RE: The Hive Financial Network: Outside the Reach of Government (Part 2)

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RE: The Hive Financial Network: Outside the Reach of Government (Part 2)

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outwars in LeoFinance • 11 months ago

This uses the US dollar as the unit of account yet is not backed by dollars

I didn't quite understand this before. It kind of makes the name HBD funny. Hive Backed Dollar, but isn't actually backed by dollar. I have heard before that this algorithm of Hive and HBD is what makes it good, and gives it an edge over others. Some have said that one of Hive's biggest problem is its liquidity. What happens if a big corporation buys up a lot of Hive, converts it to HBD, and stakes it for the 20 percent? How will Hive and HBD prices react to that?

11 months ago in LeoFinance by outwars

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taskmaster4450le 11 months ago

Well it is backed by a dollar...worth of HIVE. The dollar is a unit of account, not the currency or a T-bill like Tether or USDC.

What happens if a big corporation buys up a lot of Hive, converts it to HBD, and stakes it for the 20 percent? How will Hive and HBD prices react to that?

Supply and demand tells me the price will shoot up. The buying off the open market would send prices higher, means less HIVE creates more HBD.

The same is true if more HBD is required for transactions. That is why every project on Hive that accepts payment should use HBD. It is the medium of exchange and, as transactions grow, requires more units. That can really only come, in a large amount, from HIVE conversion.

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outwars 11 months ago

I see, thanks again for answering my questions and explaining things.

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