Changing the narrative is one of the most effective ways to influence a community. Since 2008, bitcoin has had an ever-changing number of narratives.
First, bitcoin was called peer-to-peer electronic cash. It started its narrative as a cheap global payments network uncontrolled by banks or other entities. Then, bitcoin became a bloated, expensive mess in 2017, causing bitcoin to fracture into BTC and BCH, each of which proposed a different way to solve the problem.
One of the interesting things about a decentralized network is that there’s no single narrative. There’s no single bitcoin “company” listing a single narrative, for example. There are multiple narratives, and the community chooses which one it likes best.
Sometimes, these narratives are incompatible with one another. You can’t have a darknet currency, for example, that’s also used in mainstream financial products like ETFs.
Where will bitcoin’s narrative go next? How did it get to where we are today? Nic Carter, co-founder of CoinMetrics.io, recently explored that question at Medium.com in a post titled, “Visions of Bitcoin.” Carter explained how bitcoin’s narrative has changed over its 9 year history. The piece, according to Carter, relied heavily on prior work from Murad Mahmudov and Adam Taché. Below, we’ll talk about some of Carter’s findings about bitcoin’s changing narrative.
How Has Bitcoin’s Narrative Changed Over Time? A Timeline of Events
Bitcoin’s whitepaper was published online in October 2008. In January 2009, the bitcoin genesis block was mined, and the bitcoin network has been running ever since.
For his piece, Carter identified seven distinct “narratives” throughout bitcoin’s history. These narratives “do not necessarily have to be the most influential narratives,” according to Carter. “We are instead focusing on major strains of thought that have characterized bitcoin users.”
Bitcoin’s narrative has changed significantly over time. Here are bitcoin’s narratives in rough order of their appearance, according to Carter:
An Electronic Cash Proof of Concept
Bitcoin began its life with this first major narrative: as an electronic cash proof of concept. The bitcoin whitepaper was titled, “Bitcoin: A Peer-to-Peer Electronic Cash System”. It was meant to showcase the ability for modern technology – like the internet and blockchain – to overcome longstanding problems like the Byzantine generals problem and the double-spend issue. Bitcoin wasn’t the first electronic cash concept. However, all previous schemes had failed. Based on these previous failures, it’s easy to see why people doubted bitcoin in its early days.
A Cheap P2P Payments Network
Eventually, bitcoin blossomed into something usable. You could easily and cheaply send bitcoin to other people worldwide. Bitcoin had limited value during this stage of the narrative. It was a nifty toy used by techies. This was before exchanges and exchange rates even developed, and nobody was even sure what one bitcoin was worth. At this stage, bitcoin was treated like a decentralized PayPal or Venmo. You could send payments with low fees without trusting a centralized intermediary.
Censorship-Resistant Digital Gold
Bitcoin continued growing, and its narrative continued to expand. No longer was bitcoin viewed as just a cheap and easy way to transfer wealth worldwide. It was seen as a form of long-term wealth storage. It began to be viewed as “digital gold” that was resistant to censorship and government seizure. Your could store wealth in bitcoin long-term without it inflating. Supporters of this narrative often push bitcoin’s narrative further: they claim bitcoin should only be used as a form of long-term wealth storage and should not be used for everyday transactions – contrary to Satoshi’s original whitepaper.
A Private and Anonymous Darknet Currency
As bitcoin’s usage and acceptance grew among the internet, it began to be seen as a private and anonymous darknet currency. Around this time period, people would say things like, “Bitcoin? Can’t you hire assassins from the internet using bitcoin?” It was partially true: bitcoin was the preferred method of payment for illegal items online. You could spend bitcoin at retailers – like drug dealers – that were unable to accept credit cards. Instead of using cash or a bank transfer, you could send bitcoin.
A Reserve Currency for the Crypto Industry
As bitcoin grew, so too did altcoins. As the number of altcoins expanded, bitcoin’s narrative evolved into a position similar to the position of the USD today: as a reserve currency for the crypto industry. Today, some traders quote asset prices not in USD amounts, but in bitcoin. Typically, this view is endorsed by traders, businesses, and organizations that hold large amounts of bitcoin.
Programmable Shared Database
This is one of the more niche narratives on the list. Bitcoin can be seen as a programmable shared database. It’s not just a place where you can store coins. You can embed arbitrary data – not just currency transactions – into the bitcoin blockchain. It was a common view within the community in 2015-2016, for example, that bitcoin would grow to host decentralized apps and advanced scripting features – similar to what Ethereum grew to become. This was the time when projects like Namecoin, Blockstack, DeOS, Rootstock, and timestamping services became integrated with bitcoin – services that continue to rely on bitcoin to this day.
Uncorrelated Financial Asset
One narrative treats bitcoin like a financial asset. Under this narrative, the chief value in bitcoin lies in its status as a financial asset disconnected from other market movements. Bitcoin has a low or nonexistent correlation with indexes, currencies, and commodities, making it an attractive way to diversify your portfolio and give it added stability. This narrative continues to gain steam as bitcoin becomes increasingly financialized.
Popularity Over Time
Carter charts each of the seven narratives above. The narratives listed above didn’t rise and fall: some became more popular or less popular over time. Some narratives fluctuated. Carter posts all of this narrative information in the form of a colorful graph:
That graph first highlights how bitcoin was an electronic cash proof of concept, for example. This was the dominant narrative during the early days of bitcoin in 2009 through 2011. However, this narrative has disappeared for a simple reason: bitcoin is no longer a proof of concept. It’s a working, bonafide electronic cash system.
During the early days, there were two other competing narratives: bitcoin as a cheap payments network and bitcoin as a censorship-resistant form of electronic gold.
Starting in 2010, a new narrative emerged for bitcoin: bitcoin began to be viewed (as used) as an anonymous darknet currency. This was also around the time that the idea of bitcoin as a programmable shared database emerged, although it has remained a niche view over the years.
In 2013, people started seeing bitcoin as a reserve currency for the crypto industry – a view that continues to this day.
Then, in 2014, the newest narrative emerged: bitcoin as an uncorrelated financial asset.
Today, the dominant narratives are bitcoin as a censorship-resistant form of electronic gold, bitcoin as a reserve currency for crypto, and bitcoin as an uncorrelated financial asset. According to Carter, “bitcoin as a cheap payments network” is now a niche narrative. Bitcoin (or at least BTC) is no longer about providing cheap and efficient payments to populations worldwide.
Some Visions of Bitcoin “Are Entirely Incompatible” With One Another
One of the reasons the bitcoin narrative is so interesting is because some views are incompatible with each other. Without a centralized force dominating bitcoin’s narrative, we leave it to the community to pick the best narrative.
Carter believes many of the narratives are mutually exclusive: you can’t have one while also supporting the other:
“…you’ll notice that some of the visions of Bitcoin are entirely incompatible. For instance, a move to a global on-chain payments network conflicts with the digital gold view.”
Carter goes on to describe how this conflict began to be fought earnestly when BitcoinXT was released in 2015. Bitcoin Classic and Bitcoin Unlimited intensified the conflict, and the entire issue came to a head in 2017 with the fork of bitcoin into BTC and BCH.
Carter describes these as “the civil wars of 2015-17” and believes we’ve never had a more harmonious bitcoin community than we have today.
“The civil wars of 2015–17 ended with the Bitcoin Cash fork, and migrations to other p2p payment factions like Litecoin, Dash, and Nano. For now, the tension seems to be largely resolved, and we find ourselves in an unusually placid era in Bitcoin’s history. Subjectively, it appears that under this comparatively peaceful regime, development seems to be progressing more rapidly. Endless social media battles, conference-driven agreements, and positioning for contention forks certainly created a drag on developer efforts.”
Carter warns that the battle between bitcoin as censorship-resistant gold and bitcoin as a cheap payment process, however, isn’t the only battle raging within the bitcoin community.
The Next Bitcoin “Civil War” Will Be Between the Darknet Narrative and the Financial Asset Narrative
There’s another pair of incompatible narratives in the list above: you can’t have bitcoin used as an anonymous darknet currency at the same time it’s being used as a regulated financial asset.
Bitcoin is a fungible and anonymous currency. That view, however, is at adds with those who want to make bitcoin a mainstream financial asset. Bitcoin as a mainstream financial asset would require things like AML/KYC, putting a lesser emphasis on privacy and fungibility.
“Many pundits believe this will be the next bitter fight for the soul of bitcoin,” explains Carter.
Conclusion: Where Does Bitcoin’s Narrative Go Next?
Bitcoin’s narrative has changed over time – often in surprising ways.
First, we saw bitcoin as an electronic form of cash, a nifty toy that functioned as a proof of concept for an internet-based currency. Over time, we’ve seen bitcoin grow in surprising new directions – from its use as a darknet currency to its (potential) future as a mainstream financial asset used in ETFs.