The failure of the Fiat economies pushes the adoption of Bitcoin

Hyperbitcoinization: For Bitcoin idealists, the imminent utopia for global finance begins with Bitcoin dismantling fiat hegemony. This proposed civilization has attracted cypherpunks since the early days of Bitcoin. Now cryptocurrencies have gone mainstream as ordinary people are increasingly pushed by failing economies and overbearing government policies.

Satoshi Nakamoto Institute co-founder Daniel Krawisz describes Bitcoin’s rise to power as “hyperbitcoinization”. This will emerge in part due to bad policies, failing economies, and overbearing government intervention. It will force people to renounce fiat hegemony.

“Bitcoin-induced currency demonetization, or hyperbitcoinization,” is what would happen if “any unfortunate currency” were “in Bitcoin’s path to total world domination,” says Krawisz. “If that happens, the currency will quickly lose value as Bitcoin supplants it.”

From the recent government crackdown on political protests, it is evident that whenever people are pushed, they migrate to the next technology to assert their agency. As the world enters an uncertain season with recession, hyperbitcoinization may finally become a reality.

Hyperbitcoinization: the failures of fiat money

Lebanon, Turkey, Venezuela, Cuba, Zimbabwe and many other countries have faced hyperinflation problems. Fiat currencies are in a race to the bottom, prompting governments to implement dubious policies to stop the rot.

But the invocation of special powers by presidents, price controls, and surrogate currencies also compete with economic sanctions, poor governance, and other structural factors that render the government’s fiscal control efforts useless. It also denies citizens control of their money.

Humanitarian failures of fiat money were evident in Venezuela in 2019. Families were forced to buy spoiled food and give their children up for adoption in the face of a shortage of basic necessities. At the latest official tally, Venezuelan inflation was 151% in May.

Such tragic cases imprint the urgency of an alternative currency that is not vulnerable to the whims of central banks. In Lebanon, failed government policies robbed people of their savings and pensions. Its national currency has also drastically lost value.

Moving on to Bitcoin

According to a recent CNBC report, people in Lebanon have increasingly turned to Bitcoin to preserve the value of their money in the wake of a severe financial crisis caused by decades of “costly wars and bad spending decisions”.

Citizens use Bitcoin as a means of payment for local and foreign transactions, the report said. USDT stablecoin is also popular in the country. Although cryptocurrencies are not allowed as a means of payment by the Lebanese government, people don’t seem to care.

Companies are promoting cryptocurrencies as an acceptable payment method on Instagram and other social media platforms, CNBC reported. He added that the banking system is broken and the local Lebanese pound has lost 95% of its value since 2019. Banks are limiting withdrawals.

The rise in global food and energy costs caused by the war in Ukraine and the fallout from the COVID-19 pandemic has worsened food shortages and pushed inflation even higher this year. Official figures say year-on-year inflation was 162% in September, one of the highest in the world.

“The use of USDT is widespread,” said one user, identified only as Gebrael. He added:

‚ÄúThere are many cafes, restaurants and electronics stores that accept USDT … so it’s convenient if I have to spend not on fiat, but with my bitcoin savings. The government has much bigger problems right now than worrying that some stores will accept cryptocurrency. ”

Government repression

Governments isolated and in economic crisis have historically resorted to obsessive control of institutions and repression of citizens while voicing protests. In Zimbabwe, where inflation is hitting a world high of 269% in October, authorities have rejected dissent.

Zimbabwe is often cited as a good case for Bitcoin adoption due to its longstanding currency problems. In January 2019, the government banned popular social networks from containing protests and blacked out coverage of a brutal government crackdown.

The crackdown reportedly resulted in the deaths of 12 people and left more than 60 gunshot victims in hospital. Beatings were widespread. However, repression has opened up new technological possibilities in the past.

Zimbabweans responded to the total shutdown of the internet by migrating to Telegram. Telegram is designed as a communications app to resist surveillance and suppression. Citizens have also unblocked banned social networks, Whatsapp, Facebook and Youtube, through virtual private networks (VPNs).

As citizens will take back their democratic freedoms through alternative communication channels, there is reason to believe they will follow suit by claiming their financial freedoms through censorship-resistant currencies like Bitcoin.

Zimbabwe one hundred trillion banknotes
The infamous $ 100 trillion Zimbabwe banknote

In fact, Bitcoin has continued to thrive on social media since the Reserve Bank of Zimbabwe, the country’s central bank, banned cryptocurrency trading and closed two exchanges in May 2018.

But trade didn’t die with the ban. Instead, it reinvented itself on Whatsapp through peer-to-peer exchanges. Over time, cryptocurrency enthusiasts have built strong Whatsapp groups where they share information and news on developments in the industry.

They are now using similar groups to buy and sell cryptocurrency, using connections they already know or new. The trust built in this community is the key to building trust and preventing theft.

To combat inflation, the government of Zimbabwe has revealed a scheme that allows ordinary people to buy gold coins using the local currency. The plan also aims to help people in a country that has seen the worst inflation in history, at 4 billion percent, preserve value.

Claim of individual financial freedom

Some countries are clearing the field of cryptocurrencies through soft touch regulation. Others are unwittingly doing the same by failing to contain inflation. This has led to a breaking point where citizens take back their freedom via alternative currencies, mainly Bitcoin.

In Turkey, a government crackdown on cryptocurrency exchanges failed to stop citizens from turning to BTC. Inflation in the country hit a 24-year high of 86% in October. Turkey also banned crypto payments in 2021.

According to data from LocalBitcoins, BTC peer-to-peer trading in Turkey increased by 51% and 40% during the first and second quarters of 2022. All of this happened when the value of the Turkish lira plummeted. People use Bitcoin as a hedge against inflation.

Chainalysis says Turkish citizens received $ 192 billion in cryptocurrencies between 2021 and June 2022. The country has some of the fastest Bitcoin adoption rates in the world.

Bitcoin continues to make its way around the world. This has come about through progressive government policies and increasing user adoption. The failure of fiat currencies in developing economies will continue to force citizens to take back ownership of their money.

At the tipping point of hyperbitcoinization, Daniel Krawisz’s radical vision of financial freedom and inclusiveness will see citizens of poorer countries transact in a borderless, permissionless way.

Disclaimer

All information contained on our website is published in good faith and for general information purposes only. Any action taken by the reader on the information found on our website is strictly at your own risk.

Leave a Reply

%d bloggers like this: