Last Sunday, the price of Bitcoin hit a record high, reaching $58,354 per unit, with a market value of more than $1 trillion. Since then, the value of Bitcoin has been declining, but the decentralized crypto asset market still has a huge valuation of US$900 billion. On February 26, the Director of the Economic and Social Research Council (ESRC) warned that Bitcoin’s value growth and success could lead to a technocratic dystopian society, which could compete with the “kings and kings who ruled the empire for centuries”. “The Emperor” contends.
Hyper-Bitcoinization: “Voluntary Transition from Inferior Currency to Superior Currency”
About seven years ago, in 2014, Daniel Krawisz wrote and created the term “hyperbitcoinization” to describe how fiat currencies would lose value quickly and Bitcoin replaced them. Krawisz explained what demonetization is, which is a specific type that people often talk about today, called hyperinflation.
Essentially, in economics, the term “hyperinflation” represents the inflation rate of a currency, which is growing very fast. The value of currency has fallen rapidly, and the prices of goods and services have risen sharply, thereby reducing the purchasing power of individuals.
Kravis explained at the time that there is a fundamental difference between hyperinflation and hyper-bitcoinization, as his editorial stated:
Hyper-bitcoinization is a voluntary transition from low-level currencies to high-level currencies. Its adoption is a series of individual entrepreneurial actions, rather than a single monopolist to manipulate the system.
The hyper-bitcoinization theory also makes many people believe that fiat currency will erode into nothingness, and crypto assets such as BTC will continue to develop. Some people even take their dreams to the extreme, but they divide people into different classes and call people who don’t own cryptocurrencies “Nocoiners, Which is the exact opposite of “Bitcoin”.
The rise of Bitcoin means that the castle will appear soon.
The fall of Bitcoin means that the castle is bigger.
—The Insider Jin Bao (@jimbocoin) February 25, 2021
Others think Bitcoin is jokingly saying that they will become so rich that they can structure Lots of Melon ad with Become “The upper echelon of society.” At the same time, there must be many Bitcoiners who believe that the ideas of “castle” and “coinless home” have super value, because many people are still humble, and the value of BTC increases their economic freedom.
Carcassonne Castle, France
-Bitcoin Citadel (@BitcoinCitadel_) March 1, 2021
Self-fulfilling prophecies and wrong consequences
A person with Jon Danielsson, the head of the Economic and Social Research Council (ESRC), seems to think that hyper-bitcoinization may be bad news, and even reveal the “emperor has no clothes”.
In a recently published opinion article, Danielsson said that as “Bitcoin continues to climb, the value of fiat currency decreases,” and he believes this will be an “abnormal result”. He believes that the coexistence between BTC and fiat currencies will create an “unstable balance.”
“If Bitcoin succeeds, then we will increasingly want to use it,” Danielson wrote. “This makes it more successful, so we even ignore the edict. Eventually, as the success of Bitcoin becomes a self-fulfilling prophecy, fiat currency will be completely replaced.”
Interestingly, on January 17, 2009, Satoshi Nakamoto, the inventor of Bitcoin, talked about the ability of the crypto asset to become a self-fulfilling prophecy.
Satoshi Nakamoto wrote more than ten years ago: “It makes sense just to prevent trouble before it happens.” “If enough people think in the same way, it will become a self-fulfilling prophecy. Once activated, if You can pay a few cents to the website effortlessly, as easy as inserting coins in a vending machine, then there will be many applications.” Bitcoin’s inventor said.
But Danielson’s report criticized that only “a few people” will see their wealth grow, and “those who rely on the law to maintain their material lives will suffer the most severe blow.”
Danielson explained: “The current Bitcoin owners will become the richest people in the world, competing against the kings and emperors who have ruled the empire over the past few centuries.” “They will actually have all the funds. They can buy whatever they are. What you want. Not a lot. Compared to the many people who own assets through all pension funds and mutual funds and the rest, this is a small group of people.”
No need to worry, long before this point is reached, Bitcoin will be discarded
The Danielson report also pointed out that if Bitcoin becomes the currency of choice in our daily lives, economists emphasize that Bitcoin “must also become a unit of account.” Danielsson believes that Bitcoin’s current volatility prevents this from happening, and he further asked: “Who wants a high degree of volatility in the purchasing power of wages or savings?”
In addition, economists emphasized that this contradiction may be the reason why crypto assets cannot succeed. Finally, Danielsson tried to close the Bitcoin coffin like many economists before, and said in one last breath:
Fortunately, the more successful Bitcoin becomes, the more obvious the undesirable consequences and internal conflicts will be. Therefore, before we reach this point, Bitcoin and other cryptocurrencies will be discarded. By then, the price of Bitcoin will drop to zero.
The ESRC director also ended with “Bitcoin is a bubble.” He believes that individuals and groups can “get out of the bubble as long as possible.” But Danielson warned that “just kicked off in time” and people should beware of “the little boy shouting,’The emperor has no clothes’.”
For Danielsson (Danielsson), unfortunately, despite all the unfavorable opinions expressed by some economists over the past decade, the popularity and value of Bitcoin has continued to grow. Danielsson is just the statistics of many economists who have written BTC itu reports over the years. In addition, whether Danielson likes it or not, the growth and speed of BTC continue to replace fiat currencies and money supply.
“Bitcoin’s currency circulation speed is now higher than M1 dollars,” Explanation On March 1, Willy Woo, an on-chain analyst and BTC researcher, said. Nothing happened. BTC is kidding. The liquidity of BTC funds exceeds our expenditure. It doesn’t matter, BTC is for long-term investment,” Woo added on Monday.
What is your opinion on ESRC Director Jon Danielsson’s view on the transfer of global wealth to Bitcoin? Let us know your thoughts on this topic in the comments section below.
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