Mathematics, a fascinating subject! When we were kids, my father was obsessed with teaching us mathematics. He wanted us to have absolutely pitch perfect mathematics basics. Since I have started thinking about career I was mostly fixated on becoming a doctor. I, as countless others, as you and your next door neighbor, have been repeatedly told like a broken record the Cliche :
"Oh you're going to be a doctor, you don't need to be good at math."
There couldn't be a more fucked up statement in the history of fucked up statements than this!
Anyways, whether (according to society) I needed to be good at math or not, my fathers endless enthusiasm had me eventually become really good at math. And basics never fail you! Basics of math hammers in the concept of logical thinking and common sense into you.
So earlier this week I made a post about where I wanted to be in terms of HIVE power and HBD holding by mid next year. I though I was being conservative, but it seems I was a bit too adventurous when I actually did the math. I am not going to reduce my target by one bit, but I will accept a longer duration.
Speaking of my HBD target, the reason hoarding HBD seems so appealing at the moment is of course the 20% APR...I mean for a stablecoin, that seem like a goldmine! 20%, whew! That's massive!
But is it really?
Now don't get me wrong, I am all for this 20% APR. This was one of the best decisions the witnesses have taken in the past year.
But what if I told you there was a better alternative? No no, come on now! Hold on a second before you start labeling me as traitor to the chain! The alternative involves HBD to the full-est!
Let's do some simple basic mathematics, shall we!
Say you have 2000 HBD in your savings and you are handsomely gathering the payout every month. 20% APR gives you and extra $400 in one year for doing nothing at all (yes, I know. Taking compounding into consideration the final yield will be a bit higher....but we are keeping it simple). That's all more than fantastic and everything and was the exact reason I set myself a HBD target and Have been putting all my HBD into savings...not pausing for one second to look back at it.
But the calculations have slightly changed with the market taking a nose dive into the gutters.
Take my HBD savings for example. I had ~400 HBD in my savings. One year later I would have 400 + (20% of 400) = 480 HBD. Let's say 500 HBD to make it round figure. That insane!
The price of HIVE was around 30 cents this morning, and been around there for a few days now. Now let's just say, THEORETICALLY, I took all my HBD out of my savings and went all in to buy HIVE. Crazy, I know right! But don't worry, it's all just theoretical. I am not pressing the buy button. What sort of crazy person does that, right?!
I'd get more than 1300 HIVE for the HBD I held.
Now, let's say in one year time, the price of HIVE slowly climbs over 60 cents :
Oh wait! Oops! Seems like I did press the buy button LOL!
Now let's do some basic math again.
806-403 = 403.
403/403 * 100 = 100%
That is what people would call a 100% APR!
You might say, well doc...that's not guaranteed. The HBD savings payout is guaranteed.
Fair enough.
You know how many years it would take for your ~400 HBD to turn 800? Roughly 5 years. If you're not backing HIVE's price to beat that timeline by a mile at least, what the hell are you even doing on HIVE!