Like Hive People Are Starting To Talk About Crypto Economies

How long have we been talking about the Hive economy? This is something we jumped on a while back. It is fundamental to the idea of the network state yet most seemed to miss it.

That is starting to change. As we will see in this article, the concept is starting to spread. Perhaps this will bode well for Hive in the future as we keep building.

Before getting into that, it is important to note that Hive offers two coins at the base layer. The Hive Backed Dollar (HBD) is an algorithmic stablecoin at can be converted to $1 worth of the value capture coin, $HIVE. This is a powerful combination that is unrivaled elsewhere due to the decentralization that is present with this ecosystem.

Viewing an ecosystem such as Hive, or any other blockchain, moves the focus to an entirely different level. Most simply look at playing with the tokenomics in an effort to make the price go up. That is the sole concern for most of cryptocurrency.

Suddenly, when the idea of an economy is introduced, now things such as growth are important. This extends to more than the user base, which often relates to the price of the coin. Instead, we start to concentrate on use cases, businesses, funding, and a host of other features that an economy needs.

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Raoul Pal Sees The Economy

Most who are involved with cryptocurrency are familiar with Raoul Pal. He is a former Goldman Sachs money manager who was an early entrant into Bitcoin. His background is as a macro-economist, a fact enhanced by his managing money. At least he can take a non-theoretical look at things.

Here is what he had to say:

He sees the Ethereum economy as the fastest-growing economy on earth, offering many opportunities for investors. However, Pal emphasizes the significance of investing time to find the best options, dollar cost averaging, and diversifying to avoid potential losses.

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There is no doubt he is a borderline Ethereum maximalist so no surprise his focus is upon that. At the same time, he is a money manager by training, so looking at things from that perspective is logical. The key point is that he sees Ethereum as an economy and the growth rate that is taking place.

He further adds:

Pal compares the Bitcoin economy to the Catholic church or the gold bug community, which fiercely protects the integrity of its protocol and is resistant to innovation. The Ethereum economy is compared to the U.S. economy, with a central bank that follows the rules of responsible monetary policy to ensure value is upheld.

This is quite a shift since Pal was a big time Bitcoin supporter. Nevertheless, it is an interesting way of looking at things. We might dispute his views yet must respect the way he is framing things. This is more helpful than simply looking at prices and market cap.

He is also apt to run off the rails a bit.

Pal also notes that ETH has a deflationary supply, which makes it attractive to investors seeking yield.

It is obvious he cannot leave his market movement mindset. While Ethereum does have some elasticity, to make an economy grow, money is required. This is often dictated by the business cycle, which causes the expansion and contraction of money supplies. Sadly, this is often overlooked.

Hive As An Economy

Hive actually does a better job than Ethereum in this regard. If we are making the comparison to a central bank, we see how Hive offers a market based (community) driven elasticity of the money supply.

Harkening back to the two coins, Hive has the ability for one coin to be deflationary while capturing the value in the other. If people are converting $HIVE to HBD, the value does not disappear. As more features are added, both at the base and layer 2, we can see how this will still provide the value to the ecosystem. It is not destroyed like happens with a burn.

When constructing an economy, there needs to be a means of funding new venture. In other words, expansion is required. This often means taking what is present and leveraging it for greater growth.

Many take exception to this which is ironic since they mostly do it. Here is where beliefs do not align with the actions taken.

Do you own your home? If you do, there is a 90% chance you fall into this category. Since the overwhelming majority of homes are purchased via mortgages, we see economic expansion. The debt is issued against the existing value of the home. This expands the money supply generating more economic productivity.

From the sale of the home, real estate agents get a commission. The broker makes some money also. People usually do things like buy new appliances or replace the carpeting. If a new resident, construction companies and subcontractors are paid. This means more trucks, electrical wiring, and other tools of the trade.

Therefore, the idea of burning value doesn't make a lot of sense. One could claim that the market will capture the value by raising the price as supply decreases. This might be the case but we have to keep in mind that markets are terrible at sizing up value.

Hive does not fall victim to this. The adjustment of the circulating supply between HBD and $HIVE through the conversion mechanism is simply transferring value from one coin to the other. Both are resident at the base layer and reflective of what is going on with the ecosystem (at least to some degree).

Shift In Thinking

It is time for most on Hive to shift their thinking. We are to the point where the focus has to be on economy building, not simply price action. There is a bit of correlation between the two but it is minor.

Growth rate in other areas is vital. On-chain activity is one example. Transactions can be loosely equated to trade. Hence, the more that are taking place reflects strength in our economy. Of course, we also have to take into account the value of the average transaction, something that is impossible to quantify. Nevertheless, the combination of social media and finance means we have value even in a single upvote.

How many projects are focusing upon the number of active users on their application? Do we see those behind these promoting the idea of growth? How much quantifying of commercial activity do we see taking place? Aren't these numbers that businesses, at least publicly traded, regularly put out?

We often promote the idea of thinking of ourselves as a business. Here is where the growth focus comes in. Concentrating upon a particular aspect of what we are doing and seeking to exceed it aligns with the concept of economic growth. While there might not be a direct monetary correlation, it is all part of a larger process that is unfolding.

From now on, people are going to start summarizing it as "economy". Raoul Pal is understanding this, something that we started to talk about with Hive a while back.

This instantly affects the focus of what we are doing. A change in mindset is a good thing.


If you found this article informative, please give an upvote and rehive.

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I'm just wondering when brazilians are going to do that. It's gonna be mind blowing!

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Hard to say what any individual country is going to do. However, the citizens should, in my view, jump all over this.

It is an opportunity.

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Pal compares the Bitcoin economy to the Catholic church or the gold bug community, which fiercely protects the integrity of its protocol and is resistant to innovation.

This is an interesting quote from Pal which I tend to agree with based on how the Bitcoin maxis go on.
Hive naturally exists as the economy which was why the digital network states make a lot of sense to me. One of the advantages of Hive is what is being discussed and being built exists fundamentally on Hive, our focus should be expanding on what we have.

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I like the fact that Hive can go in many different directions. There is a lot here that is being worked upon. It is rather disjointed but it is starting to come together.

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I'm looking forward to the day where we see more services being offered on Hive like they are doing in Cuba. Being able to pay bills and utilities directly via the blockchain will be a huge draw for many people.

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People have to build it. That is the key. We all want stuff yet the infrastructure and applications are required.

It is hard for users like us to use what is not there.

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We're getting there. The ecosystem is getting stronger. HBD is working brilliantly.

The timing is getting there for the likes of Raoul to discover Hive and then all the pieces fall into place. The world on Hive...

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I dont think he cares to find Hive. It is amazing how people of that nature view things. He might claim fundamentals and projects are important, but he bases his decisions on market metrics.

That is how a guy like that is wired.

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Why HIVE and not other chains?

Other chains may be more expensive and on various different approaches, they are more established and have the network effect.

HIVE is still lacking in the number of users for the ecosystem.

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They might be enjoying the network effects to the dismay of Hive. However, that might not always be the case. Hive certainly has to grow.

Fortunately, there are a lot of areas to target.

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Tbh I haven't really paid much attention to Raoul. He's been a shitcoiner in many cases and I have a hard time listening to FUD as he has pushed for a while.

With that being said, I can appreciate the approach to Ethereum as a business - but, it's not a functional, self-sustaining or self-regulating business. Ethereum as a network is huge - that is not up for debate - but what is up for debate, is how much value is actually being created within the Ethereum ecosystem.

We've seen countless attempts at new coins becoming the "Ethereum Killer" and none have succeeded. One could argue that Polygon Network was created as a sidechain to alleviate transactional volume on Layer-1 for Ethereum, but, it's not decentralized, it's merely replicating some of the same problems we are seeing within the fiat system.

As an investor, yield is important, of course, and that is something that Ethereum does much better than Bitcoin Layer-1 can reach at this stage, but, $ETH does not share the same tokenomic features that make Bitcoin unique to most other chains. It isn't just the Proof-of-Work model vs Proof-of-Stake, it's the very creation of Ethereum that lends shadiness to the whole ecosystem.

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There are definitely questions about ETH. He is a borderline ETH maxi so we have to acknowledge that.

Hive offers the decentralization that you mentioned. That is one of the reasons why I am so high on it. After that, we look to the second layer with what is being developed in terms of infrastructure.

It is slow but we have to build from the ground up.

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It seems like a lot of the Layer-2 Hive tokens are very small if even active, LeoFinance was one of the more active ones when i joined in

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