How does Hive crypto work?
We touch on the backend tech, while focusing on how Hive works from a user’s viewpoint.
Hive uses a consensus mechanism called Delegated Proof of Stake (DPoS).
This algorithm secures the blockchain by ensuring a representation of transactions within it.
A DPoS system is an implementation of technology-based democracy, which protects blockchain from centralization and abuse by utilizing voting and election processes.
As for how this pertains to Hive, the voting process is weight-based on how much Hive Power (HP) you have staked to your account.
Stakeholders elect witnesses to operate a Hive server which produces new blocks and keeps the overall network running and secure.
For the purposes of this Hive guide however, we’re going to focus on how Hive works from a user’s viewpoint and only touch on the backend tech.
How Hive works from a user’s point of view
After getting the Hive blockchain tech out of the way, let’s now move onto the things that you need to know in order to best use Hive.
Your unique Hive account
Your unique Hive account is your gateway to the Hive blockchain.
Unlike Bitcoin or Ethereum, Hive accounts aren’t string based and instead they’re easy to remember usernames that are simply in the format of @forexbrokr.
Your Hive account allows you to seamlessly interact with Hive based dApps, make money blogging on the various front-ends and manage your Hive crypto balances from your fully integrated wallet.
How to get a Hive account
The easiest way to get a Hive account is to click the get started button at the top right corner of leofinance.io and sign up via Twitter.
All you need is a Twitter account and they instantly will be given a Hive account to use on any Hive front-end or app.
From here, you’re able to download your private keys and take full ownership of your Hive account.
Hive crypto - HIVE, HBD, HP
Hive actually has 3 different cryptocurrencies:
- HIVE
- Hive Power (HP)
- Hive Backed Dollars (HBD)
Each of the Hive cryptocurrencies is linked and perform a different role for users of the blockchain.
1. HIVE
HIVE is the main currency used on the Hive blockchain.
It’s the standard, liquid cryptocurrency that you can use, earn and instantly transfer to other Hive accounts for free.
2. Hive Power (HP)
Hive Power is HIVE that has been staked to your account in a process called “powering up”.
It’s the illiquid version of HIVE crypto as once you’ve staked HP, it cannot be transferred without first unstaking it over a 13 week period with 1 equal payment per week.
The more HP you have, the more RCs (replenishing, non-transferable credits on your Hive account that allow you to transact on the blockchain) you will have
HP allows your account to endlessly transact for free on the Hive blockchain.
3. Hive Backed Dollars (HBD)
Hive Backed Dollars (HBD) is a Hive’s own stablecoin pegging Hive to the USD.
1 HBD should always equal $1 USD of HIVE and can be instantly converted using the network’s internal market.
The major advantage of HBD is for Hive-based eCommerce stores to price products in the more stable HBD, rather than the more volatile HIVE currency itself.
Distribution of HIVE via the Hive rewards pool
The Hive rewards pool the blockchain’s way to distribute new tokens via inflation.
It’s important to understand that your upvote’s value comes from newly generated tokens within the rewards pool and not from your own stake.
If you have a staked HP, then you have a say in how the daily rewards pool is shared via your upvote.
The more HP you have, the bigger your upvote will be worth.
The rewards pool offers content creators and curators an incentive to use Hive based front-ends for their blogging, with the aim of populating front-end domains with quality content.
Put simply, the Hive rewards pool is constantly fluctuating based on price and other factors and its total can always be viewed via a block explorer.
Final thoughts on how Hive works
There are a few more technical aspects of Hive that you should also be aware of including the Hive dev fund, otherwise known as the DHF.
But as we mentioned above, this particular Hive guide is designed to be a more user focused view of how Hive works and that stuff can wait.
If however, you’re after more detail on how Hive witnesses work to produce blocks and secure the blockchain right now, then leave a comment and we’ll try and go into more detail.
Best of probabilities to you.
Direct from the desk of Dane Williams.
Why not leave a comment and share your thoughts on what gives HIVE value in the comments section below? All comments that add something to the discussion will be upvoted.
This Hive crypto blog is exclusive to leofinance.io.
Posted Using LeoFinance Beta
