Obviously there is more to Hive than just looking at it from a financial perspective (e.g., new solutions to technical problems and technological innovations or the community which keeps this place going). But the financial side of things is still an important factor, especially if you are an investor. So let's have a quick look at whether or not it is worth investing in Hive from this perspective...
What is the return of investment on Hive?
As an investor one generally looks at how profitable one's investment will be. In contrast to other assets, Hive is a blockchain where you will actually receive more of what you invested in (i.e., more Hive). This is a very important aspect as your investment is not only fixed on the price of that asset, but in contrast is creating more of it. So how can you earn more Hive?
There are actually quite a few ways in which this is possible (and there are other posts here which go into more detail), but in general it is done through curation of content or delegating your staked share.
If done right (e.g. curation or delegation), it can yield an annual ROI of about 10-15%. However, this can easily be expanded by becoming a content creator yourself. However, as not everybody wants to create content lets split it up into two groups: (A) investors who are only curating or delegating and (B) investors who also create some content. If you belong to the second group, it is easily possible to gain another 5%-x% of ROI (obviously it depends of how successful you are, so the upper limit is actually quite open). But for the sake of the argument, let's say you make another 5% ROI in this way.
Now, if you don't stick around here for only a year, things get interesting as your investment grows exponentially with compound interest.
For example if you belong to group (A) you can expect a growth of 404% in 10 years
Starting off with 100 Hive yields:
100x1,15^10=*404 Hive
If you belong to group (B) your investment will grow by about 620% in 10 years
Starting off with 100 Hive yields:
100x1,2^10=*619 Hive
If we reduce the time to 5 years it would still give the group (A) about a 201% ROI and the group (B) a 250% ROI. That's not too bad...
Of course there are some caveats as well; e.g.: perhaps the most obvious one being whether Hive will still be around in 5 or 10 years... We have all seen how quickly a blockchain (Steem) can be overtaken and compromised so it is not like this is an impossibility. However, with Hive there are already plans to fix some of these issues (e.g., the upcoming HF2 24), and it seems likely that the blockchain will continue to improve in many aspects making a takeover like this more unlikely.
The other question regards the price of the token value. If it's only worth a couple of cents getting Hive won't mean a lot (if you are interested in trading it for fiat money anyways). But this seems quite unlikely, especially sine the long term outlook for cryptos is looking rather brightly. There are also good arguments for why cryptos might be the place to go when fiat currencies countinue to lose value. In addition, the Hive community (especially the developers) are constantly bringing about new innovation and thereby creating value. I suppose the biggest hurdle for the success of Hive will be whether or not it will be possible to onboard more users. With only about a couple of thousands of active users it is a far cry from other social media platforms.
Living off of Hive or at the very least getting a good passive income gets interesting at about 50k HP (depending on where you live in the world this could also be much earlier).
50k HP currently gives one about 20 HP in daily curation. If we assume that the price of Hive will return to at least 1$, this means that one actually gets about 20$ of daily passive income! That's 600$/month.
Having 100k HP doubles that to about 1200$/month.
Although this won't be enough to live off of in countries with high living costs it is at the least a substantial contribution in one's income. It would probably take at least 200k HP to live off of the 10-15% annual ROI (if the token price is at about 1$). In countries where the cost of living is lower, 50k HP might already be quite substantial!
This is once again showing the potential beauty of cryptos: financial independence and sovereignty.
UPDATE 23.07.2020
In my analysis I left out the role of inflation which I want to add here. See the post by @grampo here: @grampo/the-future-of-hive
really good post, clarifying how the system works! I got a question myself regarding inflation. I made a post some days back in which I looked at the return of investment on Hive through curation. In this I left out inflation which I think makes my analysis incorrect: @tobetada/compelling-arguments-for-becoming-a-hive-investor
From what I understand it means that as long as I make ~8% ROI my stake in Hive stays the same, right? Would the calculations then be accurate?
There are couple aspect to it. First, if no delegations are involved and you powered up your own HIVE, then inflation affects you a little less, because 15% of inflation is being distributed to all HP holders (currently 38% of all HIVE is powered up, so instead of 8.1% dilution your are facing only 4.3%).
If through active you will make another 4.3%, then your share of the total HIVE supply will remain steady or even increase.
Make sure you are upvoting quality content though ;-)
UPDATE 26.08.2020
Currently, all Hive stake holders (i.e. powered up Hive) get paid 3.36% APR to minimize annual inflation. In principal, this adds up to the curation and author rewards!
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