Bitcoin and cryptocurrency often trade on narratives, shifting to fit world events and play the role that is currently most required of them, or to offer hope for the future.
This is especially apparent when it comes to bitcoin itself, which has transitioned through several narrative phases, in each of which its most vocally touted utility altered with the global news outside.
Contrasting Bitcoin Stories
Bitcoin was forged from an era of financial crisis, launching in 2009 as the alternative to institutional ineptitude and excess. It may be true that not many were paying attention back then, but from the very beginning, bitcoin had a curious, bi-polar character. On the one hand, it represented (and it actually is) sound money and personal responsibility in the face of governmental and financial sector recklessness.
In this narrative, the gamblers and rip-off merchants are not dealing in cryptocurrency, but rather, they are the establishment institutions themselves, and it is bitcoin that, far from being a scam, embodies conservatism and stability, and will save its adopters from the broken, exploitative fiat system or enable adopters to save themselves.
Stacking sats to cold storage and holding your own keys became the adult, self-sufficient, robustly prudent lifestyle choices, but simultaneously, bitcoin took on, or had foisted upon it, a contradictory story.
In the contrasting tale, bitcoin is subversive and counter-cultural, an attempt at societal disruption, or a vehicle by which to drop out, brought into existence and disseminated by cypherpunks, anarchists and misfits who applied code and mathematics in unorthodox ways.
Is it possible to be both conservative and subversive at the same time? Bitcoin, somehow, has managed both, depending on who you ask.
What’s more, its utility has been presented sometimes as a store of value, and sometimes as a digital currency. And, when states become authoritarian, it is offered as a means of transacting freely, but when the subject of criminal activity is raised, it pointed out that blockchains are more transparent and readable than the movements of fiat through cash.
Bitcoin shifts. Or rather, the narrative shifts and can be adapted, while Bitcoin itself operates elegantly beneath, block after block, functioning and constant.
Crypto Drama Creates New Narratives
Recently, there has been a cascade of dramatic crypto news, as various entities reckon with catastrophe. It started with the TerraUSD death spiral, followed by the Celsius platform freezing user withdrawals, and then crisis at Three Arrows Capital, a malfunctioning crypto hedge fund. Most recently, there are problems at Solend, a Solana-based lending platform that purports to be decentralized but decided it might be acceptable to commandeer a user's funds.
While these events unfolded, crypto prices plummeted, but have, at the time of writing, stabilized. Could there be more drops to come, with revelations and liquidations waiting round the corner? If so, that will become apparent in the coming weeks.
But, this breathing space has allowed a couple of new narratives to emerge, both adding to the constant-but-evolving bullish case for bitcoin and crypto, and both entirely plausible.
The first of these is that deleveraging, with all the pain and shock that it entails, is occurring globally, across markets and economies, just as it is in the financial structures that have emerged around bitcoin.
However, bitcoin is forcing through its own deleveraging events sooner and at a quicker pace than can occur in traditional financial systems, and without the possibility of anything other than ruthless execution. In bitcoin’s case, it is not a case of needs must, but simply, this is how it is, while whatever happens, the blockchain clock ticks on.
Bitcoin, in this scenario, is at an advantage, being incorruptible and offering not favors, but in their place, something much more valuable: real-time, dispassionate lessons. On a nuts-and-bolts level, it means that Bitcoin will be well-placed, with its ecosystem clean and refreshed, and a little wiser on aggregate, new players strapped-in and stress-tested, for when the global, macro-economic storm really starts to gather.
Or so the story goes. And, who knows? Perhaps it is true. It certainly sounds plausible, and who wouldn’t want a life-raft when the economic waters are rising? Maybe that, in the end, will be the crux of the matter: that if enough people believe bitcoin is a way out, then the more likely it becomes that bitcoin fulfills its promise.
Decentralization Won’t Be Compromised
The other detail of note is that entities, such as Celsius, Three Arrows Capital and Solend, that have imploded or come close to liquidation, are either centralized organizations or, in the case of Solend, would abandon anything that meaningfully equates with decentralization. None of what has occurred is a reflection on that core value, that kicked matters off back with the creation of bitcoin, and that can never be traded away: decentralization.
That leads to another point, that is pertinent as we witness the collapse of centralized entities built around a culture of decentralization. A criticism sometimes thrown at crypto, from skeptics, is that it has no real utility, or is a solution in search of a problem. That argument, though, has never really held water.
There is no need to bring up complex DeFi or CeFi structures that are not sustainable, but utilize crypto, because one use case is simple and outstanding: if the only ever utility for bitcoin and other cryptocurrencies was fully decentralized money, that would be enough, and make it all worthwhile. What’s more, it would be conservative and radical at the same time, and likely play into many more narratives still to come.
