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.
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