Nashification Vs. Hyperbitcoinization
In my previous essay A Neo-Gold Standard: Exploring the Effects of a Weak Coalition of Central Banks Inflation Targeting Bitcoin I argued as bitcoin’s popularity grows central banks around the world will soon face a dilemma and will choose, out of self-preservation, to inflation target bitcoin lest they lose their customers. That is to say, that unless central banks begin to offer money that is comparable to bitcoin in quality, the money they issue will not be viewed as valuable by the general citizenry served resulting in hyperinflation of that respective currency. In this writing I make an astute observation about the comparability between a scenario in which all currencies asymptotically stabilize versus a scenario in which central banks cannot (or do not) keep up with bitcoin’s increasing demand and therefore allow their product to hyperinflate causing bitcoin to become a global universal currency-a phenomenon dubbed by Daniel Krawisz as “Hyperbitcoinization”.
The observation can be simply put:
When all major currencies’ purchasing power changes at the same rate that would signal the advent of Ideal Money (Nashification).
In regard to hyperbitcoinization as an end in which bitcoin serves as a global currency, this would be a comparable “for all intents and purposes” end as Nashification .
In other words, whether the global inter-stability of respective major national currencies takes place OR bitcoin rises to become the world currency, either situation would serve the end goal as proposed by John Nash in 20 years of lectures and writings on the subject of Ideal Money.
Nash proposed a scenario in which the value trend of each major currency was stable such that central banks no longer affected the purchasing power of the money they issued.
If someone in China uses bitcoin, and someone in Canada uses bitcoin, we can see that such roles of central banks would be removed as neither counties monetary authorities have access to the inflation schedule of bitcoin.
This means any change of the domestic prices of “cost of living commodities”would reflect that actual changes in product and demand.
The dilemma central banks now face has two distinct strategy options, however, each response leads to the same end game scenario Nash paints. Moreover, and more significantly, bitcoin, in a hyperbitcoinization scenario, perfectly serves as John Nash’s Ideal Money a concept he started talking about one year after he was awarded the nobel prize in economics (1994).
Idea Money is a concept that came to Nash as an insight nearly 70 years ago.