Hypershitcoinization: advent and ramifications


In brief, hypershitcoinization is a meme; and as with most memes, it has a long and convoluted history—one of which I’ll attempt to explain here. To fully understand the origins of term, a brief overview of fundamental economic forces, concepts, relevant examples, and memes is in order.

Economics 101

  • Scarcity: a good medium of exchange must have relatively high scarcity, so it’s associated value is resistance to degradation by inflation.
  • Price: The larger the demand is for a particular medium of exchange, the more value is associated with it.
    • This agreed upon value is succinctly represented by the trading price in a free market.
    • An accurate market price must be determined by a free market (one free from centralized manipulation), otherwise it’s simply what the controlling entity sets it as.
  • Inflation: when the value of a particular medium of exchange decreases over time.
    • Causes:
      • Decrease in demand, e.g. dwindling users and/or usage
      • Increase in supply, e.g. minting/printing of fiat money
    • Positive feedback loop between price and demand:
      • When the price decreases, demand also decreases; when price increases, demand also increases; and vice-versa.
    • Usually banks attempt to manipulate the inflation rate such that effects on eroding the value of a currency are mostly imperceptible annually.
      • Nonetheless, the compounded effects of inflation is clearly manifested in the continually increased price of goods and services over a period of decades.
  • Hyperinflation: when the rate of inflation increases to such a degree that it’s effects on the value of a currency become clearly visible in the daily life of users.

Precious Metals and Fiat Currencies Example:

  • Certain metals are precious (highly valued) is because they are very scarce on the surface of the Earth.
    • Chemical elements such as platinum, gold, silver, copper, etc. cannot be created from nothing, as this would violate the various laws of physics.
    • Chemical elements can be transformed into other elements, however this requires such enormous amounts of energy that it is largely impractical at macroscopic scale.
      • This is why the misguided pursuit of alchemy failed and why we don’t mint precious metals in chemistry labs.
    • Mining precious metals from Earth’s crust can be economical.
      • Mining also requires an enormous amount of work and energy but can profitable if the value of the recovered metal is significantly greater than the cost of the work and energy needed to mine it.
  • As a result, humans have used precious metals as proxies for value for as long as their brains have been capable of such abstraction.
    • Of course physical metal has limitations, so we invented fiat currency as yet another proxy to represent the precious metals.
  • But then something went terribly wrong: central authorities decided to decouple fiat currencies from physical metals, e.g. Nixon Shock, 1971.
    • As a direct result, these central authorities (predominantly banks and governments) gained a source of nearly unlimited power over the masses.
      • They could seemingly materialize value out of thin air simply by printing and minting new fiat currency.
    • Of course, they weren’t really creating value from nothing, they were systematically stealing it from the masses.
      • By arbitrarily increasing the supply of money, they decrease its scarcity, along with its associated value, i.e. they inflate the money.
    • The global inflation rate is 3.9%, thus fiat savings are worth less than half their original value after only 20 years.
      • i.e. every 20 years, half of your fiat savings are stolen by your banks and governments!

Memes 101

  • Bitcoinization: when Bitcoin usage infiltrates society to the degree where it begins to erode the value of rival mediums of exchange.
    • To my knowledge at the time of publication, there remains to be any publicly available evidence clearly demonstrating bitcoinization, yet.
  • Hyperbitcoinization: when mainstream bitcoin adoption reaches a scale where it begins to hyperinflate other currencies.
  • Shitcoinization: inevitably someone was going to replace the ‘b’ with ‘sh’.
    • “Shitcoinization – you heard it here first.”—@DanDarkPill
  • Hypershitcoinization: I think you see where this is going…

Analogy time: poker tournament

To help explain the above concepts more concretely, I’ve contrived an analogy: a world poker tournament. The various tables represent different nation states, each with it’s own governing body, the dealer, and it’s own fiat currency, the deck of playing cards. Ignoring the obvious incongruities in the specifics of poker rules, let’s say the chips are the value that the players associate with the fiat currency. Thus, the various poker hands are each associated with different valuations, which are reflected in the size of bets that players are willing to place on them.

The house always wins

In this analogy, the minting and printing of new money is akin to the dealers pulling aces from their sleeves and introducing them into the deck of playing cards whenever they please in order to rig the game. Perhaps the first few will go unnoticed; but before long, everyone has aces, and they become the least valued card in the deck. As such, players will cease betting large amounts on hands containing aces, i.e. aces suffer hyperinflation. But at this point, there’s nothing stopping the dealers from systematically introducing newly minted kings, queens, jacks, and so on down the line, until the deck is utterly inflated with all card denominations. At this point the deck is all-but unusable, and the game becomes unplayable; i.e. the deck is hyperinflated. Game over.

Street games

Of course, if any of the players themselves try and circumvent the house rules in anyway (as the dealers are allowed to), they will quickly find themselves escorted from the hosting casino’s premises, refused re-entry into the game, or even thrown in a cage for their trouble. However, what if a decentralized group of people set up their own table outside on the street and began playing their own game, where the rules were enforced by a computer system running opensource software? Anyone (player or bystander) could directly verify that everyone, including the dealer, was following the rules exactly. If such a table was available, where the deck was guaranteed immutable, and all parties involved were forced to play fair, wouldn’t everyone want to cash out their chips from the rigged casino and join the fair street game? At first, the street game would consist only of those excluded from playing at the casino, but soon word would spread within the casino as well, and any logical player would cash out asap. Of course this wouldn’t go over well with the rigged casino, but if it was outside their jurisdiction, what could they do about it?

Street gangs

Of course the first table set up in the street is analogous to Bitcoin. The thing about the street is that anyone can set up their own table and compete against the first table to attract new players. Even the casino. But, the street has it’s own set of rules, namely there are none. It’s every man for himself and gangs quickly coalesce and begin carving out their own turf, a.k.a. setting up their own tables and promoting them. On the street, there’s nothing stopping any gang-run table from making up it’s own rules and enforcing them on their own tables. Such rules may include anything from buy-in requirements, to house fees, or even house-take-all policies (a.k.a. outright theft). As long as they can continue to attract new players to their tables, all manner of scams, schemes, thieves, etc. can survive and thrive on the street. This is where we are at today, in the cryptocurrency space. The thousands of competing cryptocurrencies are employing every trick in the book to try and steal away attention and investment from other cryptocurrencies, including Bitcoin. Unfortunately at this stage of the game, the street is littered with all manner of propaganda (billboards, flyers, megaphones, etc.) spewed at such volume and intensity by bad actors (hawkers, con-artists, pickpockets, etc.): in a word, shitcoinization.

Congratulations: shitcoinization achieved

Why pretty much every other alt-coin is a shitcoin

  • Achieving decentralized consensus was pretty much the entire point of Bitcoin, in the first place.
  • Shitcoins are not decentralized, they are centralized—some more than others.
    • With very few exceptions, they were forked from the existing Bitcoin blockchain, with minimal effort, by some small group of people for the sole purpose of making themselves rich by convincing others to buy their coins.
    • And it worked; so many others did it too; and many more will continue to do it, so long as there are suckers out there who choose to throw their money at these scams.
    • possible exceptions (Magical Crypto Friends can’t be evil right?!):
      • Litecoin:
        • decentralization is second only to Bitcoin
        • glorified testnet for Bitcoin
      • Monaro:
        • currently centrally controlled (predefined hard-fork schedule), but presumably working towards decentralization
        • not a hard-fork of Bitcoin
        • innovative privacy features not currently available for Bitcoin

Current shitcoin market-share

Current shitcoin brain-share

  • How many times have you heard one of the following?
    • Have you heard of Ethereum and how their smart contracts are going to create a global decentralized computer!?
    • Ripple is going to take over the existing banking industry!
    • Did you hear how much NEO went up, man I could have made a fortune!?
    • Hashgraph is far superior to blockchain technology!
    • ____ is the real Bitcoin.
    • Blockchain, not Bitcoin.
    • Bitcoin is dead.
  • All this is not to mention the tremendous amount of investment flowing into the ICO and token nonsense.
  • Even traditional publicly traded companies are jumping on the hype-train:

If you believe any of the above proclamations (or the like), I strongly encourage you to do a modicum of research into the counter arguments soundly refuting their claims and clearly outing them as scams, ponzi schemes, pyramid schemes, etc. Yes, you’ll have to do it yourself, as most anyone seriously advancing the Bitcoin protocol is far to busy and intelligent (except me apparently) to join in the shit-fight.

Remember: unlike the bulk of shitcoins, literal shit has certain utility: fuel, fertilizer, deterrent, etc. The sole purpose of shitcoins is to steal money from those gullible enough to throw away their money. Any positive innovation or improvement by an altcoin can, and will eventually, be incorporated into the superior Bitcoin protocol: whatever altcoins can do, bitcoin can do better.

Trusty Bitcoin plods along

Meanwhile, the orderly game proceeding quietly along at the Bitcoin table, its players seemingly unaware of the surrounding shit-show, is often all-but ignored among the mayhem. Incredibly enough, only nine years into the game, Bitcoin is already boring. If you listen to the shit-flinging shills, Bitcoin is too slow, too expensive, too hard to use, etc. Although there has been some truth to the preceding complaints, the flashy new Lightning Network is very quickly making Bitcoin transactions fast, cheap, and easy. However, what really makes Bitcoin valuable is that it’s decentralized, it’s fair, it’s stable, it’s secure, it’s playing the long game. These powerful features of Bitcoin are admittedly a little boring. Let’s face it, good mediums of exchange are usually boring, owing to the properties that make them good mediums of exchange.

As the advantages and strengths of its unique system of decentralized consensus are fully realized, and ever more of the weaknesses and exploits of its rivals are laid bare, the popularity of the Bitcoin table continues to grow. Slowly but surely, more and more players are choosing to pull up a seat, to cash into the Bitcoin game, and to cash out of pump-and-dump shitcoins and rigged, corrupt national fiat currencies.

Next stop: hypershitcoinization

As annoying as the current shitcoinization phase is, at least it’s sure to be short-lived. I’m sorry to say that, yes, the cryptocurrency space is currently a huge bubble: a huge bubble full of shit. Right now, shitcoinization seems like a turd that just won’t flush. Unfortunately (or fortunately, depending on your point of view—as I’ll discuss in conclusion) things are going to get much worse before they get better…

As more and more of the shittiest of the shitcoins continue to disappear people’s money through hacks, quacks, scams, schemes, and plain old theft, people will eventually wise up en-mass. Then the shit-bubble will burst. And all the shit-flingers, shit-preneurs, shit-velopers, and shit-vestors will have to lie in the shitty bed they’ve made for themselves. Here’s just the latest of many high-profile examples of stinking turds to go down the toilet: collapse of Bitconnect, class-action lawsuit ensues.

By the way, if you ever find yourself in the position where a hyper salesman is yelling at you about how much filthy money they are making and that you too can make such filthy, filthy money, if you would only just give them what little money you do currently possess…for the love of god, run away very fast.

But hypershitcoinization will not be achieved by the mass adoption and success of shitcoins, rather it will be brought on when the shit-bubble bursts:

  • Hypershitcoinization, by definition, is when the collective shitcoin space has the effect of hyperinflating rival coins.
  • No matter how intense the spamming/scamming noise gets, the value of any legitimate, sound coins (namely Bitcoin, and maybe a couple others?) will continue to increase alongside their shitcoin cousins.
    • Why? Because legitimate coins actually are functional, have utility, use-cases, and associated value.
    • No amount of shit-flinging is able to change the functionality of legitimate coins at the protocol level.
  • However, when the shit-bubble bursts, due to the incredible amount of crypto-ignorance out there, the price of legitimate coins are sure to be dragged down in the surrounding shit-plosion.
  • Bitcoin prices will not increase, due to investors fleeing shit-coins, as some expect:
    • When bubbles burst, there is no getting out, due to a complete loss of liquidity (nobody wants to buy shit).
      • a.k.a. the once liquid shit coagulates into solid shit-bricks, the gig’s up (lol sorry, couldn’t help myself, we’ll see if this gets past the editing gods;)
  • Hence, when the bubble bursts, hypershitcoinization will result in driving all crypto-prices downwards towards zero—including Bitcoin.

Onwards and upwards: hyperbitcoinization

Notice I specifically said hypershitcoinization will drive the price of Bitcoin downwards and not its value. Although short-term speculators trying to get rich quick are likely to lose, long term hodlers will be fine, because hypershitcoinization is powerless to affect the Bitcoin protocol itself or the value that is immutably locked away safe and sound within it’s blockchain. As a matter of fact, the resulting collapse in BTC price will prove enormously profitable for anyone with enough understanding and courage to take advantage of this final opportunity to cash into the Bitcoin game on the cheap. Once the world realizes the value inherent in the one truly decentralized consensus protocol, BTC will never again be this affordable, because it is specifically designed to be a deflationary store of value.

It may take time for people to slowly learn to verify rather than trust, but learn they will—as there is no competition between rock-solid verification and fickle trust. In the long run, the complete superiority of the Bitcoin protocol will inevitably separate the wheat from the chaff. And by chaff, I don’t mean shitcoins—they will already be long gone, destroyed under the weight of their own shit. Bitcoin will rise from the ashes of hypershitcoinization a seasoned veteran, battle-hardened, and ready to blow away the real chaff: the modern systems of centralized banking and government that are exploitive, corrupt, and criminal to the core.

Hyperbitcoinization: the day of reckoning cometh!