Why Hyperbitcoinization Could Be Bad
Amongst the biggest believers of Bitcoin, there has long been a theory about what the future world will look like. A future where Bitcoin has fulfilled all of its potential and has taken the world by storm. Where Bitcoin has not only skyrocketed up to unfathomable prices, but has become currency of choice for nearly everyone. This has been called Hyperbitcoinization. For many of us this is a result that we have not only been waiting for, but dreaming of as well. There has been constant debates on if this will actually happen or may never come to fruition. But for the sake of this article, what if hyperbitcoinization actually would happen? What would be the possible negative outcomes that would result from it? And would it leave us wondering if it was all worth it?
Now before we dig into this topic, there are some things you need to know. If you have been following me for any length of time, you will most likely already know that I am one of the biggest believers in bitcoin you will find out there. I'm fully of the opinion that given enough time, bitcoin will eventually reach those crazy astronomical prices. That there's a good chance it will become world reserve currency, and will evolve in ways that we cannot imagine yet. I believe that hyperbitcoinization will eventually happen, and probably sooner than most people think. But, most articles usually focus only on the good things that could come from this world movement towards bitcoin. Most of all, people are usually focusing on the wealth aspect of it, and just how rich they could become. I'm as guilty as everyone else in this regard, but I have always felt it is important to keep an open mind. To think about the situation from the opposite perspective. If hyperbitcoinization would take place, what could be the possible negative results that would come from it. It's always good to be prepared, and could be a reality we are facing relatively soon. So without further delay, let's dig into this more.
A World of Have's and Have Nots
If bitcoin would reach prices of several millions of dollars per coin, that would make many of us rich. Just saying it aloud has me thinking of possibly retiring and living the easy life. But there's a very good chance that it could initially hurt just as many people as it helps. Think about all of the people that you know. Your friends, family, co-workers, acquaintances and the list goes on. There is a very good chance that most of these people know very little about what bitcoin is, and the benefits that it could bring. There is an even better chance that many of these people don't own any bitcoin.
With hyperbitcoinization, there is an idea that the eventually a lightbulb will go off in the minds of the most successful around the world. They will have all realized that bitcoin is the asset that you NEED to own, and will do everything they can to accumulate as much as possible. Of course while they are heavily accumulating, they would most likely being be FUDing BTC to others, trying to bring the price down, and keep it off of everyone's radar. Until they are accumulated their fill, and are ready for its price to go up, ready to announce it to the world. This is something that is most likely already happening today. When all of the largest companies are putting bitcoin on their balance sheet, handfuls of countries continue to make bitcoin legal tender in their country, all the hedge fund managers are strongly urging their customers to invest, and when the banks have had their fill. That is when it will be announced to "regular" people that they need to buy bitcoin, and they need to do it now. As the price of bitcoin is skyrocketing to astronomical amounts, at the same time the value of currencies like the Dollar, Yen, Euro and more will be plummeting faster than people imagined possible. There will come a time when people refuse to take their currencies. In the past you may have gone to a store that was "cash only," not accepting credit cards of any kind. In the future many shops will be "bitcoin only." Unlike everything that most people have become accustomed to today. There will only 21 million bitcoin that will ever be created, and it's likely that several million of those have been lost already. If iPhone's go out of stock, Apple will make more to sell to customers. But if people refuse to sell bitcoin, no other people will be able to buy bitcoin.
This will cause a rush and stampede towards bitcoin unlike anything we have seen before. This will only cause bitcoin's value to rise even faster, and other currencies value to drop even faster. One full bitcoin is made up of 100 million satoshi's. Right now 20,000 satoshi's would only cost you about $5 to buy. There is an idea amongst the biggest believers of hyperbitcoinization that in the future people will be bragging to others how they were somehow able to accumulate 20,000 satoshi's. That they could buy a car with it, or something even more valuable. Of course, those of us who have been investing in bitcoin for several years now, grinding, and accumulating as much as possible. It is likely that these people have been able to accumulate several million satoshi's. Perhaps they have been able to accumulate multiple full bitcoin's. These people will remain in the corner quietly congratulating that earlier person who was happy with their 20,000 satoshi's. But if this reality turns out true, the fact is that accumulating those 20,000 satoshi's would be an incredible feat, and definitely something to be proud of. The harsh reality is that the people who know nothing about bitcoin, and haven't accumulated any will get left out in the wind.
If you have lived in a country where the currency has seen hyperinflation you will be able to understand this concept better than most. There is a reality where the value of your currency evaporates overnight, and will change your lifestyle immensely. Let's say that a bottle of Coca Cola costs $2 in the USA today. With hyperinflation that same cola could cost $50 the next week. A then $100 a month later, and then double, triple and even more. Look to the currency of Zimbabwe, where you can find 100 trillion dollar bills being worthless. And cola isn't even an essential item.
People who are ignorant to the change taking place in the world would watch their cash savings become worthless, losing everything they have. No longer being able to afford the essentials, including food, shelter and so on. At the same time, those people who got into bitcoin relatively early, or even now, would see their net worth grow to amounts they've never imagined possible. While in the long run, moving to a bitcoin standard would be a net good for everyone. It would actually reward people for saving their money, in contrast to saving fiat. All you would essentially need to do to have a good life would be to just go to work, and save your leftover money in bitcoin. People would no longer need to worry about investing their way into being able to retire.
But in the short-term, while that transition from a world revolving around fiat changing to a world revolving around bitcoin. In that short-term, there would be extreme pain. It would be a world have's, and have nots. And it could potentially be a scary place. When people don't understand why they lost all of their money, and can't afford to pay for the essentials or grow wealth. They will become angry, and possibly violent. This is why the idea of their being bitcoin citadels has been a topic that has been deeply discussed. Bitcoiners would possibly need a "citadel" where they could live that would separate them from those that don't have bitcoin. Something that would keep them safe. It is an idea that sounds primitive and begs you to ask the question if having hyperbitcoinization and a lot of us getting rich, is worth it at the great pain of so many others?
And so what can we do?
The best thing is that we can continue to educate as many people about bitcoin as we possibly can. Explain why they need to begin investing in it and why it is so important. Hopefully resulting in them buying bitcoin. Educating others and having them bitcoin their journey in bitcoin today, could be something that saves or protects their futures. While this is a dramatic "what if" scenario that could take place if hyperbitcoinization would take place faster than would be recommended. There is a lot of truth packed in there as well, and that is why it is important to continue accumulating while we still can. I continue to be as bullish and excited as humanly possible about the future of bitcoin. But it is important to remember that there are always two sides to every coin.
How about you? Do you think hyperbitcoinization will happen? What are some other possible negative results that could happen because of it?
As always, thank you for reading!
So true, it's important that we must educate people about handling Bitcoin since ample knowledge is needed to wisely to utilize this kind of currency.