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In the chaotic world of cryptocurrencies, numerous coins are vying for your money. Many of these coins offer unique features and functionalities that are not available with other cryptocurrencies. But one type of coin stands out from the rest: **Stablecoins**. These digital tokens are designed to minimize volatility so they can serve as reliable stores of value. So what is HBD, and why is it the best stablecoin out there? Keep reading to find out!

## Why should you use stablecoins instead of USD?

The most important thing to understand about stablecoins is that they are not backed by any asset. In other words, you can’t redeem a stablecoin for physical goods like you can with a stable gold or silver coin. This fundamental misunderstanding is the source of much confusion within the crypto community. And it leads to many people mistakenly assuming that stablecoins are risky investments. This is not the case, and there are many reasons that you would want to hold stablecoins instead of USD. 

First, the price of stablecoins is completely determined by market forces, whereas the price of USD is affected by more complicated factors. When the Federal Reserve increases interest rates, it can cause the dollar to strengthen against other currencies. When the Fed cuts rates, it usually leads to a weaker dollar. In addition, the value of the USD can be affected by geopolitical events that don’t necessarily have anything to do with American Monetary Policy. For example, a war between the U.S. and a trading partner like China can cause the dollar to weaken dramatically, regardless of what the Fed does.


## What is Hive Backed Dollar(HBD)?
![What is HBD and Why is it the Best Stablecoin out there 2.png](https://i.imgur.com/B4bm4oK.jpg)
Hive Backed Dollar is the first digital asset in the HIVE wallet that has been fully collateralized by HIVE tokens. It is a stablecoin that enables users to trade in and out of HIVE tokens with a single click in the HIVE wallet. Hive Backed Dollar is a secure and efficient way to store and transfer value.  Also, it is a transparent, auditable, and secure stablecoin, and it is completely collateralized by HIVE tokens. 

Currently, it has a maximum supply of 1 Billion HBD and will be audited each quarter to show the exact amount of HIVE tokens that are held in a smart contract. This means it has a transparent and open source smart contract that can be viewed and verified on Etherscan. Hive Backed Dollar has been designed to be one of the best stable coins on the market. 


## What is Hive Backed Dollar(HBD) used for?

Hive Backed Dollars (HBD) are used to collateralize and create what is known as a Stablecoin. A stablecoin is a digital token that is designed to minimize volatility. In other words, it is a token whose price remains relatively stable. Stable coins are designed for people who want to hold digital tokens without having to worry about the price of those tokens fluctuating significantly. Again, stable coins often appeal to people who want to use cryptocurrencies for everyday transactions but are concerned about the volatility that often comes with holding tokens like bitcoin and Ethereum.

## What makes HBD the best stablecoin?

Here are six reasons why Hive Backed Dollar is the best stablecoin: 

• Hive Backed Dollar is fully collateralized, unlike other stable coins like Tether, Hive Backed Dollar is fully collateralized by HIVE tokens. 

• HIVE tokens are held in a smart contract with a 1:1 ratio and can be verified by anyone on Etherscan. 

• Hive Backed Dollar is transparent as it is fully auditable and transparent. All transaction details are stored in a public ledger and are fully transparent to the public. 

• HBD gives 20% interest on savings

• With HBD, you have full control over your assets, no loans or staking needed, and it has a 3 days withdrawal window. 

• Hive Backed Dollar can provide liquidity when needed. This is because the collateralized stable tokens can be removed from the system and the HIVE tokens can be sold for other cryptocurrencies.


## How does Hive Backed Dollar(HBD) algorithm mitigate stablecoin risks?

Hive Backed Dollar uses a “collateralized” algorithm to mitigate the risk of hyperinflation. This essentially means that the stablecoin is backed by HIVE tokens that are held in a smart contract. If the market price of HBD exceeds $1, then the smart contract will automatically sell HIVE tokens until the price balances out at $1. And if the price of HBD drops below $1, the smart contract will purchase HIVE tokens until the price goes back up to $1.


## How many percent interests do Hive Backed Dollar(HBD) offer on savings?

Until recently, the HBD interest rate had been 10%, the good news is that it has been increased to a 20% interest rate.  As a result of this, the value of HBD will be driven by demand for using the coin as a means of payment within the HIVE ecosystem. This demand is likely to increase as more people learn about the HIVE ecosystem. You can be sure that the token will also be listed on more exchanges. Right now, this is [the best interest rate on crypto](https://leofinance.io/@hitmeasap/best-way-to-earn-interest-on-crypto) and it will be a great decision if you take advantage of this. 


## Liquidity Problem solved with the wrapped version of HBD(pHBD) on the HIVE blockchain

After the success of the HBD interest rate set at 20%, the ecosystem was now faced with the problem of liquidity. Thus, HIVE came up with a new version of HBD (pHBD) that is wrapped by the collateral token. This version of HBD is said to have a maximum supply of 1 Billion pHBD and has the same functionality as HBD with some added functionalities too. 

HIVE has created a fully decentralized and autonomous system where the collateral token is used to wrap the stable token (pHBD). This means that the collateral token is used as collateral to wrap the stable token (pHBD) and with this, the risk of price volatility is completely absorbed by the collateral token.


## Final thoughts

HBD is a fully collateralized stablecoin that has been designed to become one of the best stable coins on the market. It's also been designed to be a more efficient stablecoin that offers higher returns on savings than the traditional stable coins. With the newly created pHBD token, the risk of price volatility is completely absorbed by HIVE tokens rather than the public being at risk of losing their money. This new version of the stable coin is a fantastic addition to the HIVE ecosystem and is set to be one of the best stable coins on the market!

Further readings:

• [Hive Backed Dollar](https://leofinance.io/@forexbrokr/introduction-to-hive-backed-dollars-hbd)

• [Hive Backed Dollar (HBD) outlasts another stablecoin](https://leofinance.io/@forexbrokr/hive-backed-dollar-hbd-outlasts-another-stablecoin)

• [The Future Of The Hive Backed Dollar (HBD)](https://leofinance.io/@taskmaster4450/the-future-of-the-hive-backed-dollar-hbd)

Image edited with Canva. 


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