The relationship between the Hive Backed Dollar (HBD) and $HIVE is very important. This is unique in the cryptocurrency world. It is also a circular feedback loop that can only help to drive the price of higher.
Of there is a caveat to this: there needs to be economic productivity tied to HBD.
If that is achieved through the development and building of the ecosystem, we are going to look at a powerful mechanism that will ensure the market capitalization of $HIVE grows in size.
Ultimately, this all comes down to transactions. It is the driver of all since that is directly tied to resource credits. As we know, this emerges from the staking of the $HIVE coin.
Actually, when you think about this, it is a beautiful system that is going to radically alter the values going forward.
Where Is The Tipping Point?
This is a question I was asked on a number of occasions. It is one that is near impossible to answer. There are many way to configure a model of this nature. Is Hive social media dependent? If that is the case, we would get one set of answers. On the other hand, if we are looking at financial transactions, this evolves into something completely different.
For example, if we are looking at social media, we see present pricing for activity in HP:
- comment - .72
- vote - .066
As a comparison, transfers come in at .105. Then we have custom JSONs, which are applicable for gaming. That is .109.
Anyone needing a Hive account is going to cost 4.622. To claim the account requires 6785.692.
In reality, we could see Hive being a combination of all these. We will have the social media applications which will also foster more DeFi. The introduction of a smart contract platform such as VSC should help.
Transactions Being Made
To give us some idea of the market potential, let us look at some of the basic transactions already happening each day.
- Credit Card - 1.01 billion
- Tweets - 500 million
- Bank Wires (US) - 750,000
- Instagram posts - 95 million
- Instagram likes - 3.5 billion
- Facebook likes - 5.7 billion
It is easy to see how the activity can get into the billions. Consider that Hive does just shy of 2 million transactions per day. According to Blocktivity, WAX is the highest with around 19 million.
As we can see, a drop in the proverbial bucket.
However, as a point of interest, if Hive has 1 billion "likes" being placed, it would required 66 million HP to just fulfill that activity. Right now, there is 166 million staked.
Multi-Pronged Approach
Hive has an interesting situation. It offers the potential for an approach that generates many different types of transactions.
For example, we already see people doing their grocery shopping with HBD. This is likely to be something that is repeated on a regular basis. After all, if HBD is the currency that gets cereal for your kid, you are going to keep using it.
We also have many social media applications forming. Here is where we can see a couple hundred thousand people making a difference. There is a plethora of applications that mirror Web 2.0 forming. Essentially, we have alternatives to some degree for YouTube, Twitter, Reddit, and Substack.
Gaming is also a big piece of the puzzle. Custom JSONs makes up the majority of the overall transactions. This is a versatile way to post data on the blockchain. It is presently being used by Splinterlands (and other games), polling on LeoThreads, and by Podping. The numbers above show there is a RC cost to these also.
There could be another area emerging that could radically increase the number over the next 18 months.
Virtual Smart Contract
We recently got the announcement of the Virtual Smart Contract platform starting to emerge. This is something we were awaiting on Hive for a long time. This is just one such platform that is being constructed.
Why is this important? Basically, it is transaction heaven.
Here we have a platform being built on top of Hive that will leverage IPFS. This means we will see the common smart contract use cases such as token creation and NFTs. We also could see a variety of decentralized finance (DeFi) contracts created.
The key to this is that all activity is records on Hive. This means that custom JSONs will be used to record different transactions. At the same time, we will see settlement occurring on Hive, most likely using HBD.
In other words, that coin could be the default for the entire platform. This means it can be the pair for tokens and the basis for all pricing.
Of course, to be a viable system, we need enough HBD in circulation. For a currency to be useful, it needs enough distribution. After all, if it in not in people's hands, they cannot use it.
100 Million Transactions
Based upon some napkin math, it appears that 100 million transactions on Hive is a major tipping point.
This is derived by using an average transaction cost of .30 HP, applying to those covered in this article. That would eat up roughly 30 million HP each day.
Obviously, this still leaves a lot of HP that is not utilized. What we have to keep in mind is we ignored the claiming of and creating accounts in this process. Those are costly operations relatively speaking, and ones being done daily. Most are aware that account creation is a slow process since claiming is dependent upon the RC available. If Hive needed 10 million accounts instantly, it might be tough to produce.
Using this as a guide, we are looking at basically a 50x in activity from this point. That might sound like a lot but, when you bore down, it really isn't. Splinterlands alone was doing over 3 million transactions per day during the last bull market. A couple other applications like that would have similar results.
The bottom line is on-chain activity is vital. We have a system that is dependent upon the staking of the coin to allow transactions. This means that more transactions equates to a higher $HIVE price.
A target of 100 million transactions would have the price skyrocket. The demand for resource credits would simply be too great at that point.
It might sound outlandish but WAX peaked at 31 million transactions in a day, based mostly on NFTs.
Adding a platform like VSC and incorporating the ability to create and trade NT and fungible tokens will significantly increase the number of transactions tied to Hive.
All of that will ultimately lead to a higher price. After all, it is built into the system.
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