Hive: Internal Versus External Growth

in LeoFinance4 months ago

There is a great deal of discussion about how to attract more users to Hive. This is something that obviously has not found a great deal of success. Onboarding initiatives keep working at it and I am confident that, at some point, we will see a breakthrough.

However, we have another way of looking at things which also could help spur things to greater heights.


Obviously, kicking off the network effect can be accomplished by getting more people to use the hive DApps. Yet, we can see a similar result if individuals use more hive DApps. Here we see the difference between internal and external growth.

Businesses often strive to grow their customer base by attracting new customers. This is an expensive process but it is vital for ongoing success. Existing customer bases dwindle for a variety of reasons, often outside the control of the entity. Bankruptcy, death, and an assortment of other factors will deplete a customer over time without the addition of new blood.

That said, every business knows the cost of acquiring new customers. Thus, from a profit standpoint, one of the vital moves is to try and sell more products or services to the existing customers. Here the relationship is already established and the customer is familiar with the workings of the company. It is more cost effective to target these individuals as opposed to trying to get a message to a new person or company.

In short, leveraging the present user base is a proven way to grow.

On Hive, we hear little about that approach. All conversation is about bringing in new users, which is obviously vital to the long term success of Hive. Nevertheless, the idea of getting the people who are here more actively involved in the different DApp and platforms is overlooked.

Of course, much of the focus is upon token price. Ultimately, getting people to buy HIVE is something that will help the entire ecosystem.

Here again we see the concentration upon getting outside investors or individuals to come to this platform. Instead, another approach is to provide the existing users with reasons to acquire more HIVE themselves.

Up to this point, the only reason to do that is to power up. That was basically the sole use case. Without many outlets for HIVE, one was limited to the reasoning for his or her purchase. Of course initiatives such as power up days helped to spread the idea of our community being our greatest customer. However, by its nature, it is limited in effect.


That is close to changing. Something that is rarely discussed in cryptocurrency yet is a fundamental part of any economy is the velocity of money. Essentially, this is the rate which money flows through the system. On Hive, when tokens are powered up, the velocity is non-existent. In fact, overall, we see little movement taking place.

If we look at networks being transformed into markets, we see how this is an applicable idea. How much of an economy does Hive have at this point? Considering a HIVE token might only move a couple times, I would guess it is not much. Certainly nobody would call it a thriving economy.

Development is starting to take this head on. There was going to be a day when the next level of Hive's evolution was to provide more use cases for the token. Presently, people either power it up or there is a boatload sitting in liquid form on exchanges. I would guess this was the case from the start.

I am noticing a bit of a shift. This is something that I know is true for myself and a few others I follow.

Instead of having HIVE powered up or sitting on an exchange, some are holding HIVE with the intention of spending it on something. This could be another token that is tied to a project one is positive about or straight out spending. A recent addition to the Hive ecosystem is beginning to make some headway.

NFTShowroom is something that many are posting about. While this might not be the "killer DApp" everyone in crypto is looking for, it does appear to be having an impact. I was chatting the other day with someone who wanted to get some convert some Hive to Hive.swap to buy a particular token and he was having a tough time finding any available.

At the time, I did not give it much thought but it did strike me later.

Seeing the activity in the short life span of NFTShowroom provides a glimpse of what is taking place. The biggest leak in the Hive ecosystem is the fact that people get HIVE, either through posting/curation or as witness rewards, and then take it to an external exchange and sell it for something else. Essentially, the money is leaving the ecosystem draining the economic impact.

Obviously, Hive-Engine is also considered an external exchange since it is not part of the internal working of Hive. However, it is a layer 2 solution that, through the Hive.swap peg, is closely tied to Hive. To me, this is a different than a Houbi or Binance which have nothing to do with Hive outside of carrying the token.

On Hive-Engine, each HIVE sent there is used to back the Hive.swap token. Thus, anyone holding Hive.swap is essentially holding HIVE. As stated, it appears some are holding larger amounts in their wallet in an effort to get involved in opportunities as they arise. I can say this is the case for me.

We are seeing the collective wealth on Hive grow. Between the amount of HIVE distributed, which grows by hundreds of thousands a week, as well as the layer 2 tokenized projects, we see people's wallets filling up. This provides a basis for the economy that we are cultivating.

Basically, we see incomes starting to form. Ironically, what is lacking is a place to spend the money. The choices right now are few but they are expanding.


Hive started essentially as a blogging platform. For all the talk of social media, that never truly was the case. Instead of comparing it to Facebook or Twitter, Wordpress or Medium was more accurate. Over the last year, we see a major shift away from this. While blogging is still an enormous element, gaming, communities, and other ideas are starting to gain a following. This is presently opportunities for the user base.

And, now, there is a digital art gallery for people to buy works that interest them.

We still live in a fiat driven world. That is not going to change anytime soon. However, as the world of crypto expands, people will continually be faced with decisions about what to do with the currencies they earn. What is the best option for what I am holding right now?

So far, the trend was to dump HIVE and get involved with something off platform such as Ethereum or Bitcoin. That only makes sense since they are safer and have, historically, been better performers.

Nevertheless, as the options spread within the Hive ecosystem, that might not always be the case. Opportunities for enormous returns, 25x-100x, exist with newer projects that take off. While it is possible we see that in Bitcoin, the odds are there are many other projects that will reach that first. Will any of them be on HIVE?

Even if that is not the case, not everything is about investing and ROI. Having a use case for the token means that people can derive other payouts. For example, collecting digital art can be its own reward even if it is not truly financially profitable. So can playing games. Millions of people around the world spend money each month on free games buying weapons, skins, and assorted other powers to enhance their experience in particular games. There is no financial benefit yet they do it on a regular basis.

Hive needs to make that transition. This will help to tap into the existing user base and push them to keep the economic engine turning. When people are actively purchasing different goods and services, the velocity of money increases. This makes the economy expand. Something as small as Hive would see explosive economy growth if the velocity of money even doubled.

Over the last few months I wrote how we are seeing some people achieve more success with the layer 2 solutions than Hive. This is putting more money in their wallets, providing them with different options. As this concept grows in number, existing Hive users will have more resources to spread around.

Ultimately, it will all come down to whether they have a reason to keep it within the system or simply move it to an external exchange to convert to another currency.

That will be the plight of Hive over the next 12-18 months.

If you found this article informative, please give an upvote and rehive.

gif by @doze


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It's quite a detailed post here and while this is really concerning, I'm thinking it's about time we give the populace a reason to see hive as secure as bitcoin and even chose it over bitcoin as a result of its Utility and many more potentials. But then how do we do this? It's really something huge to embark on and enact.

You're right we need money to come into the system don't you think we should incentivize people to do so?

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I am not sure that comparing Hive to Bitcoin is worthwhile. Bitcoin will occupy a place, at a minimum, as digital gold. I think the market already established that is how it views Bitcoin and I do not see that changing.

Hive will see demand increase as utility grows. That is how I see the growth progressing. We simply need to provide users with options as to what to do with their Hive. Historically, it was basically power up or send to exchanges to sell.

As for bringing in new money, that is one piece of the puzzle. The other is creating the wealth internally by our activity and success of some of the platforms here.

I guess you could say that was the point of the article.

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I am not sure that comparing Hive to Bitcoin is worthwhile. Bitcoin will occupy a place, at a minimum, as digital gold. I think the market already established that

Yes definitely we can't do that but then we need to even make people see certainty in hive just like they'll generally trust bitcoin. I guess we'll have to work towards that.
Thanks a lot for the content

 4 months ago 

I've noticed, anecdotally that many of the pieces bought on NFTShowroom are bought by other artists; which is great.
Naturally if they need to cash out to pay bills, so be it; but if my purchase helps the artist make his own purchase, that echoes through the ecosystem in a lot of healthy ways.

That is very true @mattclarke.

Whether your purchase is used by an artist to purchase another piece of art or taken out to pay some bills (starving artist), it all helps build the economy. The fact that many are using the proceeds to buy art from others is a positive sign of the circular nature of the ecosystem that is developing there.

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To expand and grow business, reaching out and getting new customers is important. At the same time, existing customers can grow the business fast and effectively. That's why companies always try to make repeated customers.

There are exciting projects like NFTShowroom that can attract new users as well as increase the existing users' activities. Thank you @taskmaster4450 for sharing this.

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Great post, use case of tokens and dapps are certainly a major factor when it comes offering value on the blockchain and I'm beginning to see some really great projects taking shape, new product launches etc, that are not only attracting people to Hive but all Crypto in General.

I think as a Hive user or influencer the best thing anyone could do is to provide education and information in a simple way so that someone looking at Hive and crypto currency for the very first time can easily make thier own informed decision to take action.

Thank's so much for sharing this valuable and informative post it has helped me to gain a clearer perspective on the Hive eco-system. 😀👍

...and I'm beginning to see some really great projects taking shape, new product launches etc, that are not only attracting people to Hive but all Crypto in General.

It is great that you are seeing that. Many talked about it but it was more futuristic projections. Now we are starting to see it become a reality.

Think of where things will be in a year.

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Your current Rank (36) in the battle Arena of Holybread has granted you an Upvote of 17%

Official level 2 solution like HMT might change things. I will say Hive has evolved more than social media platform.

Enabling smart contract on hive blockchain will automatically help build various kinds of dapps which will increase demand for hive as well as adoption. Immediately after introducing smart contract - the inflation should be reduced down to 2-3% and let the dapps decide their own reward mechanism.

Can I delegate Hive to LeoFinance and recieve LEO? Or do I have to buy the LEO Miner? How many LEO will I get from owning 1 Leo Miner?