Large Companies Buying Bitcoin Is Great, but Hyperbitcoinization Will Not Happen Without Individuals
Hyperbitcoinization will be done gradually individual by individual.
The last few weeks have been full of extremely positive announcements in the Bitcoin world. Among the many announcements, the arrival of a large company like MicroStrategy in the Bitcoin world has not gone unnoticed.
Seeing a Nasdaq-listed company make Bitcoin its primary treasury reserve asset is something that will accelerate the mindset change that is taking place in 2020 regarding Bitcoin.
MicroStrategy purchased $400 million worth of Bitcoins in two aggregate purchases in August and September. Michael J. Saylor’s company now owns 38,250 BTC.
This still represents 0.21% of the Bitcoin circulating supply. MicroStrategy has made Bitcoin its number one weapon in the fight against the great monetary inflation we are currently experiencing. Many companies will be following the path set by MicroStrategy in the coming months.
Institutional investors have completely changed their mindset about Bitcoin
At the institutional investor level, things are also accelerating in the Bitcoin world. It all started in early May 2020 when the renowned macro investor Paul Tudor Jones announced in a letter to his investors that he was now choosing Bitcoin over gold in the face of the great monetary inflation.
This continued throughout the summer of 2020 with the cryptocurrency investment fund Grayscale investments which made the headlines several times.
As of October 2, 2020, Grayscale investments holds 468,000 BTC for its customers who are mostly institutional investors. These investors want to own Bitcoin in their portfolio without having to manage themselves all the technical parts related to a hardware wallet.
Grayscale investments currently holds 2.53% of the Bitcoin circulating supply. This is a huge figure when you consider that since the third Bitcoin Halving, only 328,500 BTC will be issued each year. This will be further reduced when the next Bitcoin Halving occurs at block height 840,000.
All this is huge, but hyperbitcoinization will not happen without individuals
All of this news is a delight to the Bitcoiners of which I am a member.
Nevertheless, despite everything, I feel compelled to calm down the surrounding enthusiasm. If this news is likely to accelerate the adoption of Bitcoin, we are still far from the hyperbitcoinization we all dream of in the future.
The entry of large companies or institutional investors into the Bitcoin world is important, but hyperbitcoinization will not happen without the massive entry of the general public into Bitcoin.
For those who are not familiar with what hyperbitcoinization is, I will give a quick reminder. The adoption of Bitcoin by the general public will follow 3 main phases:
- Phase 1: Store of value.
- Phase 2: Generalized means of payment.
- Phase 3: Unit of account.
Hyperbitcoinization will occur when Bitcoin reaches this famous phase 3 and is used massively by the general public as a unit of account.
Bitcoin continues to establish itself as the best possible store of value
The fact that large companies or institutional investors are buying Bitcoin reinforces Phase 1 of Bitcoin adoption. Bitcoin is the best store of value available to the greatest number of people today. It is an idea that a growing number of people share.
Nevertheless, between thinking about buying Bitcoin and buying Bitcoin, there is a world of difference.
The real challenge in the years to come for Bitcoin will be that more and more people will become aware of the intrinsic value of Bitcoin. To have at one’s disposal a decentralized, neutral, independent money, whose consensus rules can hardly be changed is essential. This has no price.
Bitcoiners are already willing to pay for this. Bitcoiners are ready to pay for the freedom that Bitcoin gives them. The freedom to live your life on your own terms. With Bitcoin, you can opt for low time preference, whereas the U.S. dollar was designed to be spent.
Bitcoin Is Designed to Be Saved, U.S. Dollar to Be Spent
It’s up to you to make the best choice for your future.
Individuals will realize one by one why Bitcoin is essential
Every saver is going to have to become aware of this little by little.
Individual after individual, the number of Bitcoin users will increase. The number of people valuing all the unique properties of Bitcoin will explode over the next decade.
As Bitcoiners who are convinced of the monetary revolution that is Bitcoin, we will be able to witness this emergence of Bitcoin first hand. The first phase will be for Bitcoin to become the store of value for hundreds of millions of people.
The second phase, the widespread use of Bitcoin as a means of payment, is already well advanced in emerging countries or under authoritarian regimes. Bitcoin is both the preferred means of saving, but also an essential means of payment in these countries.
Bitcoin gives the people of these countries freedom that has always been taken away from them by their corrupted leaders.
People living in countries with the worst economies have already understood the need for Bitcoin
With Bitcoin, these people can protect their wealth over time from the ravages of hyperinflation in their countries. The example of Iran is striking, but it is the same in Venezuela, Argentina, Lebanon, Zimbabwe …
Finally, the last phase can be reached once the two previous phases have been fully completed. The hyperbitcoinization can start at that time.
However, do not put the cart before the horse. Before hyperbitcoinization can occur, this all starts with the mass use of Bitcoin as a store of value. It always works in that way.
When the market cap for Bitcoin has caught up with that of gold, with its 9,000 billion dollars, you will see that the use of Bitcoin as a means of payment will develop much faster in Western countries.
It won’t be long afterward before Bitcoin can begin to become a unit of account. All this will happen as often mentioned by Bitcoiners: gradually, then suddenly.
For now, we are still in the gradual progression of Bitcoin adoption with more and more big players entering this world. At the individual level, Bitcoin will continue to expand its adoption individual by individual.
This will continue step by step for several years yet, and then, when the world is ready, everything will suddenly fall into place as if everything had been written in advance by Satoshi Nakamoto.
This will then be the beginning of hyperbitcoinization.