Do you think hyperbitcoinization will end the rapid rise of Bitcoin's purchasing power?
Discussion
What do people mean by hyperbitcoinization?
Everyone on the Bitcoin Standard.
What does that mean? I am asking genuinely. 🫶 Once we have a proper definition we can think about the initial question. Being on the bitcoin standard is too vague for me.
Everyone within a country using Bitcoin as their only/main money.
I see now, it's easy to imagine. Is that even possible though? I thought lighning couldn't support that. If you build it, they will come. We don't have such adoption as it's not built for that yet. Also, the biggest bagholders scream at poor people to buy and hold, so the two facfions of bitcoin billionaides nedd fo decids between themselvds whether it should be hoarded or further developped to be used as ecash by everyone.
If i had to define it: “the process finalizing the subsumption of all fiat moneys and monetary premiums globally”
And by this definition, the answer to her Q is yes, as there would be no more fiat to measure the price in. We would then just see it as price deflation.
Btw i’m not one of those people who think this is inevitable, at least anytime soon. Mass retardation psychosis is strong. People love trusting banks and not taking personal responsibility, a lot. And there are lots of people.
Yeah, but my question is about what happens AFTER?
Do prices stabilize or continue to fall in sats?
They should continue to fall in a world where bitcoin is the only money (which may or may not ever happen 🫣)
How can we entertain the thought of 'after' given what NoBody described is unfathomable? For me it's a waste of time to even think about it. All assets denominated in Bitcoin, am I right? As citizens with passports and having countries and borders, we are slaves in prisons. Anyone remember covid and lockdowns? Governments are fighting over natural resourses, nobody would take bitcoin seriously with a handful of data centers mining blocks, which can be outlawed or shut down whenever it's no longer convenient. For now bankers and corrupt politicians are just milking the cow. We are insignificant. Even if anyone has millions, it's not a lifejacket.
Like, if the dollar collapsed tomorrow and everyone had switched to Bitcoin by the end of next year, would that be the end of the deflationary effect?
Would deflation just be low, like inflation is now?
Yes, because it would become 50% of the economy
Bitcoin’s scarcity wouldn’t change
This is also my assumption. 🤔
Assumed everyone thought that. It might slow a bit, from 75%/year to 50%/year or something, but not normalize.
I imagine at some point, it would find it’s true price. But that will take a LONG time. People love banks and not being responsible way too much
Well, that wouldn't matter, as we wouldn't have fiat, anymore.
Agreed. I mean it will take a long time to get to hyperbitcoinization.
Currency reform tends to happen at a press conference. The dollar crashes, the President gets in TV and says that a new era is unfolding...
Right. But to answer your original question, it would still be deflationary. Prices would continue to go down at a slower rate
Everyone agrees that they'd go down, but more like 5%/year or 50%/year?
Depends. Inflation is a vector. Some prices will fall quicker than others
Deflation is produced by technological efficiencies, bumper crops and motherlodes same as with fiat toilet paper funny money. They ride it to squeeze more as the efficiency improves.
But I thought Bitcoin has deflation built-in?
deflation is the product of the economy increasing in efficiency and activity
you can't make prices deflate except and only by ceasing to emit new monetary units
bitcoin deflates on a schedule, deflation in general is an economic factor that cannot be controlled by anyone, and anyone who tells you it can is lying to you
No. Until there is a subsidy it can even be considered inflationary. But since the total supply is capped, the 21m is priced in. People losing private keys that can't be retrieved is in a way reducing the amount, but it is insignificant. Satoshi coins are the biggest cut that big bag holders don't want liquidated.
Population up, infrastructure to make bitcoin ubiquitous up, cheaper energy up, wealth distribution up...
It's going up forever ~~Laura~~ Laeserin.
~~ = strike through in mark-up... So I thought
Love this question! Yes, if I had to guess. The reason it's appreciating so fast now is because money is moving into Bitcoin from other assets with a much larger capital base. After hyperbitcoinization Bitcoin will be the largest pool of capital so this'll no longer be the case. Then it'll go up like 3-5% a year or something in line with real GDP growth.
Although at that point the account denominator would probably have flipped, so you wouldn't say that "Bitcoin has gone up by x%" you would say "prices have decreased by x%".
If it happens yes. I think it's more likely to get monetized over about 3 decades and then everything is just priced in saats and continues to get cheaper as it reflects the deflationary effect of technology. The price in fiat will continue to rise until then, rising less and less every year. I think 1BTC will get to $10 million in todays purchasing power, (not adjusting for any future inflation). By the end USD will hyperinfllate so the final number will look stupid by today's metric and could be anywhere. Trillions.
The purchasing power will only become greater. Bitcoin’s price will continue to rise and the price of good and services will go down once Bitcoin is the standard.
I think it would, bitcoin would still appreciate though, since it's the world's scarcest asset. Deflation would then be driven by the level of human productivity. I have Jeff Booth's book, the Price Of Tomorrow, on my to read list, I believe he goes into this topic.
The Bitcoin supply would steadily shrink, tho.
If this were true, then the clever thing would be to spend most of your Bitcoin, as soon as sats are the standard. Because holding wouldn't make much sense, since the purchasing power rise is underwhelming.
Like, if Bitcoin deflation shifted to 5%-10%, why not switch to stonks?
And then, why not just keep the stocks and houses many of us already have, if we would just be dumping the Bitcoin to buy them back, in a few years?
The stock and housing supply grow more slowly than the Bitcoin supply, so they're actually more scarce, in the medium-term.
The reason would be saving vs investing. Saving is supposed to be easy, with the lowest level of risk, which is what gold was and what bitcoin will be one day. Nowadays people thing investing and saving are the same, they're not, fiat distorted this.
Stocks and real estate could offer a higher return in the future, after hyperbitcoinization, but there are more risks to both; the government could seize either, a storm could destroy your properties, businesses could go to 0, etc. Bitcoin just sits there, slowly appreciating without you having to do anything, which means it will be more of an individualized risk-tolerance thing.
I think bitcoin will bring back value investing to stocks.
Okay, but do you think it'd be easy to raise capital with interest-bearing debt, for a big project like a highway bridge or a new university?
I suggested that you wouldn't be able to just go to the bank and take out a 100 BTC loan with 10% interest and full return of principle, to build a new apartment building or whatnot, but I'm apparently the only one who thinks that.
Well, if the area of the apartment was seeing an influx maybe... Depends on the term also, longer loans have a lower rate given a solid collateral, but real estate stops being a way to get up front of the fiat printer, so the lender's assessment would be consequently based on a lower expectation of appreciation of price so maybe the rate would be lower even.
What is the collateral?
the downpayment does not reduce the principal until the termination of the contract, meaning that if you put a 25% downpayment on it, that is not in the hands of the lender until the rest of the principal is paid off, it is a margin that is guaranteed to the lender in case of default, and has to be kept in escrow
also, just wanna say this: i keep seeing the word "principle" being used in relation to the amount owing in a bill
principle is more or less a synonym of axiom or rule or law, principal is the responsible party or the amount owed in a loan, or the chief executive of a school
Sorry, principal.
i saw this misspelling, or more accurately wrong word usage in a dictionary you quoted yesterday or so, it's embarrassing to anyone who knows the english language well
Could just be my German spell-check changing things.
pretty sure the word prince and principal are related and that it is most definitely a different word, i think in german it's prinzip, or synonym grundsatz, regel, or element
yes, principal in german is rektor or direktor, haupt- or das Kapital (yes that one), schulleiter
2
(of money) denoting an original sum invested or lent.
"the principal amount of your investment"
the words are closely related but different, and probably the confusion comes out of their close relation, a principle is essential, an element, a thing with controlling influence, but a principal is the ruler or king or basis or collateral
yes, and collateral literally means "from both sides" which implies that the principal is collateral meaning that it only can be released to the lender upon settlement of the contract, ie, it requires fulfillment of the contract
We don't know how a hyperbitcoinized world looks like, so it's just theories right now. Nonetheless, humanity has seen a steady long term decline in interest rates over the past 5,000 years, interrupted by the occasional calamities like war and natural disasters. This all stopped in the 20th century with fiat money.
Having said this, there's a possibility the trend could return and send interest rates to 0% or near it. How? Because money always has a carrying cost (bank fees for example or it being stolen) that is always larger than 0. So if holding money has a cost, then not lending money has a nonzero cost, meaning people would be offering to lend money at lower and lower rates.
Saifedean Ammous really goes into this on chapter 14 of his book, Principles of Economics, and he seems to be the only Austrian economist out there talking about this.
It sounds like we're doing the whole Bitcoin thing for no reason because it'll just be the same as now, but with sats.
Minus all your wealth/work being stolen from you and being unable to save for buying a house or affording good quality food.
I thought we were just going to have Bitcoin mortgages?
If there's a demand for something, it will exist, but with a hard money you wouldn't need to forcibly get a mortgage just to buy your first house or plot of land. There's currently an excessive use of real estate for trying to preserve purchasing power over time, which inflates housing prices, couple that with money printing and government regulation on housing projects and it all creates a massive bubble in real estate.
It's the younger people who suffer here, since they don't come into the work force earning much, they then have to compete in the housing market (and inflation) with all the older/wealthier people trying to preserve their purchasing power. Bitcoin would suck much of the premium out of real estate, since bitcoin is a better asset long term; it doesn't inflate like fiat and hopefully technological progress will continue to bring down housing costs. The only major factor negatively influencing housing prices, in my opinion, would be government.
I is a think those hiperbitcoin whathaveyous is a just a influencer bread and a butter made from a plebs a dreams
🧐 --> ♾️ / 21M