The Incredible Compounding Effects of Hive

By RealSociology | Economic Musings | 12 Sep 2020


I tend to take a long term view of my Hive investment, typically buying Hive with my HBD rewards (or converting if it's rational to do so) and Powering it Up, and then using that Hive Power to earn around an 11% curation return.

It strikes me that this has a compounding effect, the same in principle to putting a sum of money away every month into a pension and then benefitting from the returns over time on a (hopefully) ever increasing lump-sum.

You can calculate the compound return (in Hive) on a regular 'Hive investment' (What you Power Up) by using a regular fiat compound calculator, the principle is exactly the same, at least if you're just calculating pure Hive returns, and paying no attention to the fiat value (and why on earth would you want to do that anyway, stay in the damn bubble man!)

So how much can you earn in the long term if you compound yer Hive rewards?

In the compounding calculations below I used this online compounding calculator - it's designed for FIAT, but the currency is really irrelevant!

The 'lower Hive rewards' amounts I just picked at random, but I got my own stats from Hive Stats, and I simply used 11% as the compounding percentage, because that's a typical ROI for curation.

The gains over time are quite dramatic, even for small amounts:

  • 100 Hive earned monthly powered up and compounded over 10 years would yield you 21 898 Hive
  • over 20 years that would yield 87 357 Hive
  • 200 Hive earned monthly powered up and compounded over 10 years would yield 43 797 Hive
  • Over 20 years that would yield 174, 714 Hive

Screenshot 20200908 at 15.01.02.png

My own stats

According to Hive Stats, I earned 1400 Hive last month (rounded down) in author rewards. Assuming I keep earning this every month and Power Up all my earnings then I'm on for the following long term returns compounded with an 11% curation return :

  • Over 10 years = 306 582 Hive
  • Over 20 years = 1, 223 000 Hive.

So if Hive merely stays at $0.20 then after 10 years my Hive stash will be worth around $60K, and after 20 years it'd be worth $240K.

Screenshot 20200908 at 15.10.51.png

And that's not including the 40K active Hive I already have, if i include that the 10 and 20 year figures are nearer 450K and 1.5 million Hive respectively

Ignore the dollar symbols, think 'Hive'.

Final Thoughts


Whatever the fiat price of Hive, if a lot more Hive is what you want, Powering Up yer earnings and letting it compound seems like a pretty chill option to me, and with a decent long term return rate.

However, this loose analysis doesn't take account of the fiat price of Hive, and you could get a better return trading Hive given its volatility, but if you can't handle all that horrible uncertainty, Powering it Up and compounding offers a fairly decent return!

It's a possibility that yer earnings are watered down if you factor what some people argue is the 'real return rate' on curation, which would be around 4% ATM (the average 11% curation return minus the Hive inflation rate).

Given the Hive inflation rate, you might well expect the value of Hive to go down over time, and the 2 year trend certainly suggests that's a trend. However, never underestimate how greedy and afraid the public are, both powerful drivers which could at the very least sustain the Hive price, and possibly push it up again.

Looking at these figures, it does all feel a bit 'too good to be true', and of course a lot can change in 10 years, so I'm not pinning my retirement hopes on Hive, but if I get to near 60 and I've got a $60K additional pension pot, that'll do!

Posted Using LeoFinance

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RealSociology
RealSociology

Blogging about Sociology and Extreme Early Retirement


Economic Musings
Economic Musings

Thoughts on economics - systemic, investments, and cryptocurrencies

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