The conversion mechanism on the Hive blockchain refers to the ability to change the supply of both the Hive Backed Dollar (HBD) and $HIVE. This is done by converting one currency into another.
There is a base layer relationship between the two coins. On Hive, one is able to expand one by converting into the other. This obviously decreases the supply of the one converted from.
With HBD, it has a backing where it is worth $1 worth of $HIVE. Based upon the internal market price, in USD, the HBD is converted into $HIVE. There is also the reverse process.
This is not a feature to replace trading on the internal exchange. For those looking to hedge or speculate, that is the place to do it. The conversion mechanism carries a degree of risk since half of the conversion amount has a 3 day wait.
