Controversy and Bitcoin
I woke up this morning and plugged in for my daily dose of Money Stuff—a fantastic daily newsletter on all things finance by Matt Levine.
Obviously Bitcoin volatility was front and center. Up, up, up, WOAH, way up, down, way down, up again… aaaaaaaghhh.
Matt wrote a great piece about how to think about the EV of Bitcoin future value: $0/coin if everyone decides to not trust it. $5million/coin if every decides to base all of finance on it. Now simply calculate the chances of each.
Then he dove into all the people who fall on one side or the other of the Great Bitcoin Debate(tm).
Bloomberg has created a fun visualization of all the demigods of finance and where they fall—pro or con—along with lovely encouraging/disparaging quotes and the price of BTC on the day of the quote:
Without even clicking through and looking at the link, without any consideration for who was on which side, without a very deep knowledge of how “taste-makers” in finance affect markets I felt a very warm sense of knowing tickle in all my toes and I thought:
This bodes very, very well for Bitcoin.
Why? Well, let me take you on a thought journey with me.
What is currency?
Currency is faith. Not in the “religious” sense, but not too far off.
When I accept $$$ in exchange for my work, I’m putting trust in the “fact” that I can give that $$$ to my landlord, grocer, Lyft driver, barista, and Delta airlines and they will all do things for me.
In turn, they all take my $$$ because they trust that other parties will accept that $$$ in exchange for goods, services and safety.
That’s what makes money “worth” anything.
It’s not religion, because I personally don’t really have to believe that $$$ is worth anything, I just have to believe that someone else does.
Do you believe that Bitcoin is worth anything?
Do you? I can point you to any number of exchanges that will list the price of Bitcoin right now. Coinbase will let me buy or sell Bitcoin for a lovely $9,427.61 a pop.
But will my grocer…?
In most cases, no. I haven’t heard of any grocery store that will accept Bitcoin for potatoes.
Some third parties will give you on and off ramps to pay them in Bitcoin, and they’ll give your grocer the dollars, but in general no grocer has faith that they can pay their employees and their landlord and their electric bill by giving anyone Bitcoin.
Why? Lots of reasons! It takes a lot to manufacture faith and trust across society, and speaking on time-scales of society, cryptocurrencies are very, very new.
Even people who understand the space, or work in tech or finance, know very little about how cryptocurrencies actually work and what they fundamentally are.
What about the grocers? Do grocers know anything about bitcoin?
Which brings me to my next point: awareness.
Where does awareness come from?
You have to know about something before you can trust it. But how do you find out about things?
A lot of people put a lot of time and money into answering that question. We have an entire economy built on top of our ability to capture and sell awareness.
Companies that make ad platforms (Facebook, Insta, Snap), companies that buy ads there, companies that make tools for optimizing ads on those platforms, companies that sell products to companies who make tools for companies to optimize ads on those platforms…
And the circle continues.
So how does a person, concept, idea gain mindshare in the attention economy?
I argue that the best, easiest, cheapest way to attract attention and generate awareness is to ride a wave of controversy.
How many of you heard about #yesallwomen before #notallmen got running? How big a following did Trump have before people had started writing articles calling him crazy? Gamergate?
Controversy makes clickable headlines.
Controversy makes shareable content.
Controversy makes things go viral.
Bitcoin needs controversy.
For a time, at least. Eventually, if the controversy survives, Bitcoin will gain mindshare across a broad enough spectrum of society, that we will move to the next big milestone: common trust.
tl;dr
Thank you to Matt Levine, Sapiens, and Slate Star Codex for informing the views and opinions in this article.
