- BITCOIN'S HIERARCHY OF NEEDS
Last week we saw the direct listing of Coinbase, as well as Bitcoin reaching an all-time high. To think that 1 year ago, Bitcoin was priced at around $6k, now it's close to $63k, that's a whopping 10x gain. Although Bitcoin has gained some attention from institutions and state funds, the question still remains, can Bitcoin achieve hyperbitcoinization? I came across this interesting article from Nik Hoffman who applied Maslow's hierarchy of needs to Bitcoin to find out what needs Bitcoin must obtain in order to succeed.
Base Layer: Fair Launch
- Satoshi didn't premine. He/She gave everyone a two month heads up before mining the Genesis block
- It was very important for Satoshi that Bitcoin was not created for any one individual's gain at the expense of others
- The whole system is inclusive where anyone can run the numbers and verify for themselves that everything is correct and that no monopolies will arise to control the system
Second Layer: Distributed Layer
- Bitcoin is decentralized. It's not centralized like gold and fiat.
- The global distribution of the developers, economic nodes and miners provide a check and balance against each other so no single party has ultimate control
- Bitcoin is like ants. You can step on one and kill their colony in one area but you'll never kill all of the ants in the world because of their massive numbers and distribution
- I think it's clear by now that Bitcoin has proven to be an excellent store of value after recently reaching a total market cap of over $1tn
- You see companies like MicroStrategy, Tesla and MassMutual putting their treasury reserve into Bitcoin
- Bitcoin makes saving possible for everyone. Now anyone from anywhere in the world can use the saving technology of Bitcoin to store their value and not needing to be afraid of their faster-collapsing home national currency
Fourth Layer: Medium of Exchange
- The next layer of Bitcoin to conquer would be to make paying for goods and services in everyday life convenient
- The Bitcoin blockchain is considered to be a settlement layer. Like how we have the traditional base layer of the legal financial system and third parties like Mastercard and Visa to help facilitate transactions
- Bitcoin can also have solutions built on top of the existing base layer such as the Lightning Network
- The result? A fast and easy payment solution that has a decentralized and unbreakable foundation
Top Layer: Unit Of Account — Hyperbitcoinization
- When more and more people store their wealth in BTC, merchants accept BTC and institutions adopt it as their treasury reserve asset, then we pretty much achieve hyperbitcoinization
- This is when everything in the world has been repriced in bitcoin in replacement of the U.S. dollar and we will be referring prices in terms of BTC or Sats
Do I think that we will achieve hyperbitcoinization anytime soon? The honest answer is no. As much as I would like to see it happen, I think that we are still years away from actually achieving it. The way I see it, Bitcoin as of now is too volatile to be an effective medium of exchange but as the bitcoin black hole continues to suck in more wealth and we see higher market caps, Bitcoin will become less volatile and maybe then we can achieve the fourth layer.