Hyperbitcoinization will be ugly, part two: 21 ways life will be miserable.

In no particular order.

  1. The dollar will collapse and the global economy will fall into crisis. The stability of the US dollar is a key ingredient to much of global commerce and underpins the surge in global economic activity over the last 70 years.
  2. Drain from finance away traditional economic activity. Finance will shift focus and capital away from traditional finance markets, which serve a purpose, in particular, the very important purpose of creating jobs and real wealth. Why invest in factories or supply chains when you can quicker and better yields playing crypto games?
  3. Consumers spend less, damaging the economy even further. As the price of Bitcoin rises, consumers become more parsimonious as they stack money into Bitcoin, expecting BTC-denominated prices to fall.
  4. Massive uncertainty will make any long-term investment at best a pain and at worst impossible. How do you sign a three-year contract that involves financial terms if the money is denominated in a deflationary currency?
  5. Bitterness between the early-birds and everyone else. Some people will be happy they got in soon. Everyone else will be extremely unhappy they missed out. It’s not “jealousy”, when you’re on the wrong side of a zero-sum game that you didn’t choose to play.
  6. Rearrangement of global alliances and emergence of new power players on the international stage. If nations like North Korea, Iran, Venezuela are all-in, they become allies to anyone else who is all-in.
  7. Human scum bleeding assholes will become billionaires. Some of the most disgustingly obnoxious people in the world will suddenly populate the uber-wealthy. This is based on the observation that Bitcoin has seemed to attract more sociopaths and more misanthropes than, say, medical school.
  8. Insane demand for energy. Others have discussed this at length. If you’re one of those gymnasts trying to explain how this will jumpstart clean energy — please try using numbers: You can google how many solar panels exist, and also what the different units mean, for example a TeraWatt hour.
  9. Insane demand for computer chips. If the price spikes, it will become incredibly profitable for chipmakers to focus on mining hardware. Graphics cards are already skyrocketing.
  10. Increased inequality. While a hyperbitcoinization scenario would certainly create some millionaires who never would have otherwise been, it will mostly favor the already wealthy. The wealthy are risk-tolerant and can afford to drop $20,000,000 in a toy internet currency a few years back, and not fret too much if it never pans out. Most of us can’t risk that, now or in 2015. Tesla can risk $1.5 Billion, because they’re a wealthy company. Who uses tether? Not you or I, but wealthy individuals who have billions of dollars offshore they prefer not to repatriate. These are the people who will win big with Bitcoin.
  11. Anxiety and financial trauma Try to imagine the anxiety in an 18-month bull run. Try imagining sleeping, or putting your normal effort into work. The bull run won’t be straight up. Some people will buy heavy before panicking during a drop, dooming their families to destitution, while the neighbor next door will do the opposite for dumb luck. Either you’re exposed to Bitcoin, or you’re exposed to not having Bitcoin.
  12. End of the traditional social contract surrounding the relationship of work and money. Gone are the days when you could expect that going to college and building a career is your best path to a comfortable existence. Your allotment in the economy will not be determined by your career, your job, your contribution to society, but rather your ability to predict currency markets and custody your coins. People will behave likewise. Why bust your ass in college and medical school and nail that residency at Johns Hopkins, when you can become much more wealthy applying your insights and determination to currency markets?
  13. Wall Street will co-opt the movement. Because, of course they will. These are smart people, and they’ve been playing this game longer than anyone in crypto.
  14. Politicians will get in the game. Why not? Nothing forbids them. They can shill, regulate, deregulate, direct treasuries into different funds, use insider information. If we have enough honest politicians they could regulate against this corruption, but this isn’t a guarantee.
  15. The government will attack Bitcoin. Some governments will have more to lose.
  16. Wars will be waged. Just like oil — Nations that have a better setup for mining might find themselves on the wrong side of more powerful nations. Again much of this is a zero sum game. If there are multiple currencies competing, some nations will have a lot on the line and will resort to force to protect their own interests.
  17. Censorship. Indeed it’s much easier than you think. Any nation with a few percent of the hash power can signal they’re censoring certain transaction and the game theory takes over the rest. If there’s a 3% chance you lose your mining reward for including a transaction, you leave it out.
  18. Increase in physical crime as well as cybercrime. Because you never know who might be sitting on a stack of Bitcoins, it might be profitable to steal as many computers or hard disks or handwritten notebooks that might contain 12 word phrases as you can. Fancy stuff like wireless router-packet sniffers will rise to the demand. Phishing attempts will consume most of your day. If you are one of the lucky ones to have a few bitcoins, you can be assured there will be a teams of dozens of hackers and social engineers around the world and in your neighborhood, putting bounties on any piece of information about you they can find. What’s your daughter’s name? What’s her 2nd grade teacher’s name? What is her pediatrician’s name? Who is delivering the new fridge you ordered? Anything that can be used to psychologically expose you in a way that might weaken your computer security hygiene. All of those relatives who start spamming from their facebook accounts and then texted you that “I’ve been hacked ignore fb.” These people will need be in trouble and need bailed out.
  19. Increased government surveillance of everything. Because transactions on the blockchain are trackable and because this can be connected to international threats, the Pentagon will have a giant team tracing every transaction and pairing this with any other available data sets.
  20. Physical attacks on holders and miners, assassinations. Remember this is a zero-sum game. If you destroy a mass of neurons that has exclusive knowledge of the password to 100,000 bitcoins, there can now only be 20.9 million and you just made everybody else slightly richer. Similarly, ff you sabotage mining equipment, your odds go up. Zero-sum games are nasty.
  21. Monetized disinformation campaigns. The internet will be the battlefield of huge zero sum international game of politics and financial warfare. Those that have a lot of cryptocurrency can pay mechanical turks across the world to spread whatever disinformation they like.