Byrne Hobart, a CoinDesk columnist, is an investor, consultant and writer in New York. His newsletter, The Diff (), covers inflection points in finance and technology.
The most optimistic investors are hodling out for one thing: the rapturous bitcoin rally known as “hyperbitcoinization.” The hyperbitcoinization thesis goes like this: Every saver in the world – individuals, companies, financial institutions, central banks – needs to own assets that maintain their purchasing power. If an asset, or the currency it’s denominated in, starts to lose purchasing power, this can set off a cascade of selling. And selling one currency means buying another. If the specific concern sellers have is that the supply of fiat money is unbounded, they’ll look at currency-like assets with a relatively fixed supply: gold, perhaps fine art, or bitcoin.
It’s a powerful narrative, and there’s plenty of historical evidence. The list of currencies that have lost most or all of their value in a short time is lengthy. Today, Venezuela and Zimbabwe are experiencing hyperinflation; the Turkish lira has lost 60% of its value relative to the dollar in the last five years, while the Russian ruble has experienced several inflationary bouts since the fall of the USSR.