What are the opportunities for Bitcoin? What scenarios could see Bitcoin play an even bigger role in the world economy in the near and distant future?
It is worth emphasizing what these scenarios are. How far can Bitcoin go and what would its role be in these possible future realities. These are the scenarios that can lead to the so-called “Hyperbitcoinization”.
One of these extremely positive scenarios is Bitcoin as collateral. As the great Renato Amoedo tells us in his Bitcoin Red Pill, this would mean having all the assets issued in the world: national bonds, currencies of any type and all kinds of derivatives that have Bitcoin as collateral. Even redeemable in Bitcoin, as it once was with metals such as gold or silver, when you arrived at the bank with a coin and could exchange it for the corresponding amount in metal (see pound sterling).
Another future expected by hyperbitcoinization enthusiasts is its role as a global currency. The advance of remote work with the pandemic has led executives and managers to evaluate its value. The number of transactions that are carried out today on the planet are innumerable. No current currency could scale to this point. Even the dollar, which is the central currency of some countries outside the United States, creates a huge currency circulation problem for these countries.
Digital networks like Mastercard and Visa are not something that the entire world population has access to today. Now, imagine a world currency and a digital system in one, with no settlement intermediaries, as would be the case with Bitcoin. It is undeniably complex, but it is possible.
With supporting technologies, “second layer” as we call it, such as the Lightning network. As with any system, scalability has its growth and adoption curve. At the same time, as bitcoin becomes more valuable, and because it is scarce, people might decide not to spend bitcoin directly, but rather derivatives of it, leading to something closer to the first scenario described above.
In this reality, one bitcoin would have a purchasing power greater than $1 million today. It is simply not as valid to say “1 bitcoin will be worth 1 million dollars”, because the dollar may not have the role it does today as the central currency of contract negotiations in the world.
This does not mean that the United States will necessarily lose its role as a center of creativity and opportunity and, above all, the attraction for immigration that it is today. But that is a topic for another day.
What the GPT chat says
What is Hyperbitcoinization? Hyperbitcoinization is a term used to describe a hypothetical future event in which bitcoin becomes the world’s dominant currency.
It is the tipping point where Bitcoin becomes the world’s default value system. As more individuals and groups around the world realize the advantages of a digitally native, borderless, and censorship-resistant system for transacting value, a critical mass of users will eventually drive the demonetization of the currency and the transition to a Bitcoin-based economy.
And what are the opportunities for Bitcoin?
Bitcoin has multiple opportunities to grow and prosper in the short and long term. These are some of the most significant:
Short-term opportunities:
- Increased adoption: More and more merchants and businesses are beginning to accept bitcoin as a payment method, helping to increase its adoption and usage.
- Institutional Investment – Large institutional investors are beginning to pay attention to Bitcoin and invest significant amounts of money in it, which could help stabilize its price and increase its legitimacy as an asset class.
- Global Economic Uncertainty – In times of economic uncertainty, some investors may turn to bitcoin as a safe haven asset, which could increase its price.
Long-term opportunities:
- Store of value: The limited supply and decentralized nature of bitcoin make it an attractive store of value for some investors, which could help boost its price in the long run.
- Decentralized Finance: The growth of decentralized finance (DeFi) could create new use cases for bitcoin and other cryptocurrencies, which could help increase their value and adoption.
- Global currency – Some proponents of bitcoin believe that it has the potential to become a global currency, which could create significant long-term value for holders.
In general, while there are risks associated with Bitcoin, there are also significant opportunities for it to grow and prosper in both the short and long term. As with any investment, it is important to consider both the risks and the opportunities before investing in Bitcoin.
Fabiano Dias is an international business developer for Bitwage. He has been working with cryptocurrencies since 2015. He participated as a speaker at various international events.
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