One of the earliest references to hyperbitcoinization (H-theory) derives from the Satoshi Nakamoto Institute. It describes a world waiting for bitcoin in the borderless, peer-to-peer sense. Especially true for emerging economies prone to inflation, hyperbitcoinization is an adoption theory with radical implications. Until recently, it was only a theory.
Hyperbitcoinization in Theory
Demonetization in its contemporary sense is yet another act of government minders, officials charged with a country’s monetary policy. Last year around the present time, Prime Minister Narendra Modi took to an impromptu television address. He announced to India, 1.3 billion people, its ₹500 and ₹1000 notes were toast as of a few hours from broadcast.
It would be something akin to the popular 10 or 20 USD bills zapped from the economy with almost no notice. And indeed, a century and a half ago, the United States demonetized silver, plunging the economy into depression.
But, again, the usual understanding of the term involves some kind of state-ordered action, the presumption of government-run monetary policy safely assumed.
What if abandonment of an official currency was done from the bottom-up? What if demonetization was reconfigured as hyperbitcoinization? Mass adoption, and quickly, of bitcoin will come at any moment, H-theory posits. Home owners accepting nothing less than a cryptocurrency, refusing to accept fiat like dollars or euros, are other early signs of a coming hyperbitcoinization.
A triggering event for hyperbitcoinization would be a fast variation of inflation: hyperinflation.
Inflation is mostly a function of currency monopoly. Monarchs of yore shaved ridges off metal coins, thereby debasing the currency. As they made their way through markets, value necessarily diminished, leaving later transactors decidedly frustrated.
Since the early 20th century, inflation has come via central banking. Promises of cradle to grave security, fighting wars against baddies every few years, governments can stay in power with ease. To accomplish these, they inflated the money supply in order to spread the wealth effect. It can quickly turn maniacal, deeply out of control. Weimar Republic’s woes after World War I is a great example. Until 2009, there really wasn’t much of a choice. People in these situations endured…