Ethereum has been on quite a run in terms of the use case.
A few years ago, it was at the center of the ICO craze, with the ERC-20 protocol being used to release tokens that were sold in an effort to raise money. Even now, the SEC is still sifting through the carnage, trying to go after those responsible for many of the scams and illegal activity.
History is repeating itself on the Ethereum blockchain. 2020 is the year of DeFi and the activity on there certainly reflects this. We are seeing tremendous value arising from the new applications that are gaining in popularity.
This is not being missed by the market and how it is pricing a lot of these tokens.
A couple of months back, Ryan Watkins of Messari, noticed how the value on Ethereum was shifting.
At the end of May, ERC-20 tokens accounted for half the value on the Ethereum blockchain. Things changed rather quickly as noticed by financial journalist, Camila Russo.
Presently, there is roughly $60 billion on the Ethereum blockchain, with more than half ($33B) being in the form of ERC-20 tokens. This is no surprise given the growth of "yield-farming" that is taking place. Compound, Maker, and DAI are now household names within the crypto community.
The question is whether this is a road map for Hive?
Certainly, the discussion of Smart Media Tokens has gone on so long it is now akin to believing in Santa Claus. We are now approaching 3 years since the release of the SMT White Paper and still nothing. Even post-fork, there was talk about testing with little mentioned since then.
Thus, we will have to look at this from a Hive-Engine perspective and add in SMTs (HMTs?) from a speculative point of view.
In other articles and videos I asserted that value was being created on Hive outside the native token. Many of the games and tribes were generating wealth for users as those platforms grew. While still small, and a fraction of anything taking place on Ethereum, it does align with how things could unfold.
Under this scenario, we could see the road map already laid out.
In my most recent video, I discussed the idea of asset based cryptocurrencies versus technology based ones. Ethereum is kicking butt through the use of asset based tokens. It is following the same path of another cryptocurrency that falls into this category, Bitcoin. These tokens are financial in nature and are meant to operate within that realm. Hence, their explosion is rapid since the only thing required is money.
Technology based cryptocurrencies are a bit different. They address different issues which means development is required. Applications must be put forth that not only address the issue but also present a better user experience. In the realm, any explosion will be the result of a growth in the user base kicking off the network effect.
BAT, Auger, and Enjin are three tokens that fit into the later.
Hive is a blockchain that also falls on the technology based cryptocurrency part of the spectrum. Not only is the main token itself in this but so are most of those created on Hive-Engine. They reward their users for specific activities as laid out in the use case for the token. It far exceeds just the transfer of value from Wallet A to Wallet B.
Some of the areas that are being developed is blogging, social media, gaming, and art. All have projects that are trying to create a user experience that moves us further towards Web 3.0.
HIVE has two main use cases that are central for the ongoing use of the system. The first is that to interact with the blockchain, some Resource Credits are necessary. This comes from powering up HIVE. Essentially, more users means that more HIVE must be powered up to cover the activities required by the user base.
The second use case is as the pair for all tokens associated with Hive. For now, we see this in the form of Hive.Swap on Hive-Engine. If SMTs do ever see the light of day, all tokens created using that protocol would end up being paired on the DEX with HIVE. This would mirror how HBD is right now, only with more tokens.
Which brings up to the subject of wealth and value.
As evidenced on Ethereum, it is possible for the applications on a blockchain to generate enormous value. In fact, we can see how the value has exceeded that of the native token. Ultimately, depending upon the ERC-20 tokens, there could be a lot more whales holding these currencies than who hold Ethereum. It shows how the wealth can be spread out over a larger number of users.
Obviously, focusing upon asset based cryptocurrencies, we are comparing a lot of the same tokens. Ultimately, it is a money game there. However, if we look at what is already created on Hive, we see a different story.
Art, blogging, social media, and gaming are all different realms. While there might be overlap, it is likely that these different arenas appeal to a wide range of people. Even within an area such as gaming, there are stark differences among the community. Some enter into blockchain gaming as a passive opportunity while others want to play on a daily basis. At the same time, some prefer card games such as Splinterlands while others opt for the shoot 'em up types.
What this tells me is that the rate of progress is going to lag that of asset based cryptocurrencies. Nevertheless, when things do start to take off, because it is based upon user experience, things can spread very quickly.
Looking at Coingecko, HIVE has a marketcap of roughly $78 million. As compared to Ethereum, this is a drop in the bucket. It also shows how a similar result can occur with just a few success applications. While the value of HIVE, as priced by the market, will certainly increase, having a couple hundred million dollars in value through the different project is not unreasonable.
In fact, as Ethererum showed, it is quite possible.
For years now, the focus has always been upon the main token. For the present user base, this is not likely to change. However, as new people join, entering the ecosystem through the different applications, we could see a different mindset. Under that scenario, those individuals would be a lot more concerned with Splinterland cards, art NFTs, or SPEAK tokens. HIVE will be viewed as something in the background; a bonus if you will.
And through all this, enormous wealth could be generated by those communities and applications that can attract a large following.
In my mind, the path is becoming clearer.
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