Understanding the Economics of Hedera Hashgraph and Hbar Cryptocurrency

Understanding the Economics of Hedera Hashgraph and Hbar Cryptocurrency

Hedera Hashgraph can expect a lot of attention this fall. The smart contract platform not only offers higher functionality but also the backing of big blue-chip companies.

The governance model and coin distribution are meticulously designed to implement decentralization and even avoid speculation to some degree.

The Governing Council of Hedera Hashgraph has 50% of the token in reserve. These tokens will be released in the market over time to induce decentralization.

According to Hedera, releasing does not imply selling. We can expect a Stellar like distribution with educational programs, developer rewards, and airdrops.

Members of the Governance Council for Hedera

The Utility of Hedera Hashgraph

While Ethereum is expecting a makeover next year, it just might too late for them. Here’s why!

Hedera Hashgraph plans to provide similar utility to that of Ethereum. Moreover, it is 833 times faster than Ethereum. It provides a platform for the development and execution of smart contracts.

The blockchain will run on Proof of Stake (PoS) protocol. Hbar tokens will act as fuel for the network. Edgar Seah, Head of Asia Pacific for Hedera Hashgraph told the media,

“Hbars play a crucial role in the function, growth, and security of the Hedera network, and it is important that they are available to those who wish to use or create applications on the network,”

Furthermore, Hedera smart contracts are programmable in solidity as well. All a developer needs to do is shift his code from Ethreum to Hedera. Although, in reality, it might be a little more complicated, it poses a severe threat of dapps jumping off of Ethereum.

Token Pricing

Hedera has a fixed supply of 50 billion coins. However, according to the distribution plan, no more than 7% of the tokens will be released in the first year. According to a recent update, the council plans to reduce the amount further.

Hedera plans to release its tokens gradually over 15 years. This is being done to induce an autonomous decentralized network over time.

hedera

HBar distribution PlanHedera began with a total SAFT investment of $124 million. However, only 8.725 billion tokens have been allocated to SAFT investors (17.45%). 

During the first SAFT offering, the tokens were sold for less than a cent. In the next two rounds, the price increased to $0.12.

A simple division would yield a price of 14 cents per Hbar. However, it is more complicated than that.

hedera token
HBAR tokens allocation

At the time of release, only a small percentage of the tokens will be released in the market. According to a recent update, about $0.6 billion tokens will be put on sale in the first 7 days. Nevertheless, it is nearly six times the supply of Ethereum.

Moreover, the governing council will release $1.2 billion tokens shortly as well. Hence, the supply of Hbar will be highly inflated in the beginning years.

Releasing the cryptocurrency is not the same as selling.

Ripple has been allegedly selling XRP tokens from its reserve. However, Hedera is planning to induce inflation and decentralization by distributing them over time.

Speculation and Market Expectations

The governance team comprises of Big Tech, and the protocol is very advanced, there is bound to be speculation around it. Maybe, the most significant speculation the market has seen in 2019.

Okex and Bittrex have confirmed that it will begin trading of the cryptocurrency on 17th September 2019. Moreover, one can expect other exchanges to add support as well.

Moreover, Hedera says it does not control or engage in token listing on crypto exchanges. The members will distribute the cryptocurrencies on the exchange. Initially, Hedera (Hbar) also plans to give away 1.2 billion tokens from the reserve as an airdrop.

Reportedly, the token was exchanging at a rate of $0.2-$0.3 on the OTC markets. A new data also suggests that the price could reach $0.6 at launch.

Nothing But Dump Until Now

After launch, the price has dumped hard from the estimations. The price of #Hbar on 27th September is $0.036.

HBAR/USD Price on Bittrex (TradingView)

One must refrain from giving in to these speculations and invest carefully. The inflation and governance model will look to balance the supply over demand.

Nivesh

Hello, I am an Electrical Engineer currently pursuing Actuarial studies. I work as an analyst reporter for CoinGape. Here to share my knowledge and observation of the crypto space. Feel free to contact!

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