What is the future of the Hive Backed Dollar (HBD)?

For those unaware, this is the stablecoin that resides on the Hive blockchain. It is algorithmic meaning that each HBD can be converted into $1 of the native coin ($HIVE).

The world of stablecoins is going to become like that of memecoins, everyone will have one. With the expected clarity in regulation, we are going to see Big Tech creating coins on their platforms. Naturally, these will lack decentralization, something we will touch upon in a bit.

One of the biggest benefits to HBD is the fact that nobody controls it. There is no company behind it as with USDC or USDT. Instead, we are dealing with something that is completely out of reach of banks, governments, and other centralized entities.

With the advancement of AI agents, and a move towards the agentic internet, the stablecoin world will play an important part. The basis of this discussion, however, extends beyond the coin itself.

This is what we will take a look at.

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The Future Of The Hive Backed Dollar (HBD) - Micropayments

The future of HBD is micropayments.

This is a concept that garnered a lot of attention back in the 2017 period. People discussed the idea of micropayments although we likely didn't have a clear vision of what would happen.

Obviously, one major problem with the existing banking (payment) system is the cost. There are so many rentseekers in traditional finance that sending money is an expensive proposition. We can see this when we try to make payments through the banking system. What does a bank wire cost? $35 or more?

For those sending millions of dollars, nobody cares. But when it comes to smaller transactions, we can see where it is prohibitive. This is something that works down the scale.

Visa handles smaller transactions as it charges a percentage. This is billed to the merchant, amounting to a total for the day. The culmination of trillions of transactions allowed Visa to lower the level required to be profitable.

As we can see, like quantum physics, this is a race to the bottom.

Even with Visa, there is a limit. Could it profitably handle a bunch of transactions for a penny or two? The answer is no. If that was the denomination of all transactions, Visa would be in trouble.

Is that a future we are looking at? With AI agents, it could become the norm. Here is where the existing financial system runs into issues. However, even though stablecoins do lower the barrier, there is a limit with that also.

Transaction Fees

Transaction fees are a killer when it comes to micropayments. This is something that is impossible for much of crypto. If we look at Ethereum, the fee is a couple dollars on that network. Even the other EVMs charge a penny or two.

While this sounds like it could work, if we consider what a micropayment with AI agents might look like, the infeasibility is quickly realized.

We are going to have agents that are transacting in fractions of a penny. This means that even a 1 cent tx fee is unworkable.

This is a major problem for USDC and USDT. While they operate on different networks, the underlying fees are a barrier.

Centralized systems have the answers. If an Apple or Meta brings out its own stablecoin, it could transact in whatever denomination is required. Micropayments can occur since the entirety of the system is owned by a single company. After all, is there a direct cost for an upvote on Instagram? Obviously not. That does not mean, however, that it is free. There is still a cost to process the transaction, one that Meta happily eats.

Decentralized networks do not have this advantage. The monetization of the networks is such at validators require compenation. Since there are many parties involved, often on a rotation basis, infrastruction is in the hands of many different entities.

HBD Solves This

HBD has the answer.

Actually, the solution is not in the stablecoin itself. In this regard, it is not much different than any other (outside of being algorithmic). So how can it process micropayments whereas others cannot?

The solution lies in the network. On Hive, transaction fees are not an expense. Instead, it is a permissioned system based upon the ability to access. This is determined by the amount of the base coin that is staked. Through the staking process, one acquires the ability to transact. It is a system that uses rechargable (non-tradeable) tokens. Throughout the day, the ability to transact recharges like the battery on your phone when plugged in.

Hence, transaction fees are not an expense but, rather, an investment. By investing in the base coin, one acquires the ability to engage with the blockchain. If one lacks the resources, adding more stake is the solution (outside of waiting).

This system is what makes Hive fesaible for social media activities. If people had to pay a fee each time they upvoted a YouTube video of Instagram photo, how many votes would be cast? Exactly.

We see the same happening with micropayments. Someone has to pay the freight. The charge is either transparent or hidden but it is there. Centralized entities simply hide it, wrapping it into their overall operations.

Blockchains, such as Ethereum, follow the practice of traditional finance. Each transaction has a fee added to it. In the financial world, people are accustomed to this. Under this scenario, the institution is not willing to eat those fees.

It all works out fine until we get to micropayments. Here we have the race to the bottom becoming clear. There is no way for most decentralized systems to even think about handling this. How do you conduct a payment for .001 cent when there is a .9 cent tx fee? An AI agent is not going to operate too long under this scenario.

High Frequency

The key variable in all of this is frequency.

When it comes to computers and automation, volume skyrockets. In other words, we enter the world of high frequency.

One area this emerged was with trading. Major Wall Street institutions designed systems that are able to frontrun orders. These operations seek to gain a penny or two on each trade. The major metric here is speed, with servers placed as close to exchanges as physically possible.

AI agents are the same thing. That is effectively what these firms built. Their software is designed to process orders and frontrun them. We are not dealing with something that will provide a recipe for Apple turnovers. It is a specialized agent that operates within confined parameters.

This is insight into the agentic world. It is probable this becomes the norm. Agentic systems will interact autonomous, 24/7. The only limitation will be bankwidth, something that keeps expanding.

Of course, before this happens, the situation with transaction fees must be resolved. Centralized entities have the solution. For the decentralized world, Hive already can handle it.

Having a native stablecoin that rides along the base layer of this network is something that can set it apart.

Posted Using INLEO