Explaining the Hyperbitcoinization Theory
The “Hyperbitcoinization Theory” describes how inferior currencies advance to superior, more valuable ones against a background of various socioeconomic conditions. After the failure of three US banks caused a significant increase in the price of Bitcoin, the phrase recently gained popularity on social media. Over the past week, investors who were concerned about the possibility of losing their money stored in such centralized banking systems appeared to have moved in large groups to the cryptocurrency sector, driving BTC’s price increase of nine months to roughly $28,000. (roughly Rs. 23 lakh).
In 2014, Daniel Krawisz first used the term “hyperbitcoinization.” An ardent proponent of Bitcoin, Krawisz established the Satoshi Nakamoto Institute in 2013, four years after the anonymous creator of the first cryptocurrency in the world, BTC, created it.
In the future, fiat currencies are predicted to look unsustainable due to their printing and maintenance costs as well as the fact that they are not backed by any tangible assets, according to Krawisz. The general public is anticipated to switch to more sustainable digital money, like cryptocurrencies, when and if this occurs.
Bitcoin is expected to be the most difficult form of money in Krawisz’s utopia due to its hypervalue appreciation and widespread adoption, according to a Nasscom blog that cited a WazirX report.
Discussions about the likelihood of Krawisz’s vision becoming a reality in the near future appear to have gained some momentum in light of recent unwinding in the fintech sector.
Three US banks — Silicon Valley Bank (SVB), Silvergate, and Signature — failed in a span of seven days this month as a result of market pressure brought on by rising inflation.
In order to prevent its banked citizens from leaving the country due to a lack of confidence in the system, the US government has allowed the customers of these banks to regain custody of their deposits.
After that, Bitcoin became a haven for investors, especially for those looking to accumulate large sums of money.
BTC’s value rapidly increased, reaching a peak of $28,136 on March 22 and a weekly increase of 28%.
The failure of the banks caused a change in market behavior, which is what sparked discussions about the hyperbitcoinization theory.
Balaji Srinivasan, the former CTO of Coinbase, made a rather outlandish prediction in support of the theory, predicting that the price of Bitcoin will soar to a whopping $1 million (roughly Rs. 8.25 crore) in the next 90 days — until June 2023.
Given its immediacy, industry experts rejected Srinivasan’s prophecy, but some people think the hyperbitcoinization era may be here sooner than we think.
To support the possibility of hyperbitcoinization to its full potential, the current, physical world will need to develop significantly more technologically and ecologically.
If the economy even comes close to adopting Bitcoin or any other cryptocurrency as its most important form of money, more developed power production and distribution systems will need to be installed throughout the world.