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The true innovation behind Bitcoin is the ability to transact value instantly around the world.
Saifedean Ammous and Peter St. Onge, in my opinion, are the thought leaders on the macroeconomic effects of adopting a bitcoin standard. The Austrian school of economics tends to shy away from making specific predictions and rather focuses on theory and grand outcomes. Mainstream fiat economists, who do tend to make these predictions — which are consistently inaccurate — don’t understand bitcoin or its value proposition and thus only produce cringe-inducing views such as this.
This leaves a gleaming gap of confusion and uncertainty about what will happen as the world transitions from using fiat currency to adopting bitcoin.
This article will try to fill in that gap, to sketch a picture for the reader of what is possible and what is probable for our economic future on Earth.
I am not of the opinion that there is a major depression looming or that the world economy will at some point “collapse,” but I rather envision a long period of transition, or realignment. There already exists a parallel economy of people living and transacting only in bitcoin. This bitcoin economy will grow while the “fiat economy” will gradually become smaller as time passes and people transition.
Bitcoin adoption will be brought about not by the public choosing to pay with bitcoin, but rather by producers and sellers preferring to be paid in bitcoin and thus incentivising customers to use it. Expect to see discounts for paying in bitcoin and sellers accepting only bitcoin.
This is not to say that there will not be turmoil. The fiat system has injected (2008) and re-injected (2020) the world economy with cheap money, causing malinvestment. At some point, there will be a large correction, or corrections — a “market crash.”. When this will happen is impossible to predict. According to Austrian Business Cycle Theory, the longer it takes for the correction to occur, the more capital is malinvested and the more drastic the correction will be.
This will not draw a large part of the economy into bitcoin immediately. The BTC price might even initially fall as everyone panic sells everything. Central banks and governments will not simply roll over and submit defeat. There will be more money printing, stricter laws and higher tax rates, etc.
Hyperinflation will occur in some areas, but remember that bitcoin is right there to be used as a medium of exchange, store of value and unit of account. Weimar Germany and Zimbabwe did not have this luxury. They had to go back to a barter system and this is what decimated their economy as everything came to a standstill. Venezuela appears to be slowly getting into bitcoin and things there seem to have gone better than originally anticipated. They also didn’t have a functioning bitcoin Lightning Network, which we already have today.

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