Last Sunday, Bitcoin price hit an all-time high of $ 58,354 per unit, surpassing a market cap of $ 1 trillion. Bitcoin’s value has declined since then, but the decentralized crypto-asset market is still valued at a high valuation of $ 900 billion. On February 26, the director of the Economic and Social Research Council (ESRC) warned that Bitcoin’s growing value and success could lead to a technocratic dystopian society rivaling “the kings and emperors who ruled empires for centuries.” .
Hyperbitcoinization: “A Voluntary Transition From Inferior To Superior Currency”
Almost seven years ago, in 2014, Daniel Krawisz wrote about the term “hyperbitcoinization” and created it to describe how fiat currencies quickly depreciate and Bitcoin is replacing them. Krawisz explained what demonization is and a specific type that is often talked about these days called hyperinflation.
In economics, hyperinflation essentially refers to the rate of inflation in a currency that is accelerating extremely quickly. The value of the currency is rapidly dwindling and the price of goods and services increases significantly, which lowers an individual’s purchasing power.
At the time, Krawisz stated that there are significant differences between hyperinflation and hyperbitcoinization, as his editorial notes:
Hyperbitcoinization is a voluntary transition from an inferior to a superior currency, and its introduction is a series of individual entrepreneurial acts rather than a single monopoly playing the system.
Hyperbitcoinization theories have also led a number of people to believe that fiat currencies will erode into nothing and crypto assets like BTC will advance. Some have even taken the dream to an extreme level by dividing people into classes and referring to people who do not own crypto as “NoCoiner”, the exact opposite of a “Bitcoiner”.
Bitcoin up used to mean citadel.
Bitcoin down means the citadel is bigger.
– jimbo the consensualist 🃏 (@jimbocoin) February 25, 2021
Other bitcoiners have jokingly said that they will be so rich that they will be able to build massive citadels and become the “upper echelons of society”. There are now definitely a large number of Bitcoiners out there who find the “Citadel” and “NoCoiner” visions extremely terrifying, as many people remain humble as the value of BTC increases their economic freedom.
Citadel of Carcassonne, France 📍 pic.twitter.com/WTo7D9rW9t
– Bitcoin Citadels (@BitcoinCitadel_) March 1, 2021
The self-fulfilling prophecy and the perverse consequence
One person, the Director of the Economic and Social Research Council (ESRC), Jon Danielsson, seems to think hyperbitcoinization could be bad news and even reveals the “Kaiser has no clothes” situation.
Danielsson’s recent opinion piece said that “Bitcoin will continue to rise the less fiat is worth,” which he believes will be a “perverse consequence”. He believes that the coexistence between BTC and fiat currencies creates an “unstable equilibrium”.
“If Bitcoin is successful, we will want to use it more and more,” writes Danielsson. “That makes it even more successful, so we ignore Fiat even more. In the end, Fiat will be completely displaced as Bitcoin’s success becomes a self-fulfilling prophecy. “
Interestingly, on January 17, 2009, the inventor of Bitcoin, Satoshi Nakamoto, spoke about the ability of the crypto-asset to become a self-fulfilling prophecy.
“It might make sense to get just a few if it catches on,” wrote Nakamoto more than a decade ago. “If enough people think the same way, it becomes a self-fulfilling prophecy. Once booted, there are so many uses that you can easily pay pennies to a website as easily as throwing coins into a machine, “said the inventor of Bitcoin.
Danielsson’s report, however, criticizes that only a “small minority” will grow their wealth, while “those whose material well-being depends on Fiat will suffer the worst”.
“The current owners of Bitcoin are becoming the richest people in the world, competing with the kings and emperors who ruled empires for centuries,” explains Danielsson. “You will literally have all the money. You can buy anything you want. There aren’t that many of them. It is a tiny group of people compared to the amount they own over all pension funds and mutual funds and the rest of the fortune today. “
Don’t worry, Bitcoin will be ditched long before we get to that point
Danielsson’s report also states that if Bitcoin is to be the currency of choice in our daily lives, it “must also become a unit of account,” the economist said. According to Danielsson, the current volatility of Bitcoin prevents this and he goes on to ask: “Who would like high volatility in the purchasing power of their salaries or their savings?”
In addition, this contradiction could be the reason why the crypto asset cannot be successful, emphasizes the economist. In conclusion, Danielsson tries to close the coffin of Bitcoin, like so many economists before him, with one final nail by saying:
Fortunately, the more successful Bitcoin becomes, the more visible the perverse consequences and internal contradictions become, so Bitcoin and other cryptocurrencies are discarded long before we get to that point. At this point, the price of Bitcoin goes to zero.
The ESRC director also concludes that “Bitcoin is a bubble” and that it makes sense for him that individuals and groups “ride the bubble as long as possible”. Danielsson, however, warns against “getting out on time” and that people should watch out for a “little boy who yells” the emperor has no clothes “.
Unfortunately for Danielsson, despite all the unfavorable opinions of some economists, the popularity and value of Bitcoin has been growing inexorably over the past decade. Danielsson is just one statistic on the long list of economists who have penned obituaries on BTC over the years. Additionally, BTC’s growth and pace continue to crowd out fiat and the money supply, whether Danielsson likes it or not.
“Bitcoin’s money speed is now higher than USD M1,” said onchain analyst and BTC researcher Willy Woo on March 1st. none of it moves. BTC makes a joke of it. BTC moves more than the money we have to spend. Nevermind BTC is meant for long term investments, ”added Woo on Monday.
What do you think of ESRC Director Jon Danielsson’s opinion on shifting global wealth to Bitcoin? Let us know what you think on this matter in the comments section below.
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