Twitter recently announced that 1 Bitcoin (BTC) could reach 100 in just 90 days (by June 15, 2023) due to inflation in the United States, according to former Coinbase Chief Technology Officer Balaji Srinivasan. It was excited to accept a bet from James Medlock that it would be worth $1.3 million.
$1 million bet
The bet was that after 90 days, Srinivasan would send Medlock $1 million, and Medlock would send Srinivasan 1 BTC.
It seems like part of marketing. Indeed it is. Srinivasan himself admitted that it was an ideological bet, not a “money bet”. It’s a warning about the dangers of quantitative easing and impending hyperinflation.
Before the bet, Srunivasan launched a “BitSignal” campaign that would pay out $1,000 worth of bitcoin to anyone who wrote a good tweet about America’s decline. Mr Srinivasan and his supporters sounded the alarm. The time for financial collapse is imminent.
And US financial markets got off to a weak start on the morning of the 20th. Venture capitalists such as Jason Calacanis had mixed reactions.
Karakanis called the bet “excellent.” Increased interest is likely to drive Bitcoin prices higher. But he also warned Mr. Surnivasan not to cause a bank run.
Meaning of hyperinflation
Either way, I’m here to make a statement. Bitcoin won’t hit $1 million on June 15, 2023 because of hyperinflation in the US. By the way, this is not financial advice.
Instead of focusing on the bets themselves, I want to focus on what hyperinflation looks like. What will happen when Bitcoin hits $1 million?
First, US hyperinflation would be devastating for the global economy. That’s all.
The impact is truly immeasurable. America is a beacon of stability for the rest of the world. Hyperinflation in the US probably means hyperinflation everywhere else.
But at least there should be Bitcoin.
Currently, you can receive about $28,000 in exchange for 1 bitcoin. In a hyperinflation where Bitcoin hits $1 million, 1 Bitcoin will be worth 35 times what it is today. It will be a welcome development for those who hold bitcoin.
But don’t expect your bitcoin holdings to become 35 times more valuable in dollars. Bread, gasoline, rice, steak, frying pan, electricity… Think 35 times the price of everything. Not just Bitcoin.
An ill-prepared ecosystem
There is a more obvious problem. how to use bitcoin
If you live in a circular Bitcoin economic ecosystem like Bitcoin Beach in El Salvador or Bitcoin Lake in Guatemala, you’re probably fine because you have the infrastructure to support your local economy.
But even with millions of bitcoiners, thousands of businesses accepting bitcoin payments, and hundreds of exchanges willing to trade bitcoin for dollars, that’s enough. Huh?
probably not enough.
Bitcoin needs to be used by billions of bitcoiners and millions of businesses. Where will people who didn’t have bitcoin before hyperinflation get it?
Can exchanges survive sudden hyperinflation?
might survive. People may begin to widely accept Bitcoin as a payment option for goods and services. Some may even get bitcoin in exchange for possessions. But no one knows yet.
Importantly, Bitcoin is not currently saving us from sudden global inflation. This is because the ecosystem is not well developed. We need more Bitcoiners, more companies that accept payments in Bitcoin, more Bitcoin companies, more Lightning Network companies, and more mining.
How many bitcoins do you need? How many BTCPay servers would need to be set up to allow businesses to trade Bitcoin? How many Lightning Channels do you need to open? How many ASICs do you need to mine Bitcoin? How many developers do we need?
much more. Bitcoin still falls short of everything.
Hyperbitcoinization is a term used to describe the world of post-government-controlled currencies, where bitcoin is the dominant international currency. To improve money, bitcoiners want hyperbitcoinization. “If you fix money, you can fix the world.”
But if hyperbitcoinization happens before the ecosystem is ready, we may not actually be able to spend the bitcoins that could save us.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original text:A Sudden Onset of Hyperinflation: What Will Happen to Bitcoin?
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