributed?
  • what payment platforms are in place? (in crypto this is present by default)
  • are there lending applications?
  • does this lead into any funding or investing projects?

All of these are legitimate questions to ask about a currency. Do you think our "Twitter expert" know the answers? Of course not. There is a segment of Hive that doesn't even consider this.

When it comes to cryptocurrency, we are dealing with something that is still in the very early stages. The transformation of the existing financial system is going to take decades. We are basically a few years into this.

For that reason, even if things aren't in place, what are the plans to implement them. Many of the answers to those questions is in the negative at this moment. That said, for much of it, we know infrastructure is being built. It is hard to provide an application without that. Unfortunately, we have to get the cart and the horse in the right order.

So knowing HBD is not a scam, we have one other question.

Is 20% APR On HBD Sustainable?

This is something that many, including those on Hive, claim is not sustainable. Why is that? How come a 20% rate of expansion of the money supply is not feasible?

The answer is derived, by many, looking solely at the existing system. Again, if we act on ideology, we can be led astray.

One of the challenges of looking at the existing money supply is there is already a distribution. With HBD, we are starting at a very low level.

The first question above was "what is the present circulating supply"? For HBD it looks like this (pulled from Hiveblocks):


There are 31.5 million HBD in total. However, we have to deduct the 20.5 million locked in the decentralized hive fund (DHF). This leaves us with a free float of roughly 10.8 million.

That is our starting point.

As a bit of fun, let us map out HBD compared to Tether. That stablecoin has roughly 80 billion in circulation. How long would it take HBD to get there? Certainly we know HBD can be generated in ways other than the interest paid. Nevertheless, it will help to frame things for us.

Here are the results:


There answer is we can pay 20% interest on HBD and it will take us 45 years to get what the market cap is on Tether today.

We are presuming that every coin that is not in the DAO is in savings and earning interest which is not the case. That means the actual time will be a bit longer.

Therefore, by this metric, not only is the 20% sustainable, it is still eclipsing the lifetime of a good percentage of us before if even arrives at Tether.

The US Dollar

If we are going to change the system, perhaps we should look at the top dog. In today's world of currency, that is the US dollar.

Using the same parameters, how long will it take to equal that?

Here we start with the circulating supply of dollars. Keep in mind this is only banknotes, the physical currency that is distributed by the Federal Reserve. This is a small portion of the total dollars used for commerce and finance, since most of those are digital. Nevertheless, it does provide a target while also showing the enormity of what we are dealing with.


As we can see, from the latest data posted by the Fed, there are $2.3 trillion in USD banknotes around the world. This is significantly higher than the amount of Tether.

Plugging this target into our calculations, here is what we come up with.


If we started today with 10.7 million HBD in savings, paying a 20% APR, it would take us 62 years until we equaled the USD banknotes. This is not the deposits that are in the banks which are "digital dollars". This is the actual currency which we know is used in only a small fraction of the cases.

In Conclusion

The evidence is clear. HBD earning 20% in savings is sustainable for decades to come. The idea that we cannot inflate the supply of this coin is based upon nothing more than trying to transfer knowledge from an existing system. None of this is applicable.

Of course, there is a caveat to all this. Utility for Hive's stablecoin is required. Infrastructure needs to be expanded so that applications can be built out. The key is to offer commercial and financial services with HBD (or a derivative thereof) as the centerpiece.

Nothing operates in isolation. However, to conclude something is a scam or is not feasible without knowing the detail nor how it all interacts is not sound.

HBD is the foundation of building an economy. This is multi-faceted requiring a great deal of infrastructure, applications, and utility. It is not going to be an overnight process yet it is something that can occur over the next few decades.

As the numbers show, there is plenty of room for things to grow.

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I disagree/agree partially.

Whether 20% is sustainable or not depends on a lot of factors. The most obvious one is the amount that is earning 20%. If this number gets too large, it will not be sustainable.

Other HBD not earning 20% out of scope.

The guy has been enlightened. He literally choose not to do his own research and that was his undoing. For someone who preaches web3, I guess he still has a long way to go. I hope he takes it upon himself to prove himself wrong.

Did he respond to the people who took him to task? Just curious. I’m not on the twat platform lol

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Your headline needs work. "HBD A Scam: Most People Do Not Understand This At All"

You're saying it's a scam and people don't understand it. People share headlines and don't read articles sometimes (often).

Just sayin'

Good point. Added a question mark.

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I feel like it was meant as bait.. :D

Probably. Dammit. It made me click...

If 20% is a scam I would happily offer this person a 15% product, and pocket the 5% difference.

I would offer him 10 per cent! 😉

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And if he doesn't like your 15% offer I'll offer 10% :)

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Hahaha good one!

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LOL That might be a great marketing pitch.

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I dont know how to do marketing. :D

The key is to offer commercial and financial services with HBD (or a derivative thereof) as the centerpiece.

That would be good. Practical usage. And the people's trust in it. Even in the physical world. For example opening grocery (and other) stores with an option of paying with Hive Dollar (HBD).

For example if you would be a fruit seller, and if I would say that I would like to buy 1 kg apple from you for Hive Dollar (HBD), would you accept it? How many others would?

With enough people trusting it, the Hive Dollar (HBD) could even replace the USD in entire businesses. It has a lot of potential.

There is indeed plenty of room for things to grow.

Have a nice day and have a nice weekend.
All the best. Greetings and much love from Hungary.

It is comprehensive the doubt about the 20%, but call it a scam without research is irresponsible. I believe that is time o start promove hive like something else than a social network that pay.

Is moment to promove $hive and $hbd as coins with a big use case and a great projection. I know that is difficult because Hive is not like other blockchains that with only 12 words you have a wallet as easy, but that is the way.

Use case on HBD is rather limited but is expanding.

We are going to see the opportunities grow in the commercial arena.

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I kind of prefer hive to continue running under their radar for a little bit longer. Then prove them wrong in a big bang.

It does make things easier if we are under the radar. Keep building is important.

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All hive holders and more so developers should just increase the utility of the platform.

I just realized, I possess 0.053% of the entire circulating HBD supply. Wow! If I owned that percentage of circulating USD, I'd have $1.23 Billion!

🤣You're rich!

That is a great feat.

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Aww, a verified account on Twitter is making issues about HBD. He needs to research more before judging HBD, for it is like judging something at first impression without even knowing more about it. I wonder if that person understands what he is saying. I just hope that h well understand everything about HBD, and not just conclude because of reading about the 20 percent APR. All is well!

Having a "Verified account" does not make the person more intelligent or smarter than others. With Twitter's verified badge going for $8 per month these days and everyone now with a blue tick, I would rate the opinion of someone without a blue tick same as someone with one.

I so agree with you my dear friend. I have some thoughts that he was just farming engagement in Twitter. How I wish he has done so many research before releasing a statement that was like a drama.

I saw this on twitter last night and was wondering if someone needed to tag you to write an article. Looks like you are way ahead of me!


LOL yes I saw it as it went down.

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In Conclusion
The evidence is clear. HBD earning 20% in savings is sustainable for decades to come.

Seriously? Sorry but I do not see your evidence. I see perception. Not reality.

I see a click bait post that will earn you some easy money. Maybe some would consider this as falling within the definition of a scam.

I am being an observer and wanting to learn more about the true HBD valuation.

I have already learned a lot about the Hive community already and I look forward to learning more. There is a lot of what I call BBB noise, Bullshit Baffle Brains noise that needs to be filtered. Much worse on w2 platforms for sure but exists here as well. Be it intentional or not.

Time to go, back later to learn some more about the true value of HBD today and to what may happen.


Seriously? Sorry but I do not see your evidence. I see perception. Not reality.

Yes seriously. And if you would care to discuss money, HBD, bonding, banking, or any other topics such as this, I would be happy to do it with you.

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Thank you for the reply.

My interest is trendline of value and buying power of HBD compared to US$ and $CDN

I am not into hype about future value of something based on compounding interest calculation and US money supply. The US economy has proven year after year that it is resilient and that money can be printed when needed and interest rates can be adjusted as needed. Both outside of my control and both not really meaning much without considering many many more factors.

As per interest be it saving or inflation, I remember a time you were better off buying goods and storing it for later use than trying to earn money from saving and doing without goods and services.

I was challenging the following...
The evidence is clear. HBD earning 20% in savings is sustainable for decades to come.

So we wait and see and in the meantime I will explore some more about DHF and other aspects of Hive operation and as usual I will continue to follow the price of $US dollar compared to other currency and token economics pegged to $US.

Have a great day.

Too many people are too quick to jump to conclusions and spread opinions based on little more than the idea of, "sounds to good to be true."

Great article man, I'm not 100% knowledgable about HBD and couldn't help wonder whether or not it's sustainable to earn 20% APR, but you broke it down well and numbers don't lie.


Lol I was roasting this dude there too

Certainly it is not very easy to make a quality publication, but if you can, better still, with the good knowledge that you always contribute, we can achieve it and receive the incentives or positive evaluations that you give us. @taskmaster4450 I wish you much success in your good orientations.

@hivesucre is helping this along. It is great to see businesses starting to embrace Hive there. HBD is a gem for the people of Venezuela.

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That's right, dear friend @taskmaster4450le just like it is worldwide, HBD is a true jewel that has come at a good time for the people of Venezuela, where the economy of families has diminished and many of them, including mine, have benefited from hive and pay with Hbd. Thank you for your support and positive evaluation of my answers. successes

This is why it is important to unlearn. Traditionally, 20% interest always ends up been a scam so that's what the average individual will believe right from the start. HBD is different, there's the possibility of more utility for the token and its expansion.

Well we are dealing with a circulating supply that is low and an economy that is just getting started.

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There have been a few scams on Hive. Dlive got us pretty good. Then Justin Sun / Ned. There were probably some other smaller ones.

But if 20% APR on a coin that you can earn with 0 investment necessary is a scam, please scam me some more! Best scam ever!

There were scams on Hive, without a doubt. Drug Wars could be consider another one, at least a rug pull.

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I saw the tweet earlier too and in my mind, I said this guy does not know in detail what he is trying to call a scam because, to him, the 20% is too much to give out as interest. He needs to see this post and see if he would still conclude it is a scam. He needs thorough knowledge and research and I hope he proves himself wrong on that notion he put out there.

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I admit, I am one of those who don´t understand the sustainability of HBD either. Your argumentation is mainly about how small the market cap of HBD is compared to the "big shots". But regardless of size, the question from where the inflation is earned is a legitimate one. Following this argument, I could create a stable coins yielding 100% inflation per year and it would take also ages unless it is as big as the USD. I think this can´t be the explanation alone. To inflate by 20% and keep the USD-Peg must have a price at the end of the day because there are no money generating revenue stream backing up the Hive ecosystem, just inflation.
Look at LEO. It inflated 60% last year and the price was heading accordingly.

To inflate by 20% and keep the USD-Peg must have a price at the end of the day...

The peg is maintained by the conversion to $HIVE. 1 HBD can be converted to $1 worth of $HIVE. So that is taken care of as long as the haircut rule is met. If not, the production of HBD shuts down.

But regardless of size, the question from where the inflation is earned is a legitimate one.

Yes that is true. The key is to built the utility on HBD. There are a number of areas this needs focus: payments, derivatives, collateral, investing and funding.

Currency needs to equate into economic productivity. That is where things get interesting. Have to build an economy.

Look at LEO. It inflated 60% last year and the price was heading accordingly.

That is true but it is a value capture token. Leofinance did not have the growth to sustain that much increase. HBD is actually backed by an access coin.

It is why building is so important. None of this operates in a vacuum.

Following this argument, I could create a stable coins yielding 100% inflation per year and it would take also ages unless it is as big as the USD.

You certainly could. And if you build an economy around it, you could keep that pace up for decades. Of course, simply creating a coin with nothing else does not equate to sustainability.

Would you coin go to funding business and financial expansion? Then you have to chance to keep things growing. That means having the necessary people with skills and an outlet to produce.

If not, the coin will end up like Venezuela which creates currency without the ability to expand economic productivity.

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"Don't understand it, sounds too good to be true, not in the headlines...."
Comments like these is what helps organic growth for HIVE. While all the "head smart" people ignore it and mock it, we can continue collecting that 20%. Eventually they'll realize it's not a scam, but by then they may discover that ship has already sailed.

Each day that we keep going, the more it works to our advantage.

Staying power is important. We just keep building and growing while being under the radar.

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Still did not understand perfectly the HBD model, i must to admit. I have an idea, but i cannot explain to somebody else. Maybe we need a contest: explain HBD like I am 5!

Well unfortunately when dealing with currency, utility, building an economy, and things of that nature, it is tough to explain to a 5 year old. There are many variables that enter the picture.

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It's a confidence Vs competence thing and you see it all over the internet. Someone is very happy to write confidently about something they know feck all about. It won't change, but I'm glad the community descended on their tweets. Will hopefully make them think - but that's a different question!


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@dstampede(1/5) tipped @taskmaster4450

It's funny to see people calling a scheme that gives 20% return as a scam, I honestly believed that those set of individuals are Yet to full do their homework very well about HBD

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I don't really trust those Twitter people to really understand and I agree that HBD's 20% is not a scam. At the current liquidity out there, I think the 20% can last for quite a while before there are any issues as well. Hive keeps developing and we need use cases that people want to push HBD to become more public.

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I know is not a scam but I will never put my entire nest egg at 100% on this. I remember the collapse of Luna USD, which lost its entire value in a debt spiral cycle.

There answer is we can pay 20% interest on HBD and it will take us 45 years to get what the market cap is on Tether today.

45 year? Most of us will be gone by that time. 😆

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Clearly HBD is backed by Hive, and we can see transparently that there is sufficient value in Hive to back the HBD. Problem arises if there is a sharp fall in the Hive price (like Luna did). The good thing for Hive is that there are mechanisms in place once the debt exceeds I think 30%. Further its actually hard to buy HBD, so its not like supply can grow that easily, you need to wait 3 days to mint the HBD.

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People, like these twitter user, that make such comment are not informed but like they say, ignorance is not an excuse. You can't drag a topic that you've not done proper research on. I hope he gets the replies in the end.

Thanks for the education. One thing this situation made me realize is that the economics of HBD isn't really explained in the hive whitepaper. I assume it's all in the code, but I haven't seen any other documentation on it. I know the old chain used to have a "bluepaper". I wonder if SBD was explained in that document.

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People quick to call something they don’t understand a scam.

Very insightful. You have explained it all

myself represent those who had a hard time understanding the functionality of HBD but little by little, and as a function of really wanting to learn what the usefulness of this derivative of the Hive token is, I have seen that it really has interesting features. Especially in terms of savings. Excellent point in your post, mate, @taskmaster4450

Some people make uninformed decision out of ignorance because they refuse to do research. That is why we have people wrong assertion, like *"HBD SCAM. 20%UNSUSTAINABLE.

What we have is someone who evidently has no clue about HBD yet, simply due to the 20% APR, it has to be a scam.

Thanks @taskmaster4450 for the detailed and understandable explanation.