Bitcoin as world currency – Is „Hyperbitcoinization“ coming now?
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For Bitcoin maximumists, Hyperbitcoinization is the endgame. Only when BTC has completely displaced fiat money, one can speak of success, so the bullish attitude of the Bitcoiners. What you need to know about Hyperbitcoinization
„Bitcoin wins when all other currencies fail,“ writes Bitcoin influencer ObiWan Kenobit in his much-cited medium article „Hyperbitcoinization: Winner Takes All“. However, the term has existed since March 29, 2014, when Nakamoto Institute author Daniel Krawisz dealt with the phenomenon of the complete suppression of fiat money by the crypto-currency No. 1.
What does Hyperbitcoinization mean?
Since then, hyperbitcoinization has been understood as both a state and a process that works towards this state: Bitcoin as the dominant world currency. Typically, a distinction is made between different stages of this process. While Bitcoin Superstar is still in an early phase these days, authors such as Krawisz and Kenobit believe that at a certain point, things move very quickly. The recent Bull Run could indicate that Bitcoin is now moving into the next phase. Then, they say, the opportunity costs of BTC adaptation will be lower than its rejection. This is known as the tipping point. Of course, nobody really knows when this will happen.
This kind of argumentation is based on the consideration of the spread of exponential technologies like the Internet, telephone and computer.
Krawisz defined hyperbitcoinization at the time as „a voluntary transition from an inferior to a superior currency“ – and thus remained true to the spirit of digital gold. After all, it is precisely this voluntary nature of participation that distinguishes Bitcoin. No one is forced to use BTC, but anyone who wants to can do so.
The maximalists‘ argumentation goes something like this: There are no monopolists with a power overhang such as in the central banking system; rather, everyone has the same rights of participation, and so the transition from a fiat to a Bitcoin system is, so to speak, grassroots democratic.
So if Bitcoin wins, and hyperbitcoinization becomes a reality one day, it is simply because digital gold is the better currency. Kenobit therefore also speaks of an „organic and self-organizing process.
Hyperbitcoinization – A castle in the air?
Sure: Those who have invested in Bitcoin would like to see the astronomical rate of 100 million US dollars per BTC (the Kenobit estimate) for the „Orange Coin“. But at this early stage one should be cautious with such exorbitant price forecasts.
The arguments of the maximalists sound plausible. However, one cannot assume that the suppression of state money by Magic Internet Money will occur without frictional losses. After all, the money monopoly is one of the most important sources of state financing for governments – laws and taxes accordingly offer some protection against the demonetarization of fiat money.
And this is where it gets exciting: Satoshi Nakamoto has optimized Bitcoin for exactly this use case for this reason. Maximalists ascribe such great importance to the decentralization of BTC because state attacks are considered the most relevant attack vector against Bitcoin. Bitcoin’s resilience against coordinated attacks and prohibitionist efforts on the part of the state must remain absolutely guaranteed. Otherwise the experiment would fail before it has even begun properly.
In the history of digital gold, there has never been a serious government attack on system integrity. This shows that Bitcoin is still in a comparatively early phase.
Better that way. After all, it gives BTC more time to build a resilient infrastructure. Who knows, perhaps the No. 1 crypto currency is in fact that „cunning way“ the economist Hayek spoke of, by which we can wrest the money monopoly from states without them noticing.