Hive Leading The Evolution Of Money

Money is an interesting topic, one that stimulates a great deal of emotion. It is often misunderstood since there is a lot of misinformation surrounding its history.

One of the most interesting things about money is the social construct. This is often overlooked. It is something that human invented, similar to language. We take it for granted that we have the ability to verbally communicate but this was not always the way.

In a world that is small (very small) and everyone knew each other, money was not really needed. I could bring a chicken to the table and exchange it for milk. When the village had 50 or 100 people, this was feasible. If the neighbor was a bit short in the total milk, not the end of the world. One could simply get extra the following days.

Money became necessary when trading with strangers. No longer were we dealing with micro-exchanges. One of the key changes was trust. When you grew up on the farm next to someone, trust was established. If nothing else, you knew where to find him or her. This is not the case when trading with strangers. How do you establish trust with someone you never met and likely will never see again?

Here is where money enters the equation.

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More Trade = More Money

Money is what allows us to trade with strangers. It matters none what the form of money is. Many will contest this but, again, this is a social construct. Throughout history we used beads, shells, cattle, precious metals, slaves, paper, giant stones, and numbers on a screen. What keeps evolving yet a monetary system remains the same.

The key is that both parties trading agree on the money. For example, you walk into a shop like Walmart with a $20 gold coin and you will likely be refused purchase. Some might say that is ridiculous; how can the turn down something of value? A Honus Wagner rookie card in mint condition has tremendous value too yet I couldn't purchase a beer cooler with it.

Money is tied commerce. Actually, it is both the stimulus and response. We see it as a result and enabler of commerce..

For example, what would it take to get 1 million in HBD transactions going on Sucre, Venezuela. To start, the region would need more HBD. Here is where the quantity enters. However, we also have to consider the velocity of money, i.e. how often it changes hands. This means we need more trading.

We could achieve the 1 million total HBD transactions by having 500K HBD exchange hands twice or 100K moving 10 times. Both get us there.

Of course, look at what happens if 500K moves through the economy 10 times. As long as there is the ability to engage in commerce, we see economic growth.

Blockchain Accelerates Everything

For the past 600 years, credit creation is money expansion. We can think of this simply as a time delay on money. Ultimately, credit is what factors in greatly to economic expansion, especially on a global scale. When a company needs $250 million to build a new factory, it borrows the money, most like by selling bonds. This leads to economic output simply in the construction of the facility. Then we factor in the furnishing with equipment, hiring of personnel, and, ultimately, sale of freshly produced products.

Double entry accounting mandates there is a debtor and creditor on each entry. We see this with blockchain. This is simply distributed ledger technology meant to keep track of all the transactions. We can easily see how Hive does this.

What is less noticeable is the impact this entire system will have, especially on credit. Right now, richer individuals (companies, nations) are able to access markets or banks. The reason starts with collateral. As they have assets of value, this can be used for credit (read money) to facilitate more economic activity. It creates a system that have massive inequalities.

Blockchain helps to democratize this. Consider the idea of robust decentralized finance (DeFi) applications. Under this scenario, anyone can take on-chain assets and collateralize them. Hence, the money creation process is spread throughout the world. No longer is it necessary to be in a country where the banking system is sound. The global distribution of blockchain means we have the ability to incorporate anyone with an Internet connection.

Hive Advanced Distribution

The challenge with much of the cryptocurrency world, aside from the fact it is not truly decentralized, is how does one acquire assets? For example, how do you get Bitcoin?

Apart from using something like faucets, for the most part, Bitcoin is available to those who buy it. In other words, you need something of value to swap for it. This could be fiat currency, another cryptocurrency, or expensive computer hardware and energy.

Hive is different. It allows people the opportunity to engage in social media activities and, in return, potentially get some cryptocurrency. This is something that can occur at both the base and second layers.

Network effect is a term often associated with social media. It also applies, however, to money. What is one of the major differences between the Brazilian real and US dollar? While there are many factors, it boils down to network effect, often terms as economic productivity tied to the currency.

Hive actually combines both of these. The more people we have engaging in social media activities, the greater the potential impact upon the different currencies. Another way of looking at this, the more applications added either tied to the monetary or social media side, the greater the effect on both.

This provides a new way to not only acquire currency but also assets of value. Once lending platforms are established, we can see things starting to accelerate. Many think leverage is a dangerous thing. On its own, it is not. Most people in the developed world have debt of some kind, usually in the form of a mortgage. What is dangerous is over-leveraging. This is where catastrophe can result.

The ability to create our own forms of money along with assets of value that are backed by online activity is rather novel. It is also very powerful.

Massive Amounts Of Money

Remember, money is directly linked to trade. When dealing with in the global realm that is the Internet, everything takes on an exponential nature. We saw this economically post World War 2 with globalization. Things exploded in terms of global trade. The online world took this to another insane level.

Of course, as they say, we haven't seen anything yet.

Let us look at Spliterlands. They have done over 1 billion transactions. This is a landing blockchain game yet is still rather niche. When compared to traditional gaming, this is a nothing project. The numbers are miniscule compared to the rest of the industry.

Nevertheless, look at the massive amount of activity generated. There are people who are holding cards worth thousands of dollars. To non-players, this doesn't mean much. To those who are playing, it matters a great deal.

Tokenization, in large part, is value capture. This means what is created by the application or platform is realized in the coin or token. It is multi-faceted, involving many components. One of the key pieces is the social aspect. This is something missed in the traditional realm of stocks.

Twitter has an estimated 500 million tweets done per day. Consider the change if most of those were monetized. Suddenly, you have 500 million potential economic transactions on a social media platform. Then consider what can be done with that money. Perhaps some of it ends up invested in a robo-taxi network in some major city. This is alters the local transportation, providing a service for the community and a return for those tweeting.

Obviously, this so not something we will see out of Web 2.0 because it is not designed for this. Web 3.0, on the other hand does. This is where Hive can excel. Working from the ground up, we can see how tokenization throughout the entire system is a radical shift.

This can take trade to an entirely new level. Billions of social media activities occur daily, few with any monetization at all. With Hive, we are altering the landscape. This is going to generate enormous economic output while allowing for full blown financial systems to spring up. In short, we are going to be dealing with smaller economies build under the overriding umbrella.

It is also something that will penetrate most corners of the world.

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