A hypothetical scenario for the future of Bitcoin?
The current debt paradigm and monetary policies for managing our fiat currencies, with low-interest rate environments and debt monetization by central banks, are unsustainable.
The negative effects on people’s purchase power further erode the trust in fiat money. All fiat money based on debt creation and exponential compounding interest will at the end return to their fair value: zero.
We have a global debt time bomb in a period of trade wars, currency devaluations, and hyperinflation.
The people in EM countries like Venezuela, South Africa, Argentina, Iran are suffering from hyperinflation.
Why would the demise of fiat money lead to an increased demand for Bitcoin?
Countries suffering from hyperinflation will implement capital controls. For people on the ground, it will be difficult to get hold of US Dollars, let alone gold. Moreover gold is impractical, bulky, too expensive and difficult to use for day to day transactions. In this period of our history with the internet and cell phones is Bitcoin superior to gold. Bitcoin is immune to capital controls, it functions outside the current financial system. Everybody can participate in this network and transact with each other with help of a cellphone. Transactions are not censurable. Bitcoin is sovereign money with all the properties of hard money. A currency crisis shortens the learning curve for people to understand this and adopt Bitcoin.
In this scenario the Bitcoin blockchain eventually turns into settlement layer and global unit of account — we will get a Bitcoin Standard. The bitcoins will not function directly as a global currency, no the bitcoins will be able to play this role through the second layer solutions on top of the Bitcoin blockchain: the Lightning Network. Everybody will be able to use Bitcoin at very low fees and lightning fast. This process will gradually lead to hyperbitcoinization.
The final standoff will be between the US Dollar, the Lion King, and Bitcoin, the Honey Badger…. or will a final fight to the dead be avoided by the FED? Might the FED not acquire bitcoins and use them in order to make a stance against China’s financial and economic power over the US?
The Chinese and the Russians it seems are betting on gold. Backing a currency with gold will not be enough in these times. Bitcoin is the digital gold of our age and all clever governments and financial institutions will understand this fact and hedge themselves by acquiring silently Bitcoin. Will the Central Banks start a Bitcoin gold rush? Will they not only indirectly but also directly be responsible for causing hyperbitcoinization in order to maintain their geo-political ambitions?
Indeed, Bitcoin is a digital Pandora’s box in the online landscape of unsustainable digital debts. The lid has been opened, there is no turning back. It will enable a financial paradigm shift which in the end will be better for mankind. Everybody on the globe will be able to learn and claim their own financial sovereignty. We will be able to create better, fair and just decentralized, permissionless financial and economic systems based on Bitcoin and new blockchain technologies without the need for third parties. Thanks to the invention of Bitcoin a new period of human enlightenment is possible with a new high-tech industrial revolution as its consequence. But first, we have to reform and unwind the old debt-ridden financial system that is on the verge to implode. This will not be without pain. Prepare accordingly.
Learn more about Bitcoin: online Bitcoin guide (Dutch).
This article is not investment advice but an appeal to do your own research on money, Bitcoin and our current fiat debt paradigm.