Hyperbitcoinization: For Bitcoin idealists, the coming utopia for global finance starts with Bitcoin dismantling the fiat hegemony. This civilizational proposition has appealed to cypherpunks since the early days of Bitcoin. Now crypto has gone mainstream as everyday people are increasingly pushed by failing economies and overbearing government policies.
Satoshi Nakamoto Institute co-founder Daniel Krawisz describes Bitcoin’s coming rise to power as “hyperbitcoinization.” This will emerge in part due to bad policies, failing economies, and overbearing government intervention. It will force people to opt out of fiat hegemony.
“Bitcoin-induced currency demonetization, or hyperbitcoinization,” is what would occur should “any hapless currency” stand “in Bitcoin’s path of total world domination,” Krawisz says. “If this happens, the currency will rapidly lose value as Bitcoin supplants it.”
From recent government suppression of political protests, it’s apparent that whenever people are pushed, they migrate to the next technology to assert their agency. As the world steps into an uncertain season with the recession, hyperbitcoinization may finally become a reality.
Hyperbitcoinization: the failures of fiat money
Lebanon, Turkey, Venezuela, Cuba, Zimbabwe, and several other countries have faced issues of hyperinflation. Fiat currencies are in a race to the bottom, prompting governments to implement dubious policies to stop the rot.
But the invocation of special powers by presidents, price controls, and surrogate currencies also compete with economic sanctions, bad governance, and other structural factors that render government fiscal control efforts futile. It also denies citizens control of their money.
The humanitarian failures of fiat money were evident in Venezuela sometime in 2019. Families were forced to buy rotten food and give up their children for adoption in the face of a shortage of basic commodities. At the last official count, Venezuela’s inflation ran at 151% in May.
Such tragic cases impress urgency for an alternative currency that is not vulnerable to the whims of central banks. In Lebanon, failed government policies have robbed people of their savings and pensions. Its national currency has also dramatically lost value.
Turning to Bitcoin
According to a recent CNBC report, people in Lebanon have increasingly turned to Bitcoin to preserve the value of their money in the wake of a severe financial crisis caused by decades of “expensive wars and bad spending decisions.”
Citizens are using Bitcoin as a means of payment for both local and foreign transactions, said the report. The USDT stablecoin is also popular in the country. While crypto is not permitted as a means of payment by the Lebanese government, the people just don’t seem to care.
Businesses are promoting crypto as an acceptable payment method on Instagram and other social media platforms, CNBC reported. It added that the banking system is broken, and the local Lebanese pound has lost 95% of its value since 2019. Banks are limiting withdrawals.
Rising global food and energy costs driven by the Ukraine war and fallout from the COVID-19 pandemic have worsened food shortages and driven inflation even higher this year. Official data says year-on-year inflation was at 162% in September, one of the highest in the world.
“The use of USDT is widespread,” one user, only identified as Gebrael, said. He added:
“There’s a lot of coffee shops, restaurants, and electronics stores that accept USDT…so that’s convenient if I need to spend not in fiat, but from my bitcoin savings. The government has much bigger problems right now than to worry about some stores accepting cryptocurrency.”
Government repression
Economically failing and isolated governments have historically resorted to obsessive control of institutions and repression of citizens as they voice protests. In Zimbabwe, where inflation is running at a world high of 269% in October, authorities have come down hard on dissent.
Zimbabwe is often cited as a good case for Bitcoin adoption because of its long-standing currency problems. In Jan. 2019, the government banned popular social networks to contain protests and blacked out coverage of a brutal government clampdown.
The clampdown reportedly resulted in the death of 12 people and left more than 60 gunshot victims in hospital. Beatings were widespread. However, repression has caused new technological possibilities to open up in the past.
Zimbabweans responded to the total internet shutdown by migrating to Telegram. Telegram is designed as a communication app to resist surveillance and suppression. Citizens also unlocked banned social networks, Whatsapp, Facebook, and Youtube, through virtual private networks (VPNs).
As citizens take back their democratic liberties through alternative communication channels, there is reason to believe they will follow suit in reclaiming their financial freedoms through censorship-resistant currencies such as Bitcoin.
Indeed, Bitcoin has continued to flourish on social media since the Reserve Bank of Zimbabwe, the country’s central bank, banned cryptocurrency trading and shut down two exchanges in May 2018.
But trading did not die with the ban. Instead, it reinvented itself on Whatsapp through peer-to-peer trades. Over time, crypto enthusiasts have built strong Whatsapp groups where they share information and news on developments taking place in the sector.
Now, they are using similar groups to buy and sell cryptocurrency, utilizing connections they already know or new ones. The trust built in this community is key to building confidence and preventing theft.
To combat inflation, the Zimbabwe government has revealed a scheme that allows ordinary people to buy gold coins using the local currency. The plan also aims to help people in a country that has seen the worst inflation in history, at 4 billion percent, preserve value.
Reclaiming individual financial freedom
Some countries are clearing the turf for crypto through soft touch regulation. Others are unwittingly doing the same by failing to contain inflation. This has led to a breaking point where citizens take back their freedom via alternative currencies, primarily Bitcoin.
In Turkey, a government crackdown on crypto exchanges has failed to stop citizens from turning to BTC. Inflation in the country hit a 24-year high of 86% in October. Turkey also banned crypto payments in 2021.
According to LocalBitcoins data, BTC peer-to-peer trades in Turkey rose 51% and 40% during Q1 and Q2 of 2022. This all happened as the value of the Turkish lira nosedived. People use Bitcoin as an inflation hedge.
Chainalysis says Turkish citizens received $192 billion in crypto between 2021 to June 2022. The country has some of the fastest Bitcoin adoption rates in the world.
Bitcoin continues to make inroads across the globe. This has happened through progressive government policies and rising user adoption. The failure of fiat currencies in developing economies will continue to compel citizens to take back ownership of their money.
At the tipping point of hyperbitcoinization, Daniel Krawisz’s radical vision of financial freedom and inclusivity will see citizens from poorer countries transact in a way that is borderless and permissionless.
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Source: https://beincrypto.com/hyperbitcoinization-failing-economies-overbearing-governments-push-people-adopt-bitcoin/