The Bitcoin Frontier
The Bitcoin frontier is a place that Bitcoiners have been dreaming about for years. A time when the world has fully adopted Bitcoin, and when everything we thought was possible, becomes reality. But what would this type of world look like? What would be the benefits, and what would be the drawbacks?
If you have been in Bitcoin for any length of time you will have heard all of the theories about hyperbitcoinization. When Bitcoin not only replaces gold as the preferred wealth preservation asset but also overtakes the US dollar as the new world reserve currency. You also likely have heard how Bitcoin will cause the largest transfer of wealth that the world has ever seen. And how people investing in the market today will be able to reap the benefits of this change.
One of the greatest benefits of a Bitcoin world is that people will actually be rewarded for saving. There used to be a time when people didn’t need to be investors. All they needed to do was work hard and keep their cash in the bank. The dollar was strong, and interest earned from money in the bank was enough to grow your money. That is no longer the case. People have been forced to become investors to have any chance at being able to retire. Bitcoin is a return to pre-investment days. Because there will only be 21 million coins with several of them lost forever, Bitcoin is already incredibly scarce. Then add the fact that the inflation rate of Bitcoin is set in stone and cannot be changed, and there is a halving in issuance every four years. All this results in the buying power of your Bitcoin increasing over time, instead of decreasing like dollars.
We have become accustomed to a world where the prices of goods seem to only increase. The new iPhone is more expensive than the model from 5 years ago. Food is more expensive than before Covid. However, there are rare examples of products becoming cheaper as technology improves. For example, flat-screen TVs. In a world where Bitcoin has taken over, all products will decrease in time similar to TVs. The first reason for this is that the value of Bitcoin will continue to increase over time. And the second reason is that people will be less willing to use their Bitcoin because it constantly will be appreciating in value. This means that retailers will be forced to increase the quality of their products, and lower prices in order to convince people to use their Bitcoin. It will be a throwback to older times when products used to last generations.
Another theory that comes with Hyperbitcoinization is that it will help to cut down on wars. With the advent of fiat currency, countries have been able to print endless amounts of money to participate in never-ending wars. That won’t be the case with Bitcoin, as no one can create any extra Bitcoin. Throughout history, one of the main reasons for war was to gain territory, but also to steal assets; such as gold. Gold, cash, art, and nearly everything else of physical value can be seized and stolen. Bitcoin, on the other hand, cannot be stolen as long as proper measures were taken. While wars may never come to a complete end, it's predicted that Bitcoin could help cut down on them.
Be careful what you wish for.
Yes, it is true that Hyperbitcoinization would likely be great for everyone in the long term. However, there is no denying that there would be extreme pain in the short term.
Look all around you, then look at your friends, family, co-workers, and acquaintances. How many of them are substantially invested in Bitcoin? The answer is likely very few of them. When Hyperbitcoinization takes place, it will happen very quickly. People who keep their wealth in cash and stored it in banks could see their life savings evaporate overnight. Similar to how people lose their wealth nearly instantly in countries experiencing hyperinflation. At this point, it won’t matter if you are currently rich or poor in terms of fiat cash, if you don’t have Bitcoin you will lose everything. That is the type of pain that Hyperbitcoinization presents in the short term.
Most of us who have been investing in Bitcoin cannot wait until the price finally goes parabolic and changes our lives financially forever. However, things might not turn out exactly how we hoped. We need to be careful what we wish for.
How about you? Are you ready for the Bitcoin frontier and Hyperbitcoinization?
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