Bitcoin's Narrative Is Shifting As It Races Towards $30,000
In Ancient Greek mythology, the Chimera was a monstrous fire-breathing hybrid creature composed of the parts of more than one animal. It was a bizarre beast of divine origin that ravaged the countryside of Lykia in Anatolia. Classic depictions of the Chimera typically portray it as a lion, with the head of a goat protruding from its back and a tail that ends with snake’s head. The Chimera was reputed to be “near invincible,” for it had the strength of a lion, the cunning of a goat, and the venom of a snake. However, its most unusual and deadly weapon by far was its ability to breathe fire.
Today, the term “Chimera” describes anything composed of disparate parts, or perceived as wildly imaginative, implausible, or dazzling. It is a concept that lives in the minds of its host and is interpreted differently based on the individual’s circumstance and preconceptions.
Source: Musée du Louvre
Bitcoin is the Chimera of the financial world. Although its attributes seem deceptively simple at first glance, one of its biggest strengths is that it represents many different things to different people. A Syrian refugee may adopt Bitcoin as the primary savings wealth preservation vehicle she chooses to transport her wealth as she embarks on a precarious journey to cross borders and settle in a welcoming European country. The owner of a bodega in Argentina may utilize Bitcoin as a store of value and medium of exchange as the Argentine peso rapidly depreciates in value. High net worth individuals may view Bitcoin as a higher beta play on gold that has superior qualities to the lustrous rock. Additionally, it is increasingly being viewed as a hedge against monetary and fiscal irresponsibility destabilizing the global monetary system by the largest macro asset managers, insurance companies, and public corporations.
As Bitcoin has grown, its community has rallied around varying narratives that have morphed over time. Beginning as a speculative digital collectible, moving to a novel peer-to-peer form of digital cash, evolving to digital gold now, and potentially transforming into a base-layer money and foundation of digital capital markets in the future, Bitcoin gains credibility as it moves through various stages of maturity.
This ability to redefine itself in the minds of its users provides Bitcoin its greatest defense mechanism. How can anyone take down a system that is constantly reshaping itself to congeal with the latest narrative of the day? Especially a system that enables its users to take ownership of their assets by memorizing a mnemonic phrase, thus quite literally living in the user’s mind.
Visionaries and dreamers are the stewards of technological and societal change. In its early days, the development of the internet was derided by cynics of the mainstream media and business institutions. Even technology pioneers and entrepreneurs were skeptical the internet would take off in its early days. In 1995, Robert Metcalfe exclaimed, “I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” The internet required visionaries and early adopters to look past its initial limitations and push technical development forward, though they would have scarcely predicted the killer apps of Amazon, Facebook, Google, and Netflix.
Financial Incumbents Are Changing Their Tune
Leading financial gurus and business leaders were right to be skeptical of Bitcoin in its early days. No one could have foreseen that an embryonic digital currency birthed pseudonymously from the fringe Cypherpunk movement would challenge dominant sovereign currencies and global store of value assets.
However, financial services incumbents that derided Bitcoin have recently begun to change their tune, signaling wider acceptance and an open mindedness to the digital asset’s potential. Quantitative strategists at the world’s largest bank, JP Morgan Chase, recently published research suggesting funds were flowing out of gold and into Bitcoin while quoting a Bitcoin price target of $650,000. Similarly, a leaked Citibank report published Bitcoin could reach $300,000 by the end of 2021. Proclamations like these are notable because banks were historically Bitcoin’s biggest critics, and they arguably have the most to lose from a burgeoning alternative digital capital markets system.
Although it is showing tremendous promise, Bitcoin still has a myriad of technical and social issues it must contend with if it is to fulfill its potential and continue its current growth trajectory. Bitcoin and other digital assets still have numerous attack vectors both internally and externally from technological, political, and regulatory perspectives. They are still very early in their lifecycles, and their primary use cases will continue to solidify over time.
2020 was the year Bitcoin entered the public consciousness. As it flourished whilst our public institutions faltered, people began to view it as a true safe haven asset. 2021 will bring new challenges, and an uncorrelated non-sovereign store of value wealth preservation vehicle can help us deal with the uncertainty.
