Bitcoin's evolving narratives make it antifragile

Bitcoin's evolving narratives make it antifragile

Over the years, Bitcoin has been able to overcome naysayers by frequently reinventing its narrative. Because Bitcoin (BTC) is multifaceted, it is able to quickly change to confront new criticism.

We have seen this over the years. For example, Bitcoin used to be frequently assailed by the media for its volatility — many articles pushed the notion that Bitcoin was too volatile to ever succeed as a currency. We do not hear too much about Bitcoin’s volatility today, in part because observers have been accustomed to its frequent price swings, but mostly because “Bitcoiners” have coalesced around the notion of Bitcoin as an investment, specifically digital gold. They argue that the only reason BTC experiences such strong price movements is because it has not yet fully matured to a market capitalization that would sap this kind of volatility, such as that of gold. Consequently, the dominant narrative surrounding Bitcoin today is that it is a store of value and inflation hedge, despite continued volatility.

Our top trading bots

Recently, Bitcoin has encountered new obstacles, namely environmental, social and governance (ESG) concerns over mining, ransomware and regulatory scrutiny. The Bitcoin community has quickly pivoted to address these concerns, while underneath the surface, the seeds were planted years ago. The Bitcoin community is so large that its members are now in most industries and even in politics. As a result, their work spans areas that have seen limited attention in the past, such as renewable BTC mining.

Related: Is Bitcoin a waste of energy? Pros and cons of Bitcoin mining

So, as new challenges arise to the current narrative, attention is suddenly drawn to the areas that Bitcoiners have been working on behind the scenes. The community then coalesces around these to develop a new narrative that is built to become the dominant perception of Bitcoin.

ESG narrative

The ESG attacks against Bitcoin resurfaced in full force in spring 2021. They generally make the following points:

  • Bitcoin consumes too much energy (more energy than small countries use).
  • Bitcoin mining is not powered by enough clean energy.
  • Much of Bitcoin mining occurs in countries such as China that are not especially known to be as transparent or ESG-friendly.

Bitcoiners sprung to action to counteract these notions almost instantly. They said Bitcoin encourages the use of green energy because this may often be among the most efficient, cheapest kind of energy available to mine with. Bitcoin miners that use low-cost renewable energy will be able to earn more than those using costlier, potentially non-renewable energy. Consequently, the BTC mining industry is being pushed toward using renewable energy exclusively over time.

Related: Green Bitcoin: The impact and importance of energy use for PoW

They have also rushed to shore up resources and education on how green Bitcoin already is. Research from investment manager VanEck and the Cambridge Centre for Alternative Finance found that 39% of the total energy consumption from BTC miners comes from renewables and that 76% of Bitcoin miners use renewable energies. This makes Bitcoin greener than many other industries — few of which receive similar scrutiny over how green their energy consumption is.

Bitcoiners also make it clear that the energy consumption of Bitcoin is to secure the network, which benefits all network participants. This security helps ensure that the Bitcoin network continues to never go offline, unlike legacy financial networks, which have experienced interruptions and blackouts in the past. So, while Bitcoin’s energy consumption can be significant in absolute terms, the service that the miners provide from that energy is a net benefit to society. If people are content to disregard the consequences of the energy required to run the global financial system, then why do they take issue with the relatively benign energy consumption of Bitcoin, which promises to establish a better and open financial system?

Related: Ignore the headlines — Bitcoin mining is already greener than you think

We also saw outspoken Bitcoiners, such as Michael Saylor, move to unite the Bitcoin community and miners against misconceptions surrounding Bitcoin’s energy use by forming the Bitcoin Mining Council. BTC miners have been encouraged to be more transparent and forward with their sources of energy. This sort of coordination demonstrates that Bitcoiners are united in efforts to make the network even greener.

Attention has also been brought to the BTC miners that have already been using significant renewable energy in their operations. Furthermore, with headlines of 99%+ hydroelectric Bitcoin-miner Bitfarms going public, I anticipate the broader public will be familiar with how green BTC mining actually is. Paired with the push for the above actions and education, Bitcoiners are reworking the narrative about ESG. If they are successful — and I have no doubt they will be — Bitcoin’s potential ESG issues are unlikely to dominate headlines in the future.

Related: Blockchain and sustainability — There’s more to it than electricity usage

Currency and scaling narrative

Bitcoin as a currency has largely been dismissed, and attention has turned to BTC as an investment. But in the background, there are Bitcoiners who are working hard at pushing BTC adoption around the world and developing the Lightning Network.

The recent development in El Salvador — the passage of the “Bitcoin Law” that decrees BTC legal tender in the country — is groundbreaking for the cryptocurrency, although to many it seemed to come out of nowhere. When taking a closer look at the situation, it is clear that the groundwork was laid by Bitcoiners several years ago. Bitcoin Beach, a project seeking to create a sustainable Bitcoin ecosystem in El Salvador, did much of the preparatory work in the country. By seeking to bolster financial inclusion through the use of Bitcoin, it also worked to address the narrative that Bitcoin was not used as currency. And it succeeded. The ramifications for global Bitcoin adoption could be profound if there is a domino effect of countries seeking to adopt BTC as legal tender.

Related: El Salvador adopting Bitcoin could make it lose market dominance

To tackle the thesis that Bitcoin cannot scale enough to be used as a currency, many Bitcoiners have been quietly working on building the Lightning Network over the past several years. While still not perfect, the use and capacity of the network are growing, showing its promise as a scaling solution. Overall, it receives surprisingly little attention. I suspect that sometime in the future, the “sudden” success of scaling solutions will transform Bitcoin’s narrative again: from investment to currency.

Thanks to the diligence of Bitcoiners working together to expand Bitcoin adoption, Bitcoin is able to remain antifragile. It has so far been able to overcome all major obstacles, in no small part because Bitcoiners are able to shape its new narrative.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Martin Gaspar is a research analyst at digital asset capital markets firm CrossTower and has a background in conducting fundamental research and cryptocurrency analysis. Martin was previously a fixed income research analyst at Wells Fargo Securities, where he helped support traders, salespeople, and buy-side clients through his actionable investment recommendations. He has a passion for crypto and has followed the space extensively since 2012. Martin holds a BA from Colorado College, where he graduated with Distinction in Economics.
Read on concerning Cointelegraph
Twitter Blue rolls out NFT profile pics for iOS
On Thursday afternoon, Twitter announced that it would be rolling out iOS support for nonfungible token, or NFT, hexagonal avatars. As of now, only paid...
Price analysis 12/1: BTC, ETH, BNB, SOL, ADA, XRP, DOT, DOGE, AVAX, SHIB
Bitcoin (BTC) finished the month of November with a decline of about 7%. This was in sharp contrast to the prediction of the “worst-case scenario” of $98,000...
Altcoin Roundup: 3 signs that show crypto mass adoption is underway
The march toward blockchain and cryptocurrency mass adoption has made significant strides in 2021 as the growth of decentralized finance (DeFi) and nonfungible...
Reddit to reportedly tokenize karma points and onboard 500M new users
American social media giant Reddit may soon convert users’ karma points into Ethereum-based (ERC-20) tokens and onboard 500 million new crypto users in...
DeFi regulation must not kill the values behind decentralization
Cryptocurrency brought us peer-to-peer payments that continue to elevate participation in the global economy for millions of people without access to traditional...
Altcoin roundup: Crypto credit cards could be the missing link to mass adoption
Out of the many routes available to the mass adoption of cryptocurrencies, which includes decentralized finance (DeFi), layer-one protocols, nonfungible...
ADA, DOGE overtake BTC as the most popular cryptos for US eToro users
American users of the popular eToro trading platform are taking up altcoins with growing conviction, with the likes of Cardano's ADA and Dogecoin (DOGE)...
If the peer review system is broken, what the hell is the point of Cardano's reliance on it?
In a recent interview with Lex Fridman, Charles Hoskinson — founder of Cardano and co-founder of Ethereum — offered his views on Bitcoin (BTC). The 33-year-old...
Berkshire Hathaway invests $500M in Brazilian digital bank
Brazilian digital bank Nubank has raised $500 million from Berkshire Hathaway, a multinational holding company run by billionaire Warren Buffett.In an announcement...
Curve (CRV) sees 150% rebound as DeFi bottoms and ETH gas fees drop
DeFi tokens and protocols took a heavy hit on May 19 as Bitcoin price dropped to $30,000 and while BTC has entered what some analysts describe as a 'compression'...
Musk decries bitcoin's 'insane' energy use after Tesla payment U-turn
By Hyunjoo Jin and Subrat Patnaik(Reuters) -Tesla Inc boss Elon Musk on Thursday denounced the "insane" amount of energy used to produce bitcoin, doubling...
Nexus Mutual moves to sunset legal entity, lift KYC requirements
In a move that could point toward greater decentralization and wider access, the Nexus Mutual community is currently considering a proposal to sunset the...
Jamaica's central bank taps Irish tech outfit for CBDC project
Jamaica is the latest country making concrete efforts towards issuing its own sovereign digital currency.According to a press release by the Bank of Jamaica...
Cryptobanks vs. Centralized Rivals: Who Will Win?
Several analysts have already expressed their belief concerning the hopeless future for traditional banks and payment systems once bitcoin and its brethren...
Crypto Market Cannot Survive Without Fair Regulation – Credit Analyst
Scott Ryan, who is a credit analyst and avid follower of the cryptocurrency markets, believes that crypto markets need a particular regulation. On the...