Bitcoin adoption changes how you feel
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Bitcoin adoption changes how you feel
How does the altered mindset of Bitcoiners help us predict the future?
Starting with a tweet:
Like all stories, we have to start at the beginning, which in this case is with a tweet:
I pose the question again: “What is the biggest change in your mindset since adopting bitcoin?” Whether you’ve never heard of Bitcoin, studied it for under 10 hours, or consider yourself a so-called “Bitcoiner”; the response received to this simple question is of interest to you.
People want to be happy. People want to be optimistic. People want to be secure. We all know this just from living life. But how do we achieve these desires? There is a phenomenon unveiling itself, should you choose to look, from an area of life too oft ignored: our money.
Read on to learn:
What is Bitcoin?
Where are we in the Bitcoin adoption cycle?
What impact is Bitcoin adoption having on Bitcoiners?
The end (of the beginning..?)
What is Bitcoin?
Short answer: money. Medium answer: digitally native money with no middle man which cannot be debased. Long answer: I am going to re-direct you to three critical resources:
High level value proposition: The Bullish Case For Bitcoin
In depth investment rationale: The Saylor Series
Social impact credentials: Check Your Financial Privilege
The thrust of this article is not however to sell you on the legitimacy of Bitcoin, but rather to delve further into how it is actually effecting people, once they have taken the plunge to adopt Bitcoin.
Where are we in the Bitcoin adoption cycle?
The answer to this question is not as straightforward as it may seem… It’s interesting to debate however, as the adoption phase indicates potential future impacts, of our aforementioned mindset change question. The earlier we are, naturally, the larger the potential future effects on our population. Ultimately it comes down to opinion, of which people have conflicting views, so its necessary to distill your own.
Opinion 1: On the one hand I chatted with Brian Estes, an investor with expertise in technology s-curve adoption, who believes we are already at around 10% adoption.
Opinion 2: But on the other hand I chatted with Croesus, author of “Am I Too Late To Bitcoin?”, who believes we could be as early as 0.01% adoption.
So who is right?
Brian cited a report from Motley Fool as part of his research, which ultimately worries me, in that it potentially conflates “Bitcoin adoption” with “Crypto adoption”. They are very different beasts. Yes Bitcoin is a cryptocurrency, but its characteristics are different from the alternative 20,000 coins. Let me make some analogies:
If you’re an early-stage equity investor, you could buy publicly traded equities, but you would do so in the knowledge it’s a different value proposition; even though they are both equities.
If you’re a wine investor with expertise in Chardonnay from Australia, to go and buy Merlot from France, you would be buying something with a different value proposition; even though they are both wines.
To return to the relevant market: Croesus defines a “Bitcoin Maximalist” as someone with 50% of their net wealth in Bitcoin, which is clearly different to someone with $10 of Dogecoin, both represent different value propositions; even though they are cryptocurrencies.
In making these analogies I will have riled some, who see Bitcoin simply as money, the technology humans use to solve the double co-incidence of wants problem. This is valid, and makes one question whether Bitcoin can even be considered an investment, but rather a savings technology. However, I like the simple framing, which I’ve found useful as an allocator of my own capital. (More on this later)
Because my interest is in Bitcoin adoption specifically, logically, I lean towards the thesis of Croesus. Defining a Bitcoin Maximalist is key. Like him I believe Bitcoin will be the base layer of our future decentralised financial system, so having 50% of your wealth stored there is totally rational, the question is: how many people currently do that versus the future?
Croesus admits that identifying how many Bitcoin Maximalists exist is “nearly impossible”… Enter stage left the tweet that started this story… Having had so many responses, 171 and counting at this stage, I was intrigued. I started delving into the tweet analytics:
What immediately struck me was the fact that over 25,000 people had seen this tweet! The power of modern social media is quite extraordinary in its ability to share ideas. But then I had some questions:
Who was commenting?
Why were they commenting?
What were they commenting?
Little did I know that these thoughts are what would inspire what you’re now reading, but such is the nature of curiosity, and the fascinating process that is the proverbial “Bitcoin Rabbit Hole”. I will go on to answer questions 2 and 3 in the next section, but the answer to question 1, helps us draw a conclusion to where we are in the adoption cycle.
So ‘who’ was commenting? The majority of those responding seemed to be what Croesus would describe as a ‘Bitcoin Maximalist’. Interesting. Then I was struck by a thought: could the comment ratio be a proxy for where we are in the cycle?
I looked at the data:
25,564 saw my tweet
171 made a comment
0.6% comment ratio
Following this logic: Bitcoin adoption is at 0.6% of the potential population. Coincidence? Maybe. Valuable exercise? For me, yes.
In theory then, 99.4% more people are going to shift to 50% bitcoin in their net wealth. Wow… What an extraordinary time to be alive, studying this nascent technology, which has such significant potential for growth from where we are today.
For the sake of this discussion, the salient point is that the mindset changes seen due to Bitcoin adoption, have only influenced a small percentage of the potential population. Read on to learn ‘why’ people were motivated to comment, and most importantly, ‘what’ it was they were commenting.
What impact is Bitcoin adoption having on Bitcoiners?
Great question! Truth is, it’s changing people’s lives. How do I know? 1) Because I can feel it in myself. 2) Because Bitcoiners happily tell you. Putting my own journey aside, let’s come back to the tweet in hand. To remind you, I asked: “What is the biggest change in your mindset since adopting bitcoin?”
Having already concluded that the majority of those commenting were Bitcoin Maximalists, let’s look at ‘why’ they commented, which I believe is simple: People wanted to share their positive experience. Funnily enough, this is the exact same answer I would give if you asked me: “Why do you host a podcast about people’s personal journey’s to Bitcoin?” I want to share stories of positive experiences.
This highlights the potential of Bitcoin to organically grow, with its users as a motivated marketing department, the engine room of viral adoption. All these people are instigating debate all day long, educating family and friends, keen to share their newfound knowledge. Nothing survives without purpose…
So ‘what’ is it they are actually saying? Frankly this is where it gets really interesting. I decided to dive deeper into these responses, to understand what mindset shift was the most common, extracting from each tweet the most prevalent theme. Here are the top 5:
Each of these subjects are huge topics in and of themselves, so I will keep this to a high-level, working in reverse order:
Fiat:
I have a degree in Business Management, so have been highly trained in how to make money, however I never stopped to ask: “What Is Money?” Turns out this is very common. By learning about Bitcoin people are forced to ask this question, the result of which inevitably leads to an analysis of the status quo financial system, which is one designed with fiat money.
How does it work? Who benefits from it? Why do I care? Digging into the design, certainly for me, highlights its insidious nature. Fractional reserve banking. Quantitative easing. The cantillon effect. Crony capitalism. It is a complex system with many negative externalities rarely proffered by those that control it.
If you like imagery in order to learn, Heavily Armed Clown and I talked through through the genesis story of WTF Happened In 1971, which depicts with charts the brutal reality of this system. The average person has seen drastic reductions in their purchasing power over the last 50 years. The most frustrating part? Most don’t even realise…
By questioning the fiat system they were born into, Bitcoiners’ curiosity leads them down a number of paths, an inquisitive attribute that clearly perforates the community. Books such as Layered Money, The Fiat Standard, and The Creature From Jekyll Island, all deepen one’s understanding. Ultimately, with good information, good decisions can be made.
As Bitcoin scales, what does it mean for society, as more and more people understand fiat money..?
Trust:
Hard baked into the design of Bitcoin is immutability. Aspects such as the monetary policy, the transaction history, and the difficulty adjustment process cannot be changed. Whilst you are able to utilise its transparent nature to decipher for yourself what is true. This has spawned a phrase: “don’t trust, verify.”
Under the hood you find a genius piece of engineering, marrying diverse fields, such as blockchain, elliptic-curve cryptography, and peer-to-peer computing. Ultimately its major breakthrough was solving the ‘byzantine generals problem’. Being able to organise people in different places at different times to reach consensus is a big deal. For the first time you cannot double spend online. If you want more on this look no further than Gigi who articulated excellently to me the importance of digital scarcity.
Being able to study the sender and receivers wallet, you can verify each exchange, so if it all matches up you know the transaction is legitimate. In short: you can rigorously appraise its financial health. Bitcoin is a digital measuring stick of truth with which humans can value everything… Or as so engagingly explained to me by Knut Svanholm: “Everything divided by 21 million”.
Bitcoin’s design is in stark contrast to the aforementioned status quo fiat system. Don’t worry everyone “trust the experts” is the rhetoric. But what if we can’t? How can we check? Where is the information to prove it? A myriad of stakeholders make sure of its opaqueness. Whilst it utilises debt as its primary building block, which by its very nature, requires you to trust it will be paid back. In an environment of record debt levels its logical to be skeptical if repayment will ever happen.
As Bitcoin scales, what does it mean for society, as more and more people want to verify everything..?
Saving:
Saving and investing are not synonymous. Frustratingly this fact has been forgotten by most of us. Not necessarily by choice mind you. As the owner of capital, if you do nothing with it, you are saving it for future use. If you decide to deploy that capital into an investment however, you are taking risk, betting that whichever market, product, and team you’ve funded grows.
The reason for this situation is simple: inflation. Modern monetary policies, with their large stimulus programmes injecting additional money supply, incentivise investment. The central bank funded narrative pertains this to be critical to a healthy economy. But is it? No doubt, simply saving in today’s environment, is a guaranteed way to lose purchasing power over time.
Bitcoin offers another solution. Bitcoin is a savings technology. Earlier I glossed over this discussion, in favour of highlighting the differences in equity or wine investments, to unsubtly identify the importance of studying the characteristics of Bitcoin. But what Bitcoin adoption identifies, is that people see huge value in simply saving money, rather than taking risk with their capital.
Importantly, due to the fixed supply cap of 21 million, Bitcoin acts as a deflationary money; it’s purchasing power grows over time. So not only does this mean Bitcoiners are able to save again, with vastly reduced counter-party risk, they are also able to combat the negative impacts of inflation. This is particularly important for the lowest socio-economic bracket as traditionally they own no investments. Thankfully we have a way to grow our rainy-day-savings again.
As Bitcoin scales, what does it mean for society, as more and more people have access to a reliable savings technology..?
Hope:
Bitcoin is hope. For those studying Bitcoin for the first time this will sound far-fetched. What the hell are you talking about? Fair call. Look at the information presented today though. This is primary research. People are literally telling me how they feel. The information is right there. Bitcoin adoption increases hope in the future.
Others have described Bitcoin adoption as “bullish on humanity” which I like. But, why do they feel this? Money is integral to how we make decisions, how we facilitate trade, how we grow wealth. Money is part of life. Yet the money in general circulation is corrupt. It clearly benefits the few at the expense of the many. Taking it a step further, if the money is corrupt, then all action spurred from it is also corrupted.
Satoshi Nakamoto designed a monetary network that echoes the founding principles of democracy: “ruled by rules, and not by rulers”. A software protocol has removed our human fallibility to corrupt money out of self-interest. As a result people are looking to Bitcoin as a transparent set of fixed rules by which to abide. Given the back drop of global recession, rising authoritarianism, and falling trust in institutions; it’s a trend that is only going one way.
Most poignant of all is the truly global nature of Bitcoin however. Anyone, anywhere, is able to utilise Bitcoin and reap the reward of hope. Dalia Platt talked me through the hope generated by financial education in El Salvador. Farida Bemba explained to me the renewed hope fighting financial imperialism in Togo. The Wizard Of Aus shared the hope generated by Australia’s Bitcoin Bush Bash. This is a global phenomenon.
As Bitcoin scales, what does it mean for society, as more and more people are hopeful on the future..?
Time:
There was a clear winner however in terms of comments to my tweet: Bitcoin adoption has altered people’s mindset in relation to time. Well what does this really mean? It means Bitcoin adoption has enabled people to delay present gratification and focus more on the future. Why? Because of being able to save in a deflationary hard money.
There is an excellent section in The Bitcoin Standard that opened my eyes to the subject of “time preference”. It immediately resonated very strongly with me. I had never considered before that the money we use was reflected in modern society so clearly. What has happened over the last 150 years to architecture, fashion, and food? Have their been measurable declines in quality and is that due to our monetary system? It’s highly probable. On the bright side, what really caught my attention, is the ability of low-time-preference thinking to enable long-term planning.
As someone who has been deep down the cleantech rabbit hole, working on and investing in climate related startups, I never looked at the monetary system we use as a potential solution. I now believe Bitcoin to be our best tool when it comes to environmental sustainability. Specifically it is the fact that inflation induced short-termism, consumerism, and other high time preference thinking is nullified. A digital money spawned from the free-market, will be a far superior tool than government policy, when it comes to aligning incentives between people and planet.
Importantly it is Bitcoiners who are feeling the benefits of this mindset shift. Whether it’s more time with family, the ability to finally re-educate in a field you’re passionate about, or take a risk building a business; Bitcoiners are taking back control of their most scarce asset: time. It is impossible to over-estimate the impact of this profound movement. The amount of creativity that is about to be unleashed is beyond our wildest dreams.
As Bitcoin scales, what does it mean for society, as more and more people manage their time more effectively..?
The end (of the beginning..?)
I loathe the end of presentations when the conclusion is: “the research tells us we must do more research”. I chuckle to myself, a bunch of full-time researchers concluding they need more work, what a surprise… But this is different. I am not recommending more research in order to secure my next grant, but rather hone the slap-dash data collection process, and ensure we capture this extraordinary moment in time; this is not fiat academia induced research for the sake of research.
I feel energised. I feel excited. I feel the beginnings of a very valuable project. To date I’ve not come across a resource specifically looking at how Bitcoin adoption makes you feel. I’ve had the idea: “why not create a more rigorous research process and survey 5000 Bitcoiners?” This is now my aim.
If Bitcoin does what we expect, in that it becomes the decentralised digital base layer of global trade, then the mindset shifts Bitcoiners experience today is a snapshot on our future society. Not only is documenting this effectively very valuable for historical records, but it will be a brilliant Bitcoin marketing resource, showing pre-bitcoiners the benefits adoption brings to them individually.
If you would like to keep up to date with my progress please follow me on twitter. I recently took the leap of faith to try to work for myself again, initially focusing on the build-out of my podcast, so like the participants responding to my tweet I am taking back control of my time. There will be ups, downs, trial, error, so plenty of learnings to share along the way.
Thank you for reading all the way to the end… Lastly, get some skin in the game, buy some Bitcoin, and remember “stay humble, stack sats”.