Yesterday, I wrote a post that discussed the possibility of $1,000 by explaining how vital it is to understand an ecosystem. We find that the largest publicly traded companies, Google, Apple, and Facebook all have ecosystems which is where they derive so much of their value. The products and services they provide is secondary in the worth since it is the ecosystem that keeps the users engaged (or is it enslaved?).
If you missed the article, you can read it here:
https://steemit.com/steem/@taskmaster4450/usd1-000-steem-understanding-ecosystems-is-the-key
Many people seem to think that cryptocurrencies have no value other than for speculation. While many tokens are presently on the market are garbage, this viewpoint is mistaken. Cryptocurrencies (coins) are tied to a particular blockchain and the two cannot be separated out. One cannot focus upon a cryptocurrency without looking at the network it pertains to.
Over the past 40 years, there were a number of studies which came about to try to identify how much a communication system (later networks) are worth. One of the most well-known is Metcalfe's Law. Over the years, there was great controversy about it with neither side proving or disproving any viewpoint. However, in 2013, Metcalfe himself showed how his equation held true when analyzing 10 years worth of Facebook data. A couple years later, a Chinese team further validated the formula when applying it to Tencent.
Without going into the mathematical equation, the Law basically states that the value of a network increases in proportion to the number of nodes. This makes sense and leads us to what is called network effect. This is where a network hits a point where the growth is exponential. It is the "everyone must have it" syndrome.
A good example is the smartphone. In 2009, not many people were buying them yet by 2012, most of the devices sold were smartphones. This continued to the point where smartphones accounts for more than 70% of the market (in the US), a time frame that only took 7 years to reach.
Therefore, we can see the value of a technology is tied to its use. This makes sense. Why is Facebook worth a ton more than MySpace? The answer is the activity on each network. Facebook has a large number of users while MySapce is significantly less.
So how does this apply to Hive?
At present we have roughly 50,000 active users. Applying Metcalfe's formula in its basic form, we come up with a value for the network of around $1.25B which breaks down to $4.88 per coin, a bit below where it trades now. These are rough calculations but you get the point.
This situation gets even more interesting when you consider the revenue side of things. When you look at a network like Facebook, part of the overall study includes the revenue generated. At present, Facebook is a $27.64B corporation in terms of its revenues. This is a very healthy number and a reason for it being worth around $600B.
Obviously, Hive cannot compare to that....or can it?
There is an interesting component to the Hive that few seem to ponder even though it is right before their eyes.
Facebook generates it revenue mainly from advertising. There are some features on there of which Facebook takes a percentage yet it is really an ecosystem meant to lock people in and charge advertisers to reach them. Of course, we know they have an additional stream of revenue from selling the data. This is a straightforward model, one that all Wall Street types understand.
But what about Hive? What commerce is being done on this blockchain? How much is really being done?
Did you know that the Hive blockchain has around $1.2B of revenue right now? Did you ever consider how that is so?
Have you ever seen this?
Total rewards fund: 3,963,859 USD / 721,854 $HIVE
Notice how it says that this blockchain is generating roughly $4M a day based upon the current pricing of $HIVE.
That is the unique feature to a blockchain: the network itself generates revenue. Think about that for a second. Facebook spent over a decade building its revenue stream to $26B while the Hive blockchain, is spitting out $4M after only a few years. The blockchain itself literally generates revenue.
If it is just a matter of creating a blockchain and spitting out token, how come everyone doesn't do it? Well if you look at all the ICOs, it appears that many are. But once again, we go back to Metcalfe. All this is tied to the number of users (MAU-monthly active users). A blockchain can spit out all the coins it wants, if only two people are using it, there is little value.
This is not the case with Hive. Not only is it putting out roughly $4M in revenue each day, the 50K daily active users are producing around 1.5M transactions according to blocktivity.info. This is the highest average of any blockchain out there (50% more than ETH which is #2).
As you can see, these are the reasons to be so excited about Hive. It is the most active blockchain while generating a great deal of revenue. Once the network effect takes hold, we will see things explode.
Basically you can think of the Hive blockchain as the merging of a social media platform along with a financial institution. It has properties of both.
And by the way, according to my rough calculations, $HIVE will have a $1,000 value at around 26M active users.
I will leave it to you to play with the growth rate from 50K user to determine when we will hit this total.
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