Hyperbitcoinization is the idea that Bitcoin (‘BTC’) will undergo a hyperbolic state, and become ubiquitous in the wider reaches of society. It refers to a replacement of the existing fiat currency infrastructure to a large degree, as well as an explosion in the value of bitcoin. The idea was first put forward in 2014 in a Satoshi Nakamoto institute article. But how likely are we to ever reach this state?
The total value of all recordable assets, including derivatives, is estimated at $1.8 quadrillion. Divided by the total available number of bitcoins (17 million, up to 20% may have been lost) would put a value of $100 million on each Bitcoin.
Obviously, this figure is too high, for a myriad of different reasons. The derivative market is inflated upon actual assets, and this is largely what makes up the $1.8 quadrillion figure above. It is incredibly optimistic to believe that BTC will completely replace all other fiat currencies and that no other cryptocurrency will take a market share. It is more likely that industry-specific coins will take a slice depending on the specific needs of users.
Still, it does indicate that BTC has serious upside potential. If not to $100 Million, perhaps to $50,000 and beyond if a shift takes place. At around $10,000, the price of BTC could well be undervalued. Buy and hold investors have a strong case for holding onto their asset as the price of BTC did recently reach highs of $13,000.
In terms of technological innovation, a tipping point of mass adoption needs to be reached. This was true for the car, the telephone, the tv, and the internet. First, they are ridiculed and said to be useless. Then, people start to accept them. Finally, a point is reached where everyone has to have them. Today, nearly everyone in developed countries has a smartphone, tv, internet connection, and car. However, BTC needs to get to a place where it’s as acceptable as fiat currency, for this to happen. And it has a lot of competition from other coins right now.
In order for hyperbitcoinization to take place, major market shifts need to occur. While nobody says it out loud, the fiat system needs to deteriorate in order for BTC to fill the void. It is unlikely to take over organically unless the existing infrastructure starts to crack.
The largest levels of BTC adoption could be seen in countries like Turkey and Venezuela, especially after the political and economic scandals that took place there. This is the only way that retail investors are going to start accepting cryptocurrencies, at least in the near future.
Let’s not forget that BTC is a disruptive technology meant to replace the financial system. It thrives on economic shocks. Stablecoins, central bank coins, and national cryptocurrencies are the opposite of BTC which is a decentralized technology. Chaos is Bitcoin’s best friend and it thrives in volatile environments.