As humans, we’ve always been driven to improve our tools and technologies, so why should the technology of money be any different? Hyperbitcoinization, while maybe sounding like a fairy tale, has been a reality on the horizon since 2014. So today we’re going to look at when it might happen, what it is and what it could do to the worlds economy.
What Is Hyperbitcoinization?
Hyperbitcoinization is when Bitcoin takes over as the default currency for a region, country or even the world. This then relegates the old, hapless currency that used to be used to the past. It’s generally accepted that the term hyperbitcoinization is when this process happens at a global scale.
That is, Bitcoin becomes the dominant global reserve currency for the entire world. All traditional financial systems would thus use it and any current fiat currencies would be demonetized and rapidly lose their value.
In short, the whole world stops using fiat currencies and swaps to living on a Bitcoin Standard. Using it as their Medium of Exchange, Store of Value and Unit of Account.
Hyperbitcoinization as a concept was coined in 2014 by Daniel Krawisz and has since gone on to be the effective “end game” scenario for Bitcoin Maximalists.
Hyperbitcoinization Vs Hyperinflation
Hyperinflation is something that has occurred countless times throughout history. It happens when a government inflates the currency at an ever increasing pace, eventually resulting in it becoming worthless. Hyperbitcoinization on the other hand, is simply what happens when people en mass switch over from some other currency to Bitcoin.
Usually when a fiat currency is hyperinflating, there are strict capital controls put in place by the government to stop its people from escaping the inflationary pressures. During hyperbitcoinization this doesn’t happen as much as stopping Bitcoin is essentially impossible. This could potentially cause hyperbitcoinization to happen faster than hyperinflationary events.
Finally, the other major difference between hyperbitcoinization and hyperinflation is that during hyperbitcoinization there doesn’t need to be an increase in the money supply of the existing currency. It could be operating as per normal, but everyone still switches to the bitcoin network anyway, resulting in it becoming demonetized.
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