Hive: Lesson From Facebook And The USD
It is time we learn from the leaders.
If Hive is going to achieve a great deal of success, which it has the potential to do, we should learn from those that achieved it. When looking for global adoption, it is best to focus upon those that got it.
For our purposes here, that is Facebook and the US dollar. It is not mistake that these were chosen. How many times have to discussed the merging of social media and finance? When it comes to these two areas, here are the leaders.
Therefore, it is best to understand how these scaled the way they did and attained the level of adoption that all else is chasing.
In this article we will dive deeper into what created this outcome.
Billions Of Users
The goal is to achieve billions of users. This might seem insane considering where we stand out but that is the total addressable market we are looking at. Both Facebook and USD is utilized by billions around the world. We need to tap into this concept to understand the level which we are dealing with.
Essentially, we are talking about a network effect of massive proportions. The leaders achieved that.
Many believe this was done through government intervention and decree, especially with the USD. This is not the case. If we study the transition of the global reserve currency from the sterling to USD, we see how it was the adoption that drove the policy, not the other way around.
The same is true for Facebook. This company showed how global adoption in the billions was possible. Basically we saw a "winner take all" situation which is so common in technology. That being said, how is that the case with the USD.
What is often overlooked about the transformation of the dollar into the most powerful currency ever used is the technology. We are living in a digital age. Before that, our communication systems were electronic. The USD actually was replaced, starting in the 1950s, by the Eurodollar. This actually became the standard.
Why was this? Because the Eurodollar quickly because a currency without any currency involved. It was a electronic (then digital) unit of account that grew rapidly. What followed was the buildout of infrastructure to support the many forms of this asset that were created.
Today we have FOREX, LIBOR, CME, and other markets that trades these assets. The fact they exist is a testament to the creativity of the financial industry over the past half century.
Depth, liquidity, and sophistication became the main criteria for this expansion. For those who follow my work, this is something we covered in the past.
The result of all this is billions of users internationally engaging in some form of activity centered around this. It is true for both Facebook and the USD.
Hive Backed Dollar (HBD)
One of the key lessons to take away is the idea of finding a need and filling it. The biggest threat to the USD is the fact there are not enough available on a global scale. This is true in the Eurodollar system along with the local level regarding banknotes.
Here is where HBD, like other stablecoins, can step it. It is a rather inexpensive way to generate dollars, this time in digital form. Most of the world does not have access to these. If they go to the local bank, they are handed the currency of that nation. Acquiring USD is a difficult process.
This is one of the reasons we can see the immediate impact on an region such as Sucre, Venezuela. The individuals of that area quickly embraced this coin simply because of what is instantly offers them. We do not have to explain the benefits to them. When you are on the other side of the dollar, the effects are clear.
We can see where Hive can learn the lesson of finance and technology. It starts with the creation and distribution of the currency. This is vital. It is impossible to have a network effect if we are dealing with a couple hundred people. Remember, the goal is billions in this game.
Piggybacking the unit of account of the USD allows for the instant adoption. There is no explanation of what this means. The use of Hive can be a bit of a challenge to learn at first but when it comes to the currency, we have instant understanding.
This is a major need around the world. There are billions of people who need this asset. Why? The USD is defense against their governments. When we look at the bolivar, Cuban peso, and naira, we see a total mess. These governments and central banks can have a direct impact upon what happens.
The same is not true with the USD. It is too big. The Fed might believe it has control over it yet we repeatedly see how its monetary policy means little. It certainly doesn't affect the people of Venezuela, Colombia, or El Salvador who are using it. In the end, they do not care.
Bigger Than Anything Else
Facebook is an American corporation. That said, its network and impact are much larger than the US. At this point, it is debatable whether some of the mega-tech companies are more powerful than governments. This would make sense considering the scale they operate.
This company has somewhere around 3 billion users. Here we see direct access to a significant part of the global population. When it comes to social media activity, this company is still the king of the hill.
Blockchain introduces an entirely new element. I believe the union of social media and finance is completely missed, even by most in cryptocurrency. Facebook realized this with its failed attempt at the Libra. If this had gone through, it would have been the most powerful entity in the world, by far.
Why?
It would have dominated both social media and money. Imagine 3 billion people instantly having digital wallets and a currency to transact with. Of course, we all know the dangers of centralized power and Facebook might have been worse than governments in this role.
This is where decentralized systems enter. We cannot underestimate the power behind owning one's wallet. It is the key feature that separates what we are discussing here about Hive and something like the possible dystopia that a Facebook would create.
Ultimately, this conversation centers around the creation of the most powerful network effect the world has ever seen. In my mind, it is not a question of if it will occur but who will set it off. We have social media and finance, two realm of billions of people. Over the next 5 years we are going to see them combined.
Here is where we have to embrace what is going to take place. Something is going to step in and serve as the basis for all else. Monetary systems are communication network (which is where Metcalfe's Law came from) as is social media. It is fairly easy to see how the line is going to be erased.
In the end, the combining of these two industries is going to capture billions. The only question is who learns the lessons and kicks this off?
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