For bitcoin maximalists, hyperbitcoinization is the end game. Only when BTC has completely displaced fiat money can one speak of success, according to the bullish stance of Bitcoiners. What 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. At that time, employed Nakamoto Institute author Daniel Krawisz dealt with the phenomenon of the complete displacement of fiat money by the cryptocurrency №1.
Hyperbitcoinization has since been understood to mean both a state and a process that works towards this state: Bitcoin as the dominant world currency. A distinction is typically made between different stages of this process. While Bitcoin is still in its early stages these days, authors like Krawisz and Kenobit believe that things move very quickly after a certain point. The latest bull run could indicate that Bitcoin is now moving into the next phase. Then, it is said, the opportunity costs of the BTC adaptation are lower than its rejection. One speaks of the so-called tipping point. Of course, nobody really knows when it will come.
Feed for this type of reasoning is a consideration of the prevalence of exponential technologies such as the Internet, telephones, and computers.
At the time, Krawisz defined hyperbitcoinization 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 participation that distinguishes Bitcoin. Nobody is forced to use BTC, but anyone who wants is allowed to.
The argumentation of the maximalists goes something like this: There are no monopolists with a power overhang like in the central bank system with BTC; rather, everyone has the same rights of participation and so the transition from a fiat to a bitcoin system is, so to speak, grassroots democracy.
If Bitcoin wins, so hyperbitcoinization will one day be a reality, it will be because digital gold is the better currency . Kenobit therefore speaks of an “organic and self-organizing process.”
Sure: Anyone who has 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 caution should be exercised with such exorbitant price forecasts at this early stage.
The arguments of the maximalists sound plausible. However, one cannot assume that the displacement of government money through Magic Internet Money will take place without friction losses. After all, the money monopoly is one of the most important sources of government financing for governments — laws and taxes accordingly offer a certain protection against the demonetization of fiat money.
And this is where it gets exciting: For this reason, Satoshi Nakamoto has optimized Bitcoin for precisely this use case. Maximalists attribute such great importance to the decentralization of BTC because state attacks are considered the most relevant attack vector against Bitcoin. Bitcoin’s resilience to coordinated attacks and government bans must be guaranteed. Otherwise, the experiment would fail before it even started properly.
In the history of digital gold, there has been no serious government attack on system integrity. This shows that Bitcoin is still in a comparatively early phase.
Better this way. Ultimately, this gives BTC more time to build a resilient infrastructure. Who knows, maybe the №1 cryptocurrency is actually this “cunning way” of which the economist Hayek spoke, with which we states can wrest the monopoly of money without them noticing.
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