financialgoals2021 | It's communities, Jim, but not as we know it
Very briefly, by way of introduction, I became an Orca way back in June 2020 and have a size-able Hive-Engine portfolio where I mainly invest in income generating tokens - SPI, EDS, LBI and INDEX. I also have a small amount of Bitcoin.
I'm your sensible auntie investor: I have goals and buying plans, based on a simple analysis (mainly business/use case and who is involved - their skills experience and reputation), I review my goals regularly and I rarely impulse buy.
Having worked and invested for the best part of fifty years, cryptocurrency forms a very small percentage of my investment portfolio. Although I was interested, when I was doing the research for this post, to discover that I, and most of my fellow UK Orcas, are outliers in terms of cryptocurrency ownership in the UK.
Having reached my numbers targets and with my investments starting to mature and produce income, my financial goals for 2021 are focused on how we increase the value of Hive and two inter-related questions:
- how can we create value for people who are not yet on hive?
- how do we normalise Hive and cryptocurrency?
One way of creating value is to solve a problem, and one of the mechanisms that we have available to us to do this is communities. Communities create niches where we can bring together social capital to solve problems in the world outside Hive.
For the past seven or eight months I've been researching and putting together a plan for The Ink Well, a community for writers and readers of short stories. It's taken a while to refine the focus and to see where there is the greatest opportunity to bring new users to Hive.
We're about there now and a couple of days ago, The Ink Well published its Manifesto setting out its business proposition for writers, readers and investors. This has been written for an external audience and is aimed at the UK as that is where I am based and have contacts and connections.
This post talks a little bit more about some of the research and assumptions behind the Manifesto and starts to set out some goals 2021. I did some research about the creative industries and publishing earlier this year and also posted about the writer economy. Fundamentally:
The creative industries, which includes publishing and broadcasting, adds £111.7bn each year to the UK economy - greater than the automative, aerospace, life sciences and oil and gas combined. At the same time, the numbers and incomes of writers continue to fall with the median annual income for a professional author at £10,500pa (USD 11,300pa) in 2018, with BME writers faring worse, calling into question the extent to which writers' contribution to the creative industries is properly valued.
We know that there are about 89,000 writers in the UK (2020), and that many of these are used to managing portfolio incomes from different sources for writing, and from supplementary activities such as teaching. Writers are already used to working across multiple channels.
The Financial Conduct Authority (FCA) estimated that about 5.35% of the adult population in the UK owned cryptocurrencies (December 2019) - an increase of 2.35% from 1.5 million people to 2.6 million people. In addition, 73% of adults had heard of cryptocurerncies (42% previously). Most cryptocurrency owners hold small sums (75% hold less than £1,000) and were aware of the lack of regulatory protections as well as that prices are volatile. Only 15% 'expected to make money quickly'.
These findings seem to indicate a rapidly growing sophistication about cryptocurrencies. I've used the findings to estimate the numbers of the writer population that might naturally migrate or adopt Hive:
Cryptocurrency Writer Ownership Projections
| Year | % | No of writers |
|---|---|---|
| 2019 | 3.00% | 2,670 |
| 2020 | 5.35% | 4,760 |
| 2021 | 9.50% | 8,460 |
| The table assumes the same growth in ownership in 2021 as there was in 2020. This is based on raised levels of MSM reporting of Bitcoin activity in December 2020-January 2021 which will have increased awareness and confidence in cryptocurrencies. |
Using these projections, The Ink Well takes 8,460 as the baseline target for recruiting new, active writers to Hive over three years with a target of 1,410 new writers for 2021, 2,820 for 2022 and 4,230 for 2023. Assuming the same purchasing pattern for Hive as for cryptocurrencies in the UK:
| Holdings | 2021 | 2022 | 2023 | Total |
|---|---|---|---|---|
| 50% = £250 | 1.2m Hive | 2.4m Hive | 3.5m Hive | 7.1m Hive |
| 25% = £1,000 | 2.4m Hive | 5.0m Hive | 7m Hive | 14.4m Hive |
| 15% = £3,000 | 4.2m Hive | 8.5m Hive | 12.7m Hive | 25.4m Hive |
| 10% = £5,000 | 4.7m Hive | 9.4m Hive | 14.1m Hive | 28.2m Hive |
| Total | 12.5m Hive | 25.3m Hive | 37.3m Hive | 75.1m Hive |
| Based on 0.15c Hive |
Several things are not taken into account in these projections:
- they are based only on UK writers, however, any activity or investment in the UK leading to increased activity in The Ink Well will have a network effect across other countries and regions.
- they account only for writers and not for readers (or curators, as they would generally be known on Hive).
- changes in the price of Hive.
Readers are an important component to the business proposition in the Manifesto. There is public funding available for audience development - targeted activities to attract readers to Hive as consumers. The Manifesto proposes that:
by opening a Hive account and purchasing Hive equivalent to the value of a paperback book once a month for a year, readers will receive rewards for reading which can be used in a variety of ways including exchanging for fiat currencies (eg USD, GBP, Euros). The greater the amount of Hive the reader has, the greater their potential to receive rewards.
The ability to reward readers for reading is a unique feature of tokenised communities. It is potentially highly disruptive as it removes the supply chain between reader and writer and creates a direct relationship where both parties are rewarded. It is going to be really interesting to see how this plays out.
Increases in readers and writers may create additional co-ordinating and governance demands with an increased need for editors and moderators. We anticipate that there will be an overlap between the roles of co-ordinating and governance, writing and reading.
Now that we have the Manifesto in place and have started to predict some target numbers for growth, our next step will be testing some of these ideas with University students on creative writing courses. The offer will be:
a learning/career development experience where there is also potential for earning spare cash to help them through uni[versity] source
Writing the Manifesto was a great help in defining and clarifying the business proposition for The Ink Well. This post has helped to identify targets and potential milestones, and also some of the many variables that will come into play.
The bottom line, though, is 1,400 readers and writers actively earning rewards in The Ink Well by the end of 2021.
This may not seem many, but when set against the current 20,000 Hive users globally, and the ten largest OCD supported communities, each of which offers similar opportunities to The Ink Well, between them, there is significant potential for growth.
What will this do for the price of Hive by the end of 2021? Hard to say at this stage, but if we are broadly doubling the user base across communities, I'd suggest 50c would not be unreasonable.
References Cryptoasset consumer research 2020 - FCA, UK (June 2020) Cryptoassets: Ownership and attitudes in the UK - FCA, UK (March 2019). How and why consumers buy cryptoassets - Revealing Reality, UK (March, 2019) Authors' Earnings 2018, a survey of UK writers - ALCS, (2018)
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