Ines AissaniYou may have heard this word “Hyperbitcoinization” if you read content about Bitcoin. If you don’t know yet what it actually means, this article is for you.
The main idea of the hyperbitoinization of the world is a process in which more and more people and institutions will eventually demonetize fiat currency and replace it with bitcoin. The expression was coined by Daniel Krawisz, a crypto engineer and research director of the “ Satoshi Nakamoto Institute"
He describes the phenomenon of Hyperbitcoinization as the inevitable result of bad economic policies and authoritarian government intervention that will push (or even force) individuals to withdraw from this system in favor of Bitcoin. Basically, the moreinflation will be stronger, the more economies will fail, the more The regimes will be authoritarian, the more citizens will want to look for an alternative. They will then discover bitcoin and become supporters of an economic system based on bitcoin.
However, this is just a summary of hyperbitcoinization. This evokes a fundamental change for our societies and the very functioning of our financial institutions on a global scale.
Is hyperbitcoinization a utopia?
When we talk about the hyperbitcoinization of the world, know that we are talking about a theory that we do not know if it will actually happen. It is nevertheless based on ever more convincing facts on the use of bitcoin around the world. The use of bitcoin is clearly growing and affecting an ever-increasing population. After 14 years of existenceBitcoin always becoming more popular with individuals than with States. El Salvador, for example, legalized bitcoin and buys bitcoin regularly for its national treasury. President Nayib Byukele also proposed financing the country's bonds in bitcoin (" Volcano Bond »). Other countries are following in El Salvador's footsteps, such as the Central African Republic.
Thus, hyperbitcoinization can be considered as a utopia desired by bitcoiners and other bitcoin aristocrats. For bitcoin idealists, the future of global finance must be decentralized and must be based on a more democratic system. It is in reality a real proposal for a new and disruptive as hyperbitoinization.
We can trace the origins of this idea to the thought of cypherpunk who advocated freedom and confidentiality of transactions in a system that would not be controlled by any central authority.
Can we stop hyperbitcoinization?
Governments may want to stop the hyperbitcoinization of the world through a series of repressive actions. However, the probability that these actions will have a real effect is almost zero... For example, we would have to cut off the functioning of the internet or even energy suppliers and, even more difficult, be part of joining the ecosystem to try to irradiate it. inside. Here again, by resistance to censorship which characterizes Bitcoin, governments would have to own more than half of the network capacity (see the 51% attacks)… It is not impossible to achieve this but it remains theoretically very difficult…
In fact, in the concept of hyperbitcoinization, there is this "inexorable" aspect of the rise of the use of bitcoin. Behind this idea is that bitcoin is unstoppable…
Moreover, we can see this concretely with countries where governments have banned the use of bitocin, such as in Nigeria or Turkey. Despite the various bans, the use of bitcoin continues to grow….
Chainalysis indicates that the adoption rate of bitcoin around the world continues to increase, with some regions experiencing faster rates than others.
Why is the hyperbitcoinization of the world sought after by bitcoiners?
This is certainly the most important question here and the one that will help you better understand the issues of hyperbitcoinization.
Economic crises occur regularly and it is often during these difficult times that individuals realize the flaws in the system and seek to escape them. It is a kind of survival instinct that takes place in our "rational" decisions and pushes us to find a solution. For many and for countries that are suffering from deadly inflation (like theArgentina for example) the solution for them is the use of bitcoin.
Some people are convinced that hyper-bitcoinization would benefit all of humanity. It would then be a question of using a single currency (the bitcoin) and thereby eliminating the injustices that a system based on the hegemony of the dollar over other national currencies implies today.
The failures of global economic policies and the rise in inflation on a global scale
Many economies are showing their limits. Some economies are more affected than others. We can cite Lebanon, Venezuela, Sri Lanka or even Zimbabwe (to name just a few) with a weak national currency, subject to serious problems of hyperinflation.
Inflation has dramatic repercussions in the private lives of the individuals who are confronted with it. They are then deprived of the fruits of their labor in the sense that the money received loses more and more value...Each daily purchase becomes ever more difficult, even insurmountable for some families. For example, in 2019, Venezuela experienced a inflation rate estimated at 156%. Some families were forced to buy spoiled food. Children have been placed for adoption because they were unable to care for them…
In 2022, we saw some Lebanese bank customers carry out real robberies to try to recover their savings. The banking system having decided to limit withdrawals while the Lebanese pound lost more than 95% of its value during the year 2019. Some Lebanese - out of spite - then turn to bitcoin or USDT (a stablecoin indexed to the dollar) to protect itself from the escapades of inflation.
Monetary mismanagement can affect all economies. Likewise, it involves other related problems with more authoritarian management of monetary policy, economic sanctions, impaired governance and structural factors that often make individuals worse off.
What would happen if hyperbitcoinzation became a reality?
If hyperbitcoinization becomes real, then the ultimate monetary benchmark would be bitcoin. We would no longer refer to the value given in dollars for example. We would assume that 1 bitcoin = 1 bitcoin. It must be understood here that this would become the unit of measurement of the value of things. Bitcoin would become part of the global economy as a currency and as a reserve currency. Thus, the world economy will be based on a deflationary monetary model, as opposed to the inflationary model that we currently know.
Individuals would use bitcoin as their primary means of payment for transactions locally and internationally. The use of bitcoin could also be done with a national currency in parallel. Hyperbitoinization does not necessarily mean the removal of all other currencies. Above all, it means the use of bitcoin in a legal manner and permitted by all players in the global financial system.
Regaining individual financial freedom, the ultimate goal of hyperbitcoinization
If we dig into the theoretical foundations of hyperbitcoinization, we touch on the concepts of financial inclusion and monetary emancipation for all individuals on the planet. Citizens around the world, especially those in countries with weak economies, could benefit from the use of bitcoin. On an individual scale, bitcoin allows international transactions without state control (or currency conversion obstacles in particular). However, it would not only be to protect themselves from inflation that individuals would benefit from the use of bitcoin. Businesses could also benefit by being able to participate in international trade from which they are excluded in the current system.
Bitcoin has considerable advantages for participating in the economic development of countries, particularly the poorest countries. The freedom to control one's money today seems to be only enabled by bitcoin. Individuals are becoming more and more aware of this and this is why many believe that hyperbitcoinization is already a reality…
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Lebanon and Venezuela, two extreme examples. One victim of a totally irrelevant gerontocracy and the other of a totalitarian ideology. Let's hope we don't reach this stage of decay.
yes, both examples are extreme and the worst is that there are unfortunately many others, Sri Lanka, Yemen, Niger, etc., etc.