Hi everyone!
I'm sure you know... but most websites are funded by advertising.
Users get to use the website for free, and the hosting, storage, databases and development are paid for by the advertising featured on the site or app.
Depending on the platform, there's also a chance that user's data is sold to data aggregators... particularly if it's a social media platform or an app that uses geolocation tracking.
Alternatively, a platform or app might be funded by users paying for the service, usually an annual or monthly subscription service. This works well when the platform offers something unique or more conveniently than any free, advertisement-based platform can offer.
YouTube has far more content than Netflix, for example, but Netflix has far more universal and generational appeal.
The Hive blockchain is very different (and possibly totally unique in the world). The Hive blockchain does not need advertisements to keep the platform running, nor does it need users to pay subscription fees.
The Hive blockchain, however, has an interesting problem in that it needs the $HIVE token to be constantly purchased.
New $HIVE tokens are created every block, blocks are processed every 3 seconds. My understanding (from this post) is that currently 2.4 new $HIVE tokens are minted every 3 seconds... If there are 28,800 blocks produced in a day, then I guess that's about 69,120 $HIVE tokens minted each day, ie, $21,725.38 added to the marketcap every day.
Amazing graph by @arcange from this post
These tokens are created to pay the witnesses who run all the infrastructure, the investors who stake and hold HIVE, blockchain development, the creators who are upvoted for their content and the curators who vote.
You can see from this example:
Compared to now 4 years later with a much bigger supply despite a similar price to May 2020.
Hive Block Explorer - Hive price at $0.31 USD
It's easy to work out who needs to sell $HIVE tokens:
- Creators who were upvoted
- Witnesses who need to pay for their servers
- Curators
- Investors
$HIVE will always have tremendous sell pressure because, that's kind of the whole point of the blockchain, to earn for your content.
The BIG question is... will the buy pressure always match or exceed the sell pressure?
There are a few reasons to buy $HIVE:
- Price speculation
- To give an account more resource credits
- To give an account higher voting power
- To convert to $HBD
Price Speculation
You can see that while $21K of new Hive was created in the last 24 hours, $1.3M was traded in that same time period:
Hive blockchain details on CoinGecko
There is a ton of activity on a lot of different exchanges, more than half that trading volume was on Binance alone... and that all affects the price.
We've seen the price of Hive go up when the price of Bitcoin has gone up... suggesting that people might take profits they've made with other cryptos and invest in Hive, expecting its price to rise too. Although you can see it's not an exact correlation obviously...
Resource Credits
Resource credits are the power behind all activity on the Hive blockchain.
You can look, but you cannot interact with anything on the blockchain without resource credits. You can't comment, you can't vote a post or comment, you can't even create an account without someone expending resource credits.
The more resource credits you have... the more activity you can do.
Resource credits replenish over time... so you can see that my upvote power is at 59%, my downvote power is at 100% and my resource power is at 82%. If my resource power drops to 0% I can't do anything at all, not even write a comment. I'd have to wait for an hour or two if I don't have many resource credits or a few minutes or seconds if I have a lot of resource credits.
The account creation is an interesting scenario. Obviously a brand new person won't have any resource credits at all... but, luckily, applications or users with a lot of resource credits can create accounts for new users. You can see this in action at Hive Onboarding who people donate new account credits to.
Applications may need to have resource credits themselves to transact on their users behalf... so that the users never have to worry about using the Hive blockchain... but to be honest I'm not sure I know of any applications that actually do this. Splinterlands, for example, used to run each battle on the Hive blockchain and players would not be able to play any more battles once they ran out of resource credits... although they don't seem to be running battles on the Hive blockchain anymore.
Voting Power
Ha! You can see that in the time it took me to write the above 2 paragraphs, both my Resource Credits and Voting Mana went up around 0.10%.
When I give posts or comments upvotes in Hive, I can choose a percentage from 0-100%. If I was to upvote someone right now at 100%, it would be worth $0.22. If I waited until my Voting Mana was also at 100%, and I voted 100% of my vote, it would be worth $0.38.
If I was to upvote someone right now, the value of their post would increase by $0.22... however, they wouldn't actually receive the full $0.22. They would get $0.11 and I would get $0.11.
While this system seems a little unfair at first... they created a whole blog post and the people who upvote them receive half of the value for clicking on a single button... it does incentivize people to actually upvote content. People would stop adding content if no one upvoted anything.
It also means that people are incentivized to purchase Hive... because the more Hive power they have, the bigger their vote and the more they receive back themselves.
If you loved a certain type of content, say Makeup Tutorials, then you could purchase Hive and upvote them to encourage more people to create more tutorials.
Convert to $HBD
$HBD is the Hive Back Dollar token which is designed to be a stable coin based off the print rates of the $HIVE token. $HBD can be used to purchase goods and services (since it should usually be always equal to $1 USD... or you can add $HBD into your savings account and earn a 20% APR.
Will the buy pressure outweigh the constant sell pressure?
This is where I get stuck.
While all the reasons above are good reasons to purchase Hive... there will always, always, always be tremendous selling pressure.
When you receive an upvote for me... it immediately powers up your account. If you want to sell that Hive you need to powerdown, and you can see that in the last few months more than double the Hive was powered down (not necessarily to be sold, but that seems the most likely reason) than was powered up.
The thing is... even when people power up... they are powering up with the purpose of earning more Hive to power down later. They're either banking on their ability to earn more Hive faster than the price may decrease or speculating that the price will be higher in the future.
There will always be sell pressure on $HIVE tokens.
Obviously the price of Hive is always going up and down, people are obviously purchasing it... but the overall trend is what I'm interested in.
The full history of Hive prices
For the last two years the price has hovered around the $0.30 - $0.40 mark, which is fine, that's all part of the market cycles... and to me it shows that even though new $HIVE is minted every 3 seconds, it's not in large enough quantities to cause a noticeable enough downward trend.
That's great news... but the fact remains that Hive is all about extraction... everyone wants to extract more than they put in... some people extract weekly, and some are waiting years, but the intention is always get take out Hive.
Who provides value to the Hive blockchain?
This is the very question that prevents me from posting more.
I don't truly know what type of content Hive needs to make it successful and long-lasting.... because I don't really understand why people are buying $HIVE tokens in the numbers that they are.
Some of the pixel art tutorials I've posted on Hive have also been posted on my personal blog website:
I'm not getting many visitors, maybe 300ish per month. You can see above the posts that are getting attention and where they are coming from.
In comparison, I'm getting around 43 views from Hive for similar content... this would have been obviously a lot less without my Splinterlands report card posts that has a bit of interest on Hive and I don't cross-post to my blog.
Not many of the posts in this list actually appear on my blog... but one is on both... this post about Axie Infinity vs Splinterlands (although it may not really count since someone only spent 1 second on it)
If I do a Google search for "splinterlands versus axie infinity" then the post from my blog website appears right under Reddit and my Hive version doesn't appear at all...
Although, this might not be a fair comparison since Google should be good at only listing one version of the same post.
I just don't really think Hive posts are doing super well on Google.
To add to this problem... Google's AI Overview will be sending a lot less people to blog posts as it tries to summarize the post and serve it up in Google to incentivize people to stay on Google instead of clicking away...
Although, you can see in the above example, the AI Overview is totally wrong... which isn't going to help people find Hive either.
Maybe Google's AI will help Hive... if content creators see their website traffic absolutely dive off a cliff, their advertising and merchandising revenue will also dwindle, so they might have to look for an alternative income like Hive that doesn't rely on advertising income or heavy traffic.
So, I don't know... does Hive need content that people outside of Hive find, and are then convinced to stay and invest in... or is it better to post more social media things (photos, opinions on articles, videos, etc) so people interact?
I don't know... while I enjoy commenting on people's posts and receiving comments, it does often feel like some people only skim your post to comment in order to receive an upvote. I, myself, have definitely received bigger payouts from comments than posts I've written.
The very best way to make money on the Hive blockchain is to post super consistently so that people autovote you (they trust you to make them their 50% curation amount regularly) - but this can lead to people just posting low-effort posts to milk those rewards.... nothing that will excite Google enough to send outside people to those posts... so often the best way to make money on Hive potentially damages the appeal of Hive to the outside.
Is it better to write consistently or write when you have something unique to say?
It should be the latter, but on Hive, the votes come with the former.
For a little while views were included in the post feed next to each post... but that was frustrating to find posts with really large rewards and very few views (because of all the autovotes) so that metric hasn't been included in a while.
If you multiple times a day just to get autovotes, and you have commenters only skimming in order to comment to receive votes... then what are we all doing here? Is anything of value being contributed?
How will Hive survive?
If new $HIVE tokens are minted every day, monthly powerdowns outpace powerups, $HIVE doesn't mirror crypto market cycles and Google doesn't rank Hive posts highly... what does the future hold?
I'm honestly not sure... but I'm still not sure why people buy $HIVE except for price speculation. I think as more dApps and games build on Hive, that will become less of an issue, but I really am struggling to see where I personally can provide the most value to this incredible blockchain...
What am I missing here? How confident are you people will need to keep buying $HIVE?
Thanks for reading!
Thanks to Boba Jaglicic on Unsplash for the feature photo!
Also cross-posted to : https://lifebe.com.au/opinion/how-will-hive-survive/
Be interesting to see the view stats on these...
