Hyperbitcoinization

Hyperbitcoinization is a term coined in 2014 by Bitcoin thinker Daniel Krawisz. It describes a hypothetical scenario in which Bitcoin adoption accelerates so rapidly that it effectively replaces national currencies as the dominant global monetary standard.

The mechanism, as Krawisz described it, is a voluntary process — not imposed by any government, but driven by individuals and institutions recognising that Bitcoin is simply superior money. As adoption grows, network effects compound. As more people hold Bitcoin, more merchants accept it. As more merchants accept it, more people hold it. At some point, the tipping point is crossed and fiat currencies lose their dominance not through force but through obsolescence.

This is the most extreme version of the Bitcoin thesis. Most serious Bitcoin holders don’t believe hyperbitcoinization is imminent, or even certain. But many believe it’s possible — and that possibility, even at low probability, drives a significant amount of the conviction in the space.

The more measured version of the thesis: Bitcoin doesn’t need to replace all currencies to be extraordinarily valuable. If it captures a fraction of the value currently stored in gold, real estate, and depreciating currencies — if it becomes a standard option in global wealth preservation — the implied value is orders of magnitude above current prices.

Hyperbitcoinization is the ceiling of Bitcoin’s potential. Most serious holders are operating on a thesis well below that ceiling — but with enough belief in the direction of travel that the ceiling matters.

Tomorrow: the separation of money and state — a radical idea with deep roots.

— The Daily Bit