The Honest-Weight Champion of the World 

By Mason (Quace the Quant) 

It is evident that the global financial system is becoming increasingly unstable. If this trend persists, the US dollar will lose its standing as the reserve currency, prompting the establishment of a new global monetary standard. This means that a competition of currencies is imminent, in which governments would, as history indicates, employ dishonest, violent, and coercive tactics to ensure their nation’s currency wins. However, there is a quiet competitor stepping into the ring with an entirely different approach: an approach relying not on imposition but rather on organic adoption fueled by honesty, cooperation, and consent; an approach that, if successful, will lead to an outcome many have called “hyperbitcoinization.” 

There have been six different world reserve currencies since 1450 AD, so this isn’t the first time history has witnessed a change of this sort. However, it is the first time a permissionless, peer-to-peer, inflation-resistant, and bank run-resistant currency has stepped into the ring to take the title of most saleable of all currencies. In many of our lifetimes, we could see the seventh world reserve currency. We have already seen the balances start to shift, and they are shifting to a just weight, a fair measure, free from the dilution and price distortion caused by arbitrary changes in the money supply: Bitcoin. 

A blatant indicator of a late-stage fiat currency is recurring episodes of high inflation and a subsequent distrust in the Central Bank. Increased risk-taking is a symptom that results from these inflationary bouts. This is because people are pushed further out on the risk curve in order to beat higher inflation. Look no further than the financial markets of 2020 as an example of this. After the unprecedented influx of new money in the system, financial markets quickly became rife with monkey and rock jpegs selling for millions of dollars, useless air tokens going to “the moon” just to get rugpulled, and a SPAC and security craze growing profitless companies into remarkable bubbles. 

And that isn’t the worst part. Not only in times of inflation are people pushed further out along the risk curve in terms of the assets they are willing to buy, but also in terms of the crimes they are willing to commit. 2022, a year of high consumer price inflation, serves as a prime illustration. According to the Council of Criminal Justice, U.S. cities had a year-over-year increase in robberies of 5.5 percent, nonresidential burglaries of 11 percent, larcenies of 8 percent, and motor vehicle thefts of 21 percent. Similar to asset speculation, crime is a way for individuals, particularly those without assets, to thwart inflation. Elevated risk taking behavior is a symptom of a currency losing its footing. 

Those in power are acutely aware of the shifts taking place. Just this February, another central banker acknowledged the reality of a currency competition when Agustin Carstens, the general manager of the Bank of International Settlements, said in regards to Bitcoin, “That battle has been won… Technology doesn’t make for trusted money. Only the legal, historical infrastructure behind central banks can give great credibility to money.” 

Here Agustin admits that a battle exists and prematurely declares victory. The flaw in his judgment is common but fatal. With the symptoms of late-stage fiat being found in the same place as the cure, it is easy to misjudge Bitcoin as just another speculative but ultimately worthless asset. He failed to see the signal through the noise. When he realizes that no matter what he does to Bitcoin, it will get back up, he will understand this fight isn’t over. It has just begun. 

Bitcoin is hope. ~Michael Saylor 

There is an often-forgotten element to how successful any particular aim is: whether or not those on whom the aim depends have hope for its achievement. This is why hyperbitcoinization is inevitable in the eyes of many. Never has the winner of this currency transition been up to the users of the currency. It is truly the first time countries’ citizens have had a way to opt out and choose which currency they want to use. The voluntary choice to use Bitcoin, a money that cannot be censored or debased, is giving people hope all over the world, all while the alternatives seem to only grow more hopeless by the day. Hope is driving hyperbitcoinization.

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Notes from Stackchain Magazine: Mason was not paid by Stackchain Magazine to write this article. If you found it entertaining or enlightening consider sending him a tip via LNURL quancethequant@ln.tips