Why HBD Will Be A Powerful Force

There is a lot of myth that exists about money. What is taught in economics and finance classes in school is simply not correct. The difference between academia and the real world when it comes to this topic is enormous.

Fortunately, as we embark upon the creation of a new financial system, we can peel away the old theories that do not work and produce something that is in alignment with how things truly operate.

Markets are global. This is a problem for the central bank system. Most of these institutions can only operate within a specific geographic area. This is not how money, nor the global economy works.

It was also one of the reasons by blockchain, and by extension Bitcoin, packed so much potential. From the start, it had two advantages: being digital and able to operate globally.

These are both at the foundation of what we will see constructed that will carry us forward for at least the next half century.

Turning back to the Hive Backed Dollar (HBD), there are a number of reasons why this is going to be a powerful force. There is a many characteristics which allow it to be a centerpiece for what is developing.

So let us dive right in.

image.png
Source

Confidence

The world of money and finance is one of confidence. This is what it all boils down to.

At the same time, we have the moving around of risk. Most assets allow for people to incorporate this into their decisions. In other words, much of the financial world simply moves risk from those who do not want it to those who are willing to take it on.

When it comes to money, the idea of confidence stems from what is backing it. Unlike the asset backed security people, this has nothing to do with a reserve. Instead, we look at the economic production that is backing the currency. This means factoring in the actions of governments as it pertains to the ability to grow the economy.

Blockchain was established to get rid of the middlemen. This, by definition, means it instilled trust along with eliminate counterparty risk. What we saw in 2022 reaffirmed how dangerous this can be.

With Hive, the base layer coins reside on the blockchain. That is the counterparty. Since it is run by a group of unrelated node operators, the counterparty risk does not exist. This is one of the factors that can instill confidence in HBD.

Money Is Debt

Money is not paper. This is where people misunderstand the fiat currency system. We no longer use physical cash for settlements.

What money is for is to facilitate exchange. This is where an asset, once it is liquid and tradeable can act as money. The entire Eurodollar System operates on this premise. So does the Repo market.

The central bank system broke down with globalization. With the advancement of the post WW2 economy, we see how the limitations to this system fell short. This allowed for the development of the Eurodollar System, which is now breaking down. It is one of the factors leading to slowing growth rates.

Next up is the blockchain based system which can step in and provide what the Eurodollar System offers, minus banks and governments.

All of this stems from simple accounting. What is a liability one balance sheet is an asset to another. The holders of the debt has an asset paying a return. This something the banking system understood from the earliest days.

Where HBD excels is that we have debt that can be driven by market demand. Unlike coinage where the minter had to guess how much was required, or central banks trying to guesstimate things with their monetary policy, HBD simply is created as the community (market) sees fit. This is a vital component. It can be expanded or contracted as necessary.

Global In Nature

One things about the elasticity of the money supply, from a national level, is the flow of capital.

Many take their schooling and look at things like the M1 and M2 believing that it telling them about the money supply. It is not. What is the actually barometer is the movement of capital around the world. When the United States has a great deal of foreign investment, that means the domestic US dollar supply is increasing. It has nothing to do with the Fed or the "printing press go brr". When foreigners buy US assets, dollars flow into the country.

This is true for all currencies. That said, most are not the reserve currency meaning they lack global distribution. Here is where the dollar stands out.

Since distribution is vital for the reserve currency, having it all flow into the United States is problematic. Here we see one of the reasons why the Eurodollar System is breaking down. With more money in the US banking system, Triffin's Dilemma is suddenly an issue.

HBD does not have this problem. Nothing is going to flow to and from the blockchain. HBD is resident on Hive, a global, decentralized network-state. If the coins flow to a particular geographic area where trade and commerce is occurring, that is not to the determent of elsewhere. This is a demand driven equation. If more HBD is required for different pockets of activity, this can be created.

The key is that it is all part of the Hive economy. Whether online or in person, if people are transacting using HBD, it is incorporating that trade in this economy. It matters none where in the world it is taking place. The blockchain does not care. Nodes all over the world are validating the transactions and producing blocks regardless of where it is coming from.

Unit Of Account Everyone Knows

One HBD is worth $1 in $HIVE.

This is an important component. The fact that this is tied to the USD in denomination yet has nothing to do with actual US dollars is crucial.

Most of the world understands the dollar as a unit of account. While the US dollar as a currency has a finite life span, as a unit of measure, it could carry on for a long time.

We have 4 generations of people walking the planet who understand the dollar. It was something we were raised with. Since international trade is priced in this, all are exposed to it.

It is rather difficult to explain Hive to newer people. By the same token, it could be a challenge to go through HBD, the interest paid, and all the mechanisms tied to it. What does not require explaining, however, is the USD.

In other words, when you tell someone HBD is worth $1 of HIVE, they understand immediately. Nobody is going to ask you what a dollar is.

In Conclusion

There are so many components to the global economy and the elasticity of money that no single person can comprehend it all. That said, we must understand it is much larger than we were taught in school.

HBD is a trusted stablecoin simply because of the dynamics surrounding it. This was created based upon the original tenets of cryptocurrency. Unlike most other situations we find within this industry, there is no counterparty risk. At the same time, there is no monetary or fiscal policy that will alter the perception relating to the economic productivity, thus destroying confidence.

In the end, HBD simply will go where it is needed. There is nothing that can stop a region for utilizing it for commerce. Since the blockchain is permissionless, one only need an account and some resource credits to transaction.

From there, all transactions are handle by the blockchain based upon the base layer coding.


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

gif by @doze

screen_vision2025_1.png

logo by @st8z

Posted Using LeoFinance Beta



0
0
0.000
26 comments
avatar
(Edited)

Another outstanding benefit of HBD is that aside from being a stable coin it can also act as a bank saving with interest. Thanks so much enlighten our understanding aboutHBD

0
0
0.000
avatar

The savings feature is powerful. It helps with the distribution of the coin, i.e. getting money into the Hive economy, while also incentivizing people to hold it.

We also will delve into what it all truly is and how interconnected all of Hive is.

Posted Using LeoFinance Beta

0
0
0.000
avatar

"Most of these institutions can only operate within a specific geographic area." Indeed! It's such a pain for travelers not to be able to purchase what they want when they don't have cash or any financial instrument accepted in a certain country. Glad crypto and other digital currencies are being innovated not just as a piece of a digital asset but as well as a new innovative currency without geographical limitations.

Really hoping that someday in our area, it will be one of the payment methods for large malls. Heck, it'd be great if it could be accepted in simple stores too!

0
0
0.000
avatar

The challenge is for individuals and businesses. Think if multinational corps that have to endure currency risks and hits simply due to movements in the FOREX market.

None of that with HBD.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I fully agree with everything. I believe that in general HBD will have a great development above all because it is truly decentralized and with the advantage of having a certain stability.

Furthermore, the added value is the trust that circulates in the Hive community, which, for example, does not exist for banks or for the various governments.

We will see which roads we will take and where they will take us.

Nice post!

0
0
0.000
avatar

We have the ability to build around it which is incredible when you think about it.

Posted Using LeoFinance Beta

0
0
0.000
avatar

Of course I think about it all the time and I think it's really amazing; where you can build the future is always rosy.

I believe that improving and evolving is fundamental in everyday life... the Hive ecosystem is something that can grow dramatically, evolve and improve.

The beauty of all this is that it can be done with the contribution of all Hivers and each of us has our share of responsibility for the growth of this fantastic ecosystem.

As a fan of the comments, I conclude with a .... with great powers come great responsibilities!😉

0
0
0.000
avatar

In the end, HBD simply will go where it is needed.

And it is already doing so on a global scale as it spreads around the world.
And the advantages of the eliminating the middleman, zero transaction fees and fast settlement time is going to make it attractive to those seeking the use of Stablecoin over time.

Posted Using LeoFinance Beta

0
0
0.000
avatar

With prices finally moving the right direction in the markets we should be seeing at least a little bit bigger HBD payouts. Let the stacking begin!

0
0
0.000
avatar

We have 4 generations of people walking the planet who understand the dollar.

I disagree with the semantics here. I would say that most people are familiar with the dollar and don't necessarily understand it, but I get what you're saying.

Although I gotta admit, people in my area are slowly starting to engage more curiously in crypto topics because they are losing trust in FIAT every day little by little. The transition will be really slow but it is coming for sure.

0
0
0.000
avatar

You are right, understand probably was the wrong term. They grasp the unit of account even if they do not understand they dynamics of it or how it is created.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I am just being picky, but I think the difference is really important in this context.

0
0
0.000
avatar

While the US dollar as a currency has a finite life span, as a unit of measure, it could carry on for a long time.

How long do you think the dollar has??? When it falls, a lot of people are going to suffer :(

If the HBD becomes the stablecoin of choice first, it'll make it easier due to people having a basic knowledge of Hive, and earning online. But it'll still be a catastrophe.

This post has been manually curated by the VYB curation project

0
0
0.000
avatar

How long do you think the dollar has???

Going to be a long time if I had to guess. The USD is superiod to the other fiat currencies which means they are going to go first. Watch for the confidence in those governments to wane, followed by economic catastrphe, and then followed by the governments reaction to the conditions which will only make it worse.

Since the USD operates as money without the currency, we could be in for decades. Until there is a suitable replacemet, for example, for US Treasuries which are mostly collateralized, we will have the US dollar with us since those are nothing more than future dollars.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I love the idea that HBD is not constrained by geography or financial policies. It's able to go wherever the market needs it as it has the ability to be there. HBD could naturally be among the top stablecoins in the world.

0
0
0.000
avatar

HBD is one of the only stable coins that survived and kept it's value during this recent crypto collapse in 2022, which makes it one of the better coins for stable value.

0
0
0.000
avatar

With Hive, the base layer coins reside on the blockchain. That is the counterparty...

This is what makes HBD exceptional. It's rather unfortunate that, less is known about the HBD in the outside world. I hope as time goes on, the good news of Hive shall reach out to the wide wold and it will face a mainstream adoption

0
0
0.000
avatar

There is no real way to stop HBD because there is no centralized entity unlike the other stable coins but I also think it will be hard to get the process mainstream for the same reason. Once it does start, it probably can't be stopped.

Posted Using LeoFinance Beta

0
0
0.000
avatar

I'm grateful to be picking your brain every week on the podcast because the message has been loud and clear for me…Get more HBD lol

And then use it…And get more…And use it…And before you know it, our little stable-ish coin is a real player in the space!

!CTP

Posted via Veews

0
0
0.000
avatar

This is another very helpful explanation for the power of HBD. Just curious if you have an article on how HBD will drive out bad money.

!PIZZA

!CTP

Posted Using LeoFinance Beta

0
0
0.000
avatar

In other words, when you tell someone HBD is worth $1 of HIVE, they understand immediately.

So

  • if 1 HIVE = USD 0.333, then 1 HBD = USD 1 = 3 HIVE; and
  • if 1 HIVE = USD 0.500, then 1 HBD = USD 1 = 2 HIVE.

Please confirm if this is correct.

I was trying to do some calculations months ago, and something seemed off between what I came up with and what I saw on feeds.

Posted Using LeoFinance Beta

0
0
0.000