October 31st marked the 13th anniversary of Bitcoin Whitepaper – a 9-page study that is about to change the world.
Published to an obscure cypherpunk mailing list, the idea of Bitcoin was first supported by only a handful of geeks - and look where we are now. Bitcoin market cap exceeds $1Tr, a burgeoning industry is being built around it, growing grassroot and institutional adoption… Bitcoin and crypto in general has become a major phenomenon and a hot topic for the regulators all over the world.
How did this happen? Bitcoin didn’t have any advertising or sponsorship and throughout its short history it was continuously accused of being a means to criminal ends, a danger to the environment, a risky gambling tool… Yet it is still here, more popular than ever and armed with heavy arguments against crypto-skeptics – and all this thanks to the crypto community.
Community driven by values
Bitcoin only lives through people: they add blocks and mine new bitcoins, they verify transactions, they use bitcoins, they verify the code and propose its updates, they organize crypto lobbies and educate other people. If a handful of geeks from the very beginning could become a 200M+ community of people from very different walks of life, it means that the community values are so strong they can transcend our differences and federate people – a rare quality in the age when most algorithms tend to separate them.
Bitcoin community is a strong one. It is very vocal and capable of acting as a united front when it comes to defending Bitcoin against misinformation or political attacks. Bitcoin enthusiasts are driven by conviction, so they tend to evangelize people in their own surrounding, making the community grow.
This grassroot transmission is key to Bitcoin success and perfectly reflects its goal: allowing people take back control over their money and their data in general, providing free access to a new financial system that does not (and cannot!) discriminate on any basis.
Bitcoin community should be an interesting topic for an anthropology study: as diverse as it may seem, it is united by strong values, and it has its own set of rituals and its own slang. Twitter’s “Laser eyes to $100k” is a clear adistinctive feature of a Bitcoiner, as well as saying HODL (steaming from a misspelled post on Bitcointalk forum in 2013) to signify not selling Bitcoin. Despite a seeming foolishness these are important elements that help people identify as a part of the community, keeping it united and… entertained 😊
Why many economists don’t get Bitcoin
Bitcoin is propagated by people, and everyone willing to understand the Bitcoin phenomenon needs to look at the people who use it and learn why they do it.
Mainstream economists, on the contrary, tend to believe what is written in (their) books rather than what is happening in the real life: they look from above, siloed from perspectives and unwilling to accept that the world is changing. Paul Krugman (Nobel prize), Nouriel Rubini, Steve Hanke, and many others continue comparing Bitcoin to the tulip bubble of 1637, impervious to the reasons why people use it. Joseph Stigliz (also Nobel prize) even insisted “We should shut down the cryptocurrencies”, showing the extent of his ignorance and not at all embarassed to give his opinion on a subject that he does not master.
These economists ususally have a common flaw of theorizing things that happened in the past and trying to apply this theory to the present, or even future. It never works.
Austrian economic school is the closest to understanding Bitcoin utility: it states that the economy is made by people who act according to personal (and not rational) reasons, and advocates for a minimal intervention of state into economy.
This school also considers Central Banks’ monopoly on money and their closeness with the state as a conflict of interest, which distorts the data and makes interventions even more harmful. Friedrich von Hayek, one of its key figures, is often quoted now, when Central Banks unleash their printing fury and the states intervene more and more into the economies.
When it comes to economy and society, what is recognized as rightful? A directive coming from the top (the state) or the practices common at the bottom (people)? Should the state impose money “by fiat” (by decree), or people can decide for themselves what they use as money?
As crypto enthusiasts, we of course believe that Bitcoin is money because people use it as such, and in the long term no state can resist the power held by people’s collective decisions. In the end of the day, the state is here to serve the people, and we should not forget this.
Art and NFT
The tech news that made the most of headlines this week was undoubtedly about Facebook rebranding its parent company into Meta, highlighting their bet on the metaverse - a virtual world where people can socialize, play and work.
The metaverse is not a new notion in the crypto world, where platforms like Decentraland, TheSandbox, Cryptovoxels or NetVRk build decentralized user-owned worlds. NFTs play an important role in the metaverse, acting as deeds of ownership for the plots of virtual land, integrating digital fashion, gaming artifacts and other features that are blowing life into a virtual world.
We don’t know yet what Facebook-made metaverse would be like, but the chances are high that it will be centralized, which together with Facebook’s track record of user data abuse is dangerous.
Can a decentralized alternative win over a company with almost 2Bn users and almost bottomless pockets? We’re about to live interesting times.
Bitcoin was traded sideways this week, plunging -7% and rising +3% vs last week, ending just below $62k.
Among the good news we can mention Mastercard integrating Bitcoin into its payment platforms, which will boost the adoption even further, and the Chair of the American Federal Deposit Insurance Corporation Jelena McWilliams pushing the US regulators to allow banks hold crypto on their balance.
Ethereum gained over 5% this week, marking its all-time high of $4460 on Friday, slightly corrected afterwards.
Quote of the week
"Bitcoin is mathematics, mathematical purity. There can never be another Bitcoin created."
Apple co-founder Steve Wozniak