The Next Bitcoin Narrative
Bitcoin’s price runs on macro narratives (credit @nlw).
Over the past 12 years, bitcoin’s price has moved up and down in response to a series of ever-varying storylines. We have moved from the technical elegance of Bitcoin to the mystery of Satoshi Nakamoto, to the altcoin ICO bubble and subsequent burst. More recently, we have passed through bitcoin as a commodity, as a better gold inflation hedge, to Elon Musk singlehandedly blowing up the Bitcoin balloon and then personally sucking his own air back out (rinse and repeat). And now we have endured months of wave after wave of never-ending FUD attacks from posturing politicians and generally clueless (and/or lazy) ‘experts’. The latest narrative result has been a 50% decline and now flatline pricing. So what’s next?
My bet is Bitcoin as Economic Empowerment. This is not a new thread, but the combination of several threads that seem to have significant momentum and are starting to converge. I believe they will reach full macro-narrative status in September 2021. The unifying theme for these converging threads is the use of Bitcoin as a true currency with the emergence of the layer two Bitcoin Lightning Network.
First, there is El Salvador representing the theme of national economic empowerment. In early June, El Salvador officially adopted bitcoin as a national currency. The law takes effect on September 7. There will be a resurgence of news coverage when the law goes into effect, with the general theme being economic empowerment for both the country and the citizens. El Salvador is freeing itself from total dependence on US Dollar policy (moneyprintergobrrr except they don’t own the printer), and there will be a parade of stories about the first-mover advantage of using bitcoin/lightning as an actual currency and the resulting influx of bitcoin technology companies and jobs into the country. On the individual economic empowerment level, there will also be waves of personal interest stories of banking the unbanked. Other countries will noisily follow suit (with varying degrees of fluff and substance).
The second trend is the Bitcoin Lightning Network as a vastly improved new platform for the multi-billion-dollar global remittance market: offering transactions for sending money home that are nearly instant and nearly free. Zap/Strike will launch its brilliant mobile app wallet in the EU, the Philippines, and possibly other countries by September. Western Union (NYSE: WU) will tank as Bitcoin’s individual economic empowerment narrative disintermediates its first official victim.
The Bitcoin Lightning Network will achieve adult status at the age of five. The Lightning Network, while still small, has been quietly growing at a phenomenal rate: 20% monthly, nearly doubling every quarter. And the rate of growth is still accelerating. It will very shortly surpass 2,000 BTC and 25,000 nodes 1ml.com. The hobbyist Umbrel project (@getumbrel) is a remarkably well-designed and effective hardware-software combination. It is enjoying enormous success, and it brings full Bitcoin Lightning functionality to anyone with a screwdriver and $240. Umbrel enables anyone to operate their own Bitcoin Lightning ‘bank’ and even share it as a node with their family, neighborhood, or community. The achievement of personal or community economic empowerment will present nearly unlimited and certainly unprecedented economic freedom.
Finally, I predict that the US SEC will, in rapid succession in Q4 2021, approve at least three of the pending Bitcoin ETF applications, spurring a wave of investment. It may be too much to hope for, but perhaps the US congress will reintroduce and pass the de minimus exemption for Bitcoin transactions below $200 which would allow the easy utilization of Lighting in the US without being subject to capital gains taxes.
So, Bitcoin fans, we should all start assembling these narratives under a single ‘Umbrel-la’ and, as a unified community, push back the FUD and move together into a bright future filled with a message of national, community, and individual economic empowerment, freedom, and hope.