Let's teach crypto to 7-year-olds... Starting with HBD

avatar of @young-boss-karin
4 min read

Where do I start?

Well, we have this thing called HBD. I would like to believe that you know what it is because you're on Hive but assuming you don't; when you go to the place called "wallet" and you scroll down, you'll see it there.

Image from Magda Ehlers on [Pexels](

HBD stands for Hive Backed Dollar and it's what we call a STABLECOIN, even when it's not so stable. By stablecoin, we mean it's usually valued at the same price as the US Dollar but it's pretty shaky so sometimes it can be a little bit less than the US Dollar or a little bit more.

Now, this HBD has what we call a 20% APR that's added to it when you transfer it to your savings.

About HBD savings

HBD savings can be likened to your savings account in a bank. You deposit some money there and the bank promises you some pathetic interest like 2% at the end of the year.

If you're in Nigeria, that won't even matter because within the year the bank probably deducted their interest from your account in the name of "bank charges".

To transfer to savings, all you need to do is tap the button under the amount of HBD and select the "transfer to savings" option.

Anyways, this is like that but with more perks;

  • There are no charges
  • There's the 20% APR (or Interest)
  • It's generally safe and has no risk

Why's this 20% APR a big deal?

Just like I likened the HBD Savings to a typical bank savings account, APR stands for Annual Percent Rates but in simple terms, it's just an INTEREST in your investment or in this case, savings.

It was previously 12%, but the Hive Witnesses voted unanimously to have it increased to 20%. What this means is that you get 1.67% of your savings that accumulates every month until the end of the year.

So, if you have 100 HBD in your savings, you get 1.6HBD which is added to what you already have at the end of every month. That means you get to start the next month with 101.67 HBD and get 1.67% of that amount at the end of that month.

That's what we call compounding interest, and if you do the maths, at the end of 12 months, you'll actually be getting 21.9% on your initial capital. How dope is that?

The problem with HBD

At the moment, the only problems I personally have with HBD in savings are the 3 days withdrawal period and the inability to cancel a withdrawal from savings once the command is made.

Generally, everyone has 2 other problems with HBD;

  • It's not properly pegged to the US Dollar sometimes
  • It's limited in supply

While I may not have a problem with it being shaky thanks to my ROI (Return On Investment), the inability to get a lot of it is a problem.

At the moment, I read here that there is about 10 million HBD already in circulation in the open market. This is not enough, especially now that there's a lot to gain from holding it. There is a massive demand for it.

The solution

Thankfully, there's a solution to this scarcity problem and it's the pHBD/USDC Liquidity Pool you've probably been coming across on a lot of people's posts.

I'll explain it in detail in my next post because it involves a lot more words than this HBD APR gist.

Why did I write this?

I have a friend who's constantly uncertain about whether he hates crypto or loves it. He poses some good questions sometimes, the one that gets me bothered most times is; "why isn't it easy to explain?".

I write crypto articles often so I understand this particular issue. It took me a long while to understand a lot of things even while I wrote. I always had a fear of speaking out of proportion and giving out wrong information due to my lack of understanding.

Crypto articles are not first-timer friendly. It would be nice if they were but that would be too time-consuming for both the writer and the already informed reader. I can't imagine opening an article to get one particular information and then in the process of trying to get that information I have to read crypto A-B-Cs just because we're trying to make it easy for everyone.

What I found interesting is the fact that while I was still trying to navigate the Hive platform and properly understand a lot of things here, I thought people who wrote articles about these things were geniuses. These days while reading what people write, it's pretty obvious that they have absolutely no clue what they're saying.

We have a lot of crypto noobs here on Hive so it makes sense for there to be a guide that helps explain the things that go on here in the simplest possible words. I might take that up as a personal project eventually, but for now, I'll try to break down a few trending information to help a little.

If you found my explanation helpful, do well to let me know and if there are things you still don't understand, please ask. You're not dumb, I assure you. Web 3 information is not easy to understand at a first glance.

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