Despite price fluctuations in the market, the number of Bitcoin owners has gradually increased over the past few years. While this is a subtle sign of mainstream adoption, some experts predict that Bitcoin will eventually become the default value system of the world. This phenomenon is popularly known as ‘hyperbitcoinisation’.
But it has been 14 years since Satoshi Nakamato’s brainchild, Bitcoin, was introduced to the world. So, where are we in terms of hyperbitcoinisation, especially now that the market is trading far below its 2021 highs? Let’s see what experts have to say.
How far are we from hyperbitcoinisation?
Hyperbitcoinisation was coined in 2014 to describe a point where people switch to Bitcoin as a default store of value, as opposed to fiat currencies. Some even describe it as a process where Bitcoin will be embraced as the world’s primary monetary reserve.
In layman's words, hyperbitcoinisation is a phenomenon in which every individual and business will use crypto for transactions, instead of fiat currencies.
Considering the dominance of fiat currencies at the moment, particularly the US dollar, hyperbitcoinisation may seem like a far-fetched dream. However, some experts believe that we might get to witness hyperbitcoinisation sooner than we realise as adoption is already underway.
For instance, there were 814,000 wholecoiners (those who owned one Bitcoin) in early 2022, and by the end of the year, there were 978,000, representing a 20 percent rise.
The figure has continued to rise since, despite a shaky crypto market. By the end of Q1 2023, analytical firm Glassnode stated that there were over 1 million wholecoiners around the world.
CEO and co-founder of Bitcoin firm Blockstream, Adam Back, stated that the existing trend suggests that "hyperbitcoinisation" is soon to come. He argued that the growth in Bitcoin’s price would make purchasing it not only a luxury but something unattainable altogether.
He reasoned that this would happen because 10 million people racing to buy 1 Bitcoin over a few years would be the force that pushes the Bitcoin price out of reach for most buyers.
Separately, a survey of crypto experts indicated that 54 percent of respondents believe Bitcoin will replace fiat currency by 2050, if not sooner.
Amber CEO Aleks, in reference to El Salvador adopting Bitcoin as a legal tender, stated that the development could set a trend that may lead to some sort of hyperbitcoinisation. In April 2022, the Central African Republic also followed suit, becoming the second nation to adopt Bitcoin as a legal tender.
Against the backdrop of weak crypto prices during November 2022, Samson Mow, CEO of Bitcoin technology startup Jan3, said that hyperbitcoinisation is only a few years away.
Speaking to CoinDesk, Mow stated that for hyperbitcoinisation to be included in every country in the world, it might take 20 to 30 years for the same to become a reality. However, if we count a significant number of countries including Europe, North America, and a selection of countries in Latin America and Africa, then hyperbitcoinisation could be expected around 2030, he concluded.
Most recently, Silicon Valley Bank, Signature Bank, and Silicon Bank crumbled amidst weak macroeconomic conditions. During this time, it was believed that many took refuge in Bitcoin to safeguard their investments. Within days, the Bitcoin price soared as high as $28,500 on March 22, which marked a 28 percent weekly surge.
The failure of banks further solidified the theory of hyperbitcoinisation. In that regard, the former CTO of Coinbase, Balaji Srinivasan, predicted that Bitcoin’s price will soar to $1 million in the next 90 days, i.e., till June 2023.
With Bitcoin trading between $27,000 and $29,000 as of May 23, Balaji’s statements come off as wishful thinking. Furthermore, if this were the case, Bitcoin prices would have already begun to skyrocket back to their 2021 highs. Hyperbitcoinisation would require governments to adopt Bitcoin as a reserve asset, like gold, for it to be achieved over the next few years.
Conclusion:
Paolo Ardoino, CTO of Tether and Bitfinex, tweeted on March 21, 2023, that the banking crisis prompted many to create memes on the arrogance displayed by those working in the banking and retail sector when people tried to withdraw their money.
He added, "If these are the companies and people Bitcoin is up against, then hyperbitcoinisation can really happen soon." However, in practical terms, the economy needs to be more technologically equipped to adopt Bitcoin and tap into the full potential of cryptocurrencies. Therefore, while hyperbitcoinisation seems near, it still has a long way to go.
