Understanding The Compounding Growth On Hive
Not surprisingly Albert Einstein called compound interest the 8th wonder of the world.
Money makes money. And the money that money makes, makes money.
Benjamin Franklin.
The compounding interest effect on Hive is what makes your growth even more magical as it just happens. Your growth is related to how busy you are on the block chain ,but there are other influencing factors which propel your growth forward.
The obvious one is the posting of articles where you receive upvotes from other users which pay out every 7 days. This is added to your stake which is continuously growing. The more you earn and stake the more you accumulate through compounding.
Your vote I have always said is where the real value of your account lies as not only do you earn from upvoting others but you receive 50% back as curation rewards. The more your vote value the more you earn and that is all tying back to the stake as that tells you what the vote value is worth. The bigger you grow the stake the more the vote value increases meaning you earn more.
The real compounding effect takes place behind the scenes where your stake or Hive Power receives a 3% APR. This is not spoken about that much and I am bringing this up as Revisesociology mentioned this yesterday in his post. This 3% doesn't sound like much but every minute your stake is increasing in size as it is growing. This is all being compounded so the stake is never standing still. This is not compounded monthly or yearly like most other things but literally every minute and that is significant.
If we take my current stake of 70 500 and multiply it by 3% that equates to roughly 2110 Hive per year which is significant growth. breaking that down further that equates to over 5.7 Hive every day or 0.240 Hive every hour. One has to also factor in that every day this will increase as it is compounded.
Back when I started out on Hive this was not really noticeable as the stake was so small but overtime this does become a major factor into how quickly you grow as it adds up every single day and why staying active is that important.
I think this is one of the main reasons why Hive and passive income are a reality for many in the future when the prices do rise. Hive at $5 would be life changing for many as that would equate to around $3K in my case per month from curating and interest earned with no posting required. Definitely something to consider for later on if required.
This is hopefully helpful to those that don;t see the bigger picture of how and where the growth comes from. Staying busy now is more important than ever as the compounding along with the rewards you make will transform that into value at some point. I am a firm believer that once you understand the growth process you will always stay active no matter what the price is. Those that left over the last few years didn't understand what they had and have given something up that could transform their lives in monetary value alone.
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