So I feel like an idiot for realizing this so late, but I think this post could help others... So here it goes!
New users to Hive will have noticed that they get their payout in Hive and HBD if one hasn't changed this default option. So essentially you are getting 50% Hive Power and 50% HBD as your payout. Now the question is, what to do with that HBD?
You probably noticed that there is the "converting option" right next to your HBD balance. This is what I think many users probably do with their HBD; simply convert it to Hive and then one is able to power up more Hive! Well this is where misconceptions started to happen for me as I always thought that this HBD was being converted over three days for the average price ratio of HBD/Hive. Right? Well yes and no!
First, yes... it is the average price of Hive over those 3 days into which HBD is being converted. BUT! This is being done against the fictitious peg of HBD to 1$. However, HBD (in case you haven't noticed) hasn't been pegged to 1$ lately. In fact, it was over 3$ yesterday. So... if you are using the converting process, you are getting currently a lot less for your HBD as it is traded at a much higher value on the market currently...
I think not enough people are aware of this, hence the post.
So what should you do instead?
A much better option currently is to use the internal market for HBD/Hive which can be found when clicking on Hive
Just be aware that HBD being traded above 1$ isn't going to last forever and has often been under that pegged value. Ultimately, I hope that Hive will have a much more stable HBD in the future which is currently underway!
So again... this is old news, but I didn't "get it" until now after 3 years on Hive/Steem which is embarrassing 😅 I reckon that many newer users didn't know about this before as well. So I hope this will be helpful to some :)
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Very good advice. I've seen people talk about doing that and it's worse than them not getting as much value in the way of rewards as they should. What converting HBD into HIVE does is destroy the HBD because HBD is a debt instrument and converting it redeems the debt. The debt matures at that point, if you will, and the bond becomes null and void. What the removal of HBD from circulation does is make it more scarce and help make its price higher, thus helping the pumpers who quite possibly fraudulently pump it in order to dump it on silly speculators.
There are several active proposals out there whose purpose is to use the HBD minted by the DAO to flood the markets with it in order to bring the price back to the peg. When people convert HBD to HIVE they actually work against that.
So, thank you for your helpful post.
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sure thing, glad it was helpful! :)
You are not alone. I didn't get it either. I'm not sure I'll bother converting mine though as I only have a couple last time I looked. Presumably there will be fees to pay. 😂
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no fees! :) but you are right, it's not always worth the trouble
Thanks for the additional information. 😊
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Never convert your HBD into HIVE unless HBD is trading under $1 but not too much because the conversion functionality does not guarantee anything if the value of HBD in circulation exceeds 20% of the value of HIVE.
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shtup referred to the conversion, not the trade on the market
Outside of hive, these words are interchangable. It's no wonder there is confusion.
Yes and be aware that right now there is a proposal being funded that is BURNING HBD to reduce supply, get the price closer to $1 and to inject value into HIVE as a result.
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No, burning HBD will raise its price. You should defund proposal 21 . There are three proposals that have been funded and they don't burn HBD but sell them. These are poposals 158, 166, and 169 Selling lowers a price. Lowering supply raises the price.
Hi @tobetada. I find this quite an interesting read. I was not aware that there was another way to convert HBD to Hive aside from the option Market which is one of the options that appears when you click on the arrow beside the HBD totals in the Wallet. That's what I have been using to convert.
market is the best option currently!