Thread by @JohnCantrell97

The adoption and therefore price of Bitcoin might accelerate faster than most people realize.

What is game theory?
How does it apply to Bitcoin?

You probably heard the ideas thrown around but let me break it down for you 👇

Game theory is the study and analysis of the strategy used by rational actors within some environment.

In its simplest form you can think of as analyzing how each player should play in a board game.

The ideas can be applied more broadly to all types of ‘games’.

So what games are going on in Bitcoin?

There’s actually many separate but related games being played within the Bitcoin ecosystem.

There’s the mining ecosystem, development process, individuals, company treasuries, and even nation state games at play.

While they are all interesting in their own right, let’s focus today’s thread on the one that will force an accelerated global adoption of Bitcoin.

The idea is actually pretty simple to understand and is basically the same for individuals, companies, and nation states.

Let’s use a simplified example to illustrate the idea. Let’s say there are three people: Alice, Bob, and Carol.

Alice is currently the wealthiest and has a net worth of $100.
Bob is the next wealthiest with $60 and Carol is the poorest with $25.

The price of Bitcoin is $1.

It’s important to understand that because of Bitcoin’s fixed supply the more people that adopt or demand Bitcoin the higher the price will go.

In our example if Carol converts her wealth to Bitcoin she is able to acquire 25 Bitcoin but she consumes all the supply at $1.

The price of Bitcoin is now $3.

Bob sees what Carol did and decides he should also convert his net worth to Bitcoin before Alice does.

Bob is able to acquire 20 Bitcoin and consumes all of the supply at $3.

The price of Bitcoin is now $6.

Alice wants to trade with Bob and Carol but they’re only operating in Bitcoin now.

Alice is forced to convert her net worth to Bitcoin and is only able to acquire 16 bitcoin.

The price of Bitcoin is now $10.

Before hyperbitcoinization happened the standing was:

Alice: $100
Bob: $60
Carol: $25

After hyperbitcoinziation the standing is:

Alice: 16 BTC (~$160)
Bob: 20 BTC (~$200)
Carol: 25 BTC (~$250)

The entire situation has flipped based on the order they adopted Bitcoin.

This is exactly what can happen with individuals, companies, and nation states.

The billionaires, S&P 500, and the richest countries can all be leap-frogged by early adopters in the race to adopt and acquire Bitcoin.

Back to the game theory.

If you understand this is what happens if you are late to acquiring Bitcoin then strategy says you should acquire Bitcoin early as possible.

This is what people like you, companies like Microstrategy, and countries like El Salvadore all realized.

@nayibbukele , the president of El Salvadore, predicts at least two other countries will adopt Bitcoin in 2022:

https://twitter.com/nayibbukele/status/1477464599612076038

This is the beginning of the theory playing out. As nations see what is going on they will quickly realize they can’t afford to wait.

As more and more nations adopt Bitcoin others will be forced to adopt or be left behind in the transition to a hyperbitcoinized world.

The same thing will happen at the company level and even the individual level until the transition to a Bitcoin standard is complete.

I hope this helped you understand what people are talking about when they reference the game theory related to the adoption of Bitcoin by individuals, companies, and nation states.