- The story of Bitcoin is currently being written and no one knows with certainty what are the repercussions of its introduction in the financial system and, more broadly, the global economy. We need to approach this space with an open mind and without being overly tribalistic.
- The Bitcoin narrative has changed significantly in the last decade. What Bitcoin was created to do (decentralized peer-to-peer payment system) and what major advocates currently say it should be used for (a network that stores value against other assets) are two very different things.
- Bitcoin’s store of value narrative is valid, especially given its technological features (secure network and finite supply) and the current macroeconomic environment (worries about inflation picking up). That being said, there are many moving parts to this equation.
Bitcoin, and the entire crypto-space, is an emerging asset class that everyone has heard of by now (disclaimer – my mother owns a very small amount of bitcoin). This is a space that is crowded with a significant amount of new information that is intellectually challenging, and we don’t claim superiority in covering it. That being said, cryptocurrencies might be the most spectacular disruption, or financial bubble, that modern finance and economics have seen, and as such, we feel a duty to ride the crypto bus out of curiosity.
Different from many of the crypto-focused outlets out there, we’re not trying to change your mind, but rather put together some thoughts that are conversation starters rather than the end-points of a discussion. We, (Tim and Diego) own a bit of bitcoin, but we’re not banking our financial security, reputation, and future on it. (Just kidding, Tim 100% is)
In the coming weeks, we’ll lay out as concisely as possible what we believe are the most interesting aspects of the assets in the space and will continue to cover crypto (mostly bitcoin) as it develops. We will likely change our opinion as we continue writing about it – after all, this is a nascent space that merges technology, economics, entrepreneurship, political ideologies, finance, game theory, and much more, and we don’t believe many individuals are proficient in the intersection of them all – but whenever we do, we’ll make sure to highlight what’s changed. We think we can add value to our readers by talking crypto, and especially Bitcoin, in exactly the same way we talk about it when we discuss it with friends or colleagues. We don’t overdress it.
Let’s start with Bitcoin.
From Peer-to-Peer Payments to Store of Value
Bitcoin is currently 60% of the market cap of cryptocurrencies (historically, it bottomed at 32% and topped at 100%) and, most importantly, it has been the first and most dominant crypto since the successful invention of cryptocurrencies. It’s the Ayrton Senna of cryptos, which is why it tends to be the starting point for anyone who wishes to learn more about the space.
Bitcoin’s story is being written as we speak, and should it fail to be anything other than simply a story, it was at least a really entertaining one. The narrative (i.e. the arguments in favour of its value and adoption) has changed significantly since its creation in 2008, and we’re yet to understand what the ultimate purpose of this new asset is.
Bitcoin was initially created as a peer-to-peer payment system that focused on allowing network participants to transfer value across the internet without the need of a trusted intermediary (more specifically a “financial institution”) that certifies the system is not fraudulent. That’s where the word “decentralized” comes from – it does not depend on a central “clearing” institution. Make sure you read the white paper – it’s not the most obvious thing, but it represents the starting point of the entire Bitcoin conversation, and it’s a good foundation to have under your belt.