The excitement and hype surrounding Bitcoin, despite its limited practical use, demonstrate the power of economic narratives. These narratives, like viruses, can spread and significantly alter economic behavior, such as investment decisions and business confidence. This rise of Bitcoin’s value, is attributed more to a contagious narrative than its underlying technology.
Of Bitcoin and Bubbles
Bitcoin’s story, fueled by excitement and promises of riches, spread like an epidemic and drove its price from zero to $300 billion in a few years. Critics see it as a bubble similar to the tulip mania, while supporters argue its value is based on public perception, similar to gold. Despite its volatility, Bitcoin’s narrative has captivated the market, even though most people don’t understand the complex technology behind it. The narrative, not the technology, is the key driver of Bitcoin’s value.
Bitcoin and Anarchism
There is a connection between Bitcoin and anarchism. Anarchism, a philosophy against government, has seen slow growth but enduring interest. Bitcoin’s rise is fueled by an anarchist narrative – a story of freedom from government control. This narrative positions Bitcoin as a tool for escaping authority and creating a new, independent financial system. The emotional appeal of this story contrasts with traditional negative views of anarchism. Other examples of online movements that challenge authority, like hackers and Wikipedia can be seen as analogous narratives. Bitcoin’s success is largely due to its ability to capture the imagination of people who desire freedom from government control.
Bitcoin as a Human-Interest Narrative
The human interest factors contribute to the popularity of the Bitcoin narrative. The story appeals to cosmopolitan and technologically inclined individuals who desire financial independence. Furthermore, the narrative benefits from the mystique surrounding its creator, Satoshi Nakamoto. Nakamoto’s anonymity fuels speculation and keeps the story alive in the public consciousness, ultimately contributing to its contagious spread.
Bitcoin and the Fear of Inequality
The rise of Bitcoin is fueled by people’s anxieties about economic inequality and job displacement. The story of Bitcoin resonates with those who feel powerless against growing income gaps and the increasing automation of jobs. The narrative positions Bitcoin as a tool for empowerment, offering freedom from government control and a path to financial independence. This resonates with the “fear of being left behind” sentiment as technology rapidly transforms the workplace. With traditional career paths seeming less secure, some people view Bitcoin as a potential escape route.
Bitcoin and the Future
The excitement surrounding Bitcoin, not its technical underpinnings, is the key driver of its value. Complex technical terms like “digital signature algorithm” are far less contagious than the broader story of Bitcoin. The narrative positions Bitcoin as a gateway to the future, a way to profit from technological change and avoid job displacement. People are drawn to Bitcoin not just for its potential returns, but also for the chance to be part of something revolutionary. The ease of buying Bitcoin, even without understanding it, further fuels its popularity. Ultimately, the “Be a part of the future” narrative creates a self-fulfilling prophecy, driving up Bitcoin’s value and generating even more excitement.
Bitcoin as a Membership Token in the World Economy
Bitcoin’s rise can also be seen through the lens of globalization and storytelling. Bitcoin’s appeal stems from its global nature, aligning with the growing sense of a cosmopolitan identity. Unlike currencies tied to nations, Bitcoin feels democratic and international. The narrative positions Bitcoin as independent of any government control, contrasting it with traditional paper money, seen as a symbol of outdated nationalism. Owning Bitcoin feels like a rejection of these limitations.
Furthermore, Bitcoin benefits from a network effect. People are drawn to it because others are interested, creating a self-fulfilling loop where excitement grows with participation. Owning Bitcoin fosters a sense of global citizenship and psychological freedom from traditional affiliations. Ultimately, Bitcoin’s success is a result of basic human storytelling principles, not purely economic factors. People are interested in Bitcoin because so many others are interested, and the narrative feeds on itself.
Cf. Robert J. Shiller. 2019. Narrative economics. How Stories Go Viral & Drive Major Economic Events. Princeton, NJ: Princeton University Press p. 3 – 11.