The Real Value of HBD - An Unfair Match

in LeoFinance2 months ago

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Hive Backed Dollars (HBD) - the stable coin of the Hive blockchain and one of the primary rewards authors and curators earn for engaging in the Hive blockchain is an interesting and revolutionary development on not just in the Hive blockchain, but in the crypto world in general.

With the help of HBD, you come to see and appreciate the token more as you would a real currency instead of seeing it like another cryptocurrency that is plagued with crypto inherent feature - volatility.

HBD is real money, in fact, HBD is the US dollars in disguise. So, instead of pegging my currency and local economy just against the US dollars, why not do it the crypto way?

The Outlook

In this post, we hope to stack HBD up against my local economy and currency in terms of purchasing power, but not limited to that. I will dwell on matters such as:

  • The value of HBD against the Nigerian Naira
  • The purchasing power of HBD in my community
  • The impact of inflation on HBD in my community
  • Budgeting with HBD
  • Investing HBD

Without further ado, let's begin.


The value of HBD against the Nigerian Naira

Ideally, one HBD should be equal to one US dollar, definitely an ideal situation which we all hope to attain at some point on the Hive blockchain. But, let's dwell on the idea scenario.

With that in mind, if HBD is pegged to exactly 1 US Dollar, this value could be fragmented into the two common financial markets here in Nigeria.

The Nigerian financial space is highly fragmented, with two main markets currently operational and assigning different values to the naira-dollar relationship. These markets are illustrated below:

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The above values are average estimated values based on my recent transactions. Based on this, it is clearly evident that making you are holding more value if you can transact with the CBN (Central Bank of Nigeria) rate instead of using the black market rate, but as Nigeria may have it, the CBN rate is not available to the common man, you have a transaction limit of 20 USD per month as an individual and 50 USD per month as a business, this may sound quite absurd, but it is not a joke, it is a fact we have to deal with down here.

So, since we have to deal and live on the black market rate for HBD as Nigerians, all I will be sharing will be based on the black market exchange rate at roughly 600NGN/HBD.

The purchasing power of HBD in my community

In a community where more than half of its residents live below 5 HBD per day, you will agree that 1 HBD is significant.

Let me put things in a little more contest, my current job earns me less than 3 HBD for each day of work (about 2.4 HBD/day), and that is even above the current minimum wage. Here are some more figures:

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HBD is worth much in my community, as seen above, with a very little amount of HBD, you can get yourself a healthy meal in a local restaurant or even a flashy restaurant if you want. If your purchases are mostly local services and products, you can see that with a very small amount of HBD, you can do alot locally.

The impact of inflation on HBD in my community

With the increase in inflation lately, that could be blamed on a lot of local factors as well as global factors. The consequence of this is price hikes. Here are some numbers:

ItemsInitial price (HBD)Current Price (HBD)
Fuel/gas0.2750.33
Shoes> 5> 7
Standard pot of soup> 4.2> 6
Soft drinks0.160.25
Energy drinks0.330.58
Smartphones> 41.7> 58.3
Laptop> 165> 250
Beer> 0.42> 0.58

These changes in price as a result of inflation may not look too significant to some, but it is! According to this Trading Economics report on Nigeria's inflation, there is a constant 0.1% monthly increase in price of basic commodities in Nigeria, (mine) while the income value is constantly retrogressing.

For example, my monthly income from my part-time job has remained 40,000NGN and equivalent of 111.1 HBD when I was employed in 2019, currently, this 40,000NGN is an equivalent of 66.6 HBD, that is a massive 40% reduction in value.

Budgeting with HBD

With HBD looking more interesting than my native currency, if I should earn more HBD, here is what my monthly budget will look like:

S/NItemCost in HBD
1Transportation14 HBD/month
2Food37.3 HBD/month
3Healthcare8.3 HBD/month or less
4Internet8.3 HBD/month
5Shelter16.7 HBD/month
6Wardrobe8.3 HBD/month
7Fun16.7 HBD/month
8Miscellenous16.7 HBD/month
9Home wares16.7 HBD/month
10Savings50 HBD/month
$Total218 HBD/month

Interesting budget with an income of 66.6 HBD. Thanks to other side hustles, I am currently able to fund this simple lifestyle. Trust me, it is a very simple lifestyle, compared to people in other parts of the world, and even some persons around me.


Investing HBD

With very few safe investment opportunities available locally, the best approach is to source for one yourself. My first go to is to swap some HBD to USDT after converting them to Hive and thereafter saving them as USDT at 16% APR with my crypto exchange - Roqqu.

I also hope to go into the development of some applications to operate a business model around the Apps as a Service (AaaS) model, however, this will need more HBD savings and time, as each project should cost an upward of 5,000 HBD.

Final Words

With HBD looking more interesting than my native currency, the worthwhile goal currently is to earn more in HBD than in my native currency, as with it, I can beat inflation more successfully.

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my salary for a full time job is 200$ in Iran, we have a lot of inflation too, saving HBD is a good Idea but what about HP? is'nt it a better investment in these price?

The appeal for HBD is it's stability. One HBD is always within the price of a dollar and it's made to withstand too much volatility which makes it easy for one to plan with it.

Give is not like that, it is highly volatile and currently sells for about half a dollar; and Hive Power is staked Hive which requires power down to be used, a process that may take weeks before completion.

So, the best savings for you is HBD as Hive is too volatile to be trusted and relied upon.

But think about that Hive going to be atleast 5x in years and you can take better pasive income as voting

Yea. What it may become. It's nice to have good plans for the future. But what if Hive doesn't become what we expected?

It's sooo hard to make that decision. I agree that easy access to funds is needed - i can access my savings faster than my HP. But I'll earn more with HP. So what do I do? It's just speculation I guess.

I just feel HP earnings is highly speculative, and uncertain. Granted, you will earn more with HP over time and if Hive grows well, but with volatility in the heart of the market and with no way to do a direct apple to apple comparison of your earnings overtime, we can't guarantee more HP earnings.

But more earnings are guaranteed if Hive price goes significantly higher than they are currently, at least properly go above the 1 dollar mark..

I love it when it goes up, I can just hear the ka-ching, Ka-ching. for a while there i was doing great.. be hard to afford bananas now 😂

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This shows how important it is for us Nigerians to learn to save and invest more in HBD. Because the inflation rate is too high. We cannot continue like this. I know how much I spend in a week. Even when I try to cut expenses.

Honestly, you can't do much with the Nigerian naira and a retrogressing income. Thanks to HBD, we can manage to rake something out for ourselves. With the current state of naira, it's a hand to mouth situation.

Exactly. HBD has been a great means of income nowadays. I wish to save and invest more here than in any other coin.

Really interesting breakdown, this is why Nigerians work so hard because the country’s economy is unfavorable.

My first go to is to swap some HBD to USDT after converting them to Hive and thereafter saving them as USDT at 16% APR with my crypto exchange

On Hive you can stake that HBD and earn 20% APR that gets auto compounded each month. That’s extra 4% increase for you. Or what do you think?

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Lol. Yea. I also have some savings on HBD, just some more futureproofing, you know, HBD is the coming up and hasn't been as stable as other stable coins.

Though, I also felt the contest discouraged some obvious investment options available on the Blockchain already.

But HBD at 20% APR is really sweet.

A very nice laid out write-up that showed the value of HBD and the prices of commodities in your country. I love that the price of petrol/gas there is less expensive compared to the others that I have read and also here in my country.

Glad you are saving HBD monthly too which is good :) I wish you the best on the challenge!

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Thanks @ifarmgirl for stopping by. The irony is that while price of petrol here may appear cheap, it's expensive for us.

In other countries, government do provide things like electricity, but here, we provide electricity ourselves and the major source of energy is petrol, through the use of petrol-powered power generators, so, the cost easily adds up over time.

Any slight increase is significant.

That's right though. The prices of things are skyrocketing on a global scale and everyone is affected. I am sorry to hear about your electricity supply. Let's hope things will get better soon. The inflation is really choking us all. All the more reason to get busy here in Hive and grind :)

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Exactly dear! It's nice having you around!

Thank you and enjoy the weekend.

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Always good to see how crypto can affect people from different parts of the world. Those who focus upon HBD are able to weather the storm of a currency like yours.

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See this is what is soo fascinating about HIVE as a platform and how amazing it is that people all across the world can actually making a living from it. So when I give you a tiny vote, it's actually contributing to your income which pays your rent and bills and food.

For me, 53.07 HBD is about 35 dollars Australian. My WEEKLY food budget is anywhere between 100 and 150 dollars a WEEK. So Hive is never going to be something I can live off. But if I can acculumate enough, it makes a difference, such as helping pay off my mortage. And all this is mainly due to human connections - writing, engaging, upvoting - with investments on top of that of course, farming, staking etc. What an incredible system.

Seeing the figures laid out like this is really amazing. Your diagrams and explanations are fantastic. This post deserves more HBD!

I really appreciate the way you just placed things in more context. The idea that one's vote is helping to contribute to another person's life is just inspiring and very factual.

It's actually interesting the way money work in different places, just your weekly feeding budget is already covering half of my monthly budget. That's interesting, showing that the significance of HBD varies greatly by location.

I really appreciate your inputs and for more HBD, I only wish this post earn more.