Over the last 18 months, we discussed the Hive Backed Dollar (HBD) a great deal. This is because we are dealing with a powerful currency that can truly make a difference globally.
In the latest episode of Cryptomaniacs, we covered the latest events relating to Hive in Sucre, Venezuela.
It was a moving show as we will see, emphasizing the impact that we can have in countries of this nature.
In this article we will detail the impact that HBD is making along with the potential going forward.
USD Alternative To Bolivar
Countries like Venezuela can suffer from economic devastation. There are many reasons for this but one has to do with the local currency. It is not uncommon to see massive price increases as the currency falls against the US dollar. This has compounding impact upon the population, especially for those who earn and save in the local currency.
The Bolivar is known for its issues. Every few years this makes the news due to the moves the government makes. In the end, it is the same story.
Many do not realize countries like this have a black market for USD. This is purchased similar to guns and drugs. It is an illegal market that opened up, yet serves a huge need.
The main difference is these people have to operate using banknotes. There are no digital versions of the dollar available. In this nation, that is reserved for the Bolivar.
HBD solves this problem. Physical cash is counterintuitive in a digital age. It also carries safety concerns. With HBD, the citizens of Sucre have access to a US dollar denominated asset that can be used as a medium of exchange. This is a very powerful tool for the population.
Changing Lives
The average public salary, including bonuses, in Sucre is $70 a month. This should put it in perspective of how much impact Hive can have.
If one is engaging with the blockchain and pulling in $20, $30, or $50 a month in rewards, this can make a huge difference. As we can see, this individual could be outpacing a large portion of the local community in earnings.
Having $30 flow into the local economy is helpful. However, this is only the first leg of the potential economic impact. One of the key metrics is how many times a unit of currency travels through the economy in a given time period. This is known as the velocity of money.
An individual who receives $30 from Hive is enhanced. We will presume in this example all is swapped to HBD and spent. This effectively brings $30 more into the economy.
However, this is only the first layer. When the individual spends the 30 HBD, that money is in the hands of the merchants. Now they have 30 HBD to spend.
If this goes through the economy 4 times, that is $120 in economic activity generated.
This is how economies grow. From this simple illustration, we can see how impactful this can be.
Like many countries, the population prefer US dollars over the local currency. This is something to keep in mind.
At present, there are 60 businesses that accept HBD (and $HIVE) in Sucre. They also have roughly 300 individuals who have accounts with Hive. Here we see a nice local economy forming centered around HBD.
A big step was recently that shows the evolution of what is taking place.
It is a major benefit when someone is able to earn some HBD and spend it. That enhances the individual financial situation. However, if the HBD is taken by the merchant and swapped for local currency, the impact effectively ends (or at least is minimized).
We were told the first business-to-business (B2B) transaction occurred. This means a merchant accepted HBD as payment then, instead of swapping on an exchange for Bolivar, was able to make purchases using HBD.
To illustrate, let us take a restaurant that accepts HBD. It takes that in as payment for meals served. Now the owner has HBD. In comes a farmer with vegetables and meats the restaurant needs. As opposed to paying in Bolivar, HBD is used to pay for the goods the restaurant needs.
This is how we see the velocity of money start to accelerate especially when dealing with a suffering economy. The income levels make saving difficult. However, the money flowing through the economy can generate massive economic activity (relatively speaking).
Spreading HBD
The project is spreading within Sucre. This is likely to move outward into other areas of Venezuela. There are 28 million people in the country, most suffering under poor economic conditions. They are also a population that is relegated, for the most part, to the bolivar.
We can see enormous potential due to the fact this is a grassroots movement. It is being driven by the people in Sucre who are on Hive. They also can receive support from Hivians all over the world. That is the power of a network state.
For this reason, it is not outlandish to envision a day when tens of thousands of Venezuelans are using HBD. We can already see the foundation in this region.
Argentina Next?
Another South American country is in dire need of HBD. That is Argentina.
The currency there, The Argentine Peso (ARS), has depreciated 47% against the USD. It is a country that has an inflation rate running over 100% per year. This is pushing major economic pain on the population.
As bad as Venezuela is, Argentina is even worse. This has some calling for the country to dollarize the economy. Of course, we are dealing with political decisions that tend not to be made for the benefit of the average person.
The economy in Argentina is already dollarized to a degree. Many people earn and save in USD but the peso is still the main currency. Like in Venezuela, there is a physical dollar market where people buy and sell.
Once again, we can see how HBD can change this economy. What is taking place in Sucre can be duplicated in areas of Argentina. This currency gives people access not only to the USD, but in digital form. Naturally, like those in Sucre are realizing, distribution can come as a result of one's efforts as rewards flow into the region.
HBD has enormous potential since there are many countries around the world that are like these two. In fact, we could spread through all throughout Central and South America. Most of those regions are mirroring what is written in this article.
We are already proving the test case in Sucre. Now it is just a matter of spreading the word and getting other grass roots initiatives going.
HBD is not only changing lives, it can alter economies.
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