Money is Imaginary - Why Should Bitcoin Be Different?
Weekly Hot Take + Market Overview + Highlights
Theo Delarosa
February 03, 2023
January 28th-February 3rd, 2023
This week’s hot take is a necessary reminder that none of it is real! Money, Bitcoin. It’s just in our imaginations. A shared social construct and it’s so freeing once you accept this.
Key Points Covered:
- A splash of cold water to remember it’s not real
- The history of money
- How we perceive Bitcoin
- Similarities between money and Bitcoin
- Where do we go from here
A Splash of Cold Water to Remember It’s Not Real
Daddy Bitcoin. The OG. The spark that set us on the path that changed the course of many lives. Is it hard money, a store of value, a medium of exchange? Bitcoin and crypto maxis have a tendency to be incredibly extra when it comes to their views. It’s time for some necessary cold water splashed on your head. Simply put, all money is imaginary! Dollars, Euros, Pounds, Pesos, Yen, crypto etc etc etc. The United Nations currently recognizes 180 currencies used in 195 countries across the world and you know what? It’s all in our heads! Money is often considered a tangible and real thing, but in reality, it’s nothing more than a shared perception among individuals in a society. The only value it has is that which we put in it. So, similarly, Bitcoin only has the value which our silly little primate brains ascribe to it. Nothing more and nothing less! Stay with me, because there’s a lot of freedom in this once you accept it.
The History of Money
Let’s back up and start at the beginning of this story with the history of money. From the earliest forms of bartering to the modern era of electronic transactions, the concept of money has been a human construct. We’ve used it as a medium of exchange, a store of value, and a unit of account. But the money we use and rely on every day is nothing more than an illusion. A creation of our collective imagination, shaped by the forces of history, culture, and technology. The history of money is a fascinating journey through the evolution of human society, and it is a story that is still unfolding to this day with the rise of cryptocurrencies.
So what about Bitcoin? It’s a form of digital currency based on encryption and blockchain technology and its value is determined by the same principles that govern any other form of currency: supply and demand, and the perception and acceptance of individuals within a society. Bitcoin just so happens to be coded to be desirable by our arbitrary and imaginary perception of something designed to store value in or be a currency. To its credit, Bitcoin was designed to solve very real problems within the financial world.
Similarities Between Money and Bitcoin
- Both Bitcoin and money are based on a shared belief in their value.
- The value of both Bitcoin and money is determined by supply and demand, rather than inherent worth.
- Bitcoin and money have no intrinsic value and exist only as a social construct.
- The use of Bitcoin and money is dependent on trust in the system.
- The scarcity of Bitcoin, similar to the scarcity of traditional money, also contributes to its perceived value.
- Bitcoin and money are both intangible, existing in the digital or monetary system.
- Both Bitcoin and money serve as a store of value and a unit of account, but their value is subject to fluctuation
How We Perceive Bitcoin
Ok. So the decentralization of Bitcoin is cool and adds to its perceived value, as it operates without a central authority. It’s hard coded to abide by rules dictated by universally accepted code. It’s got some good qualities but all of it is for naught if people can’t agree to consider it to have “real value.” Will people in a large enough majority come to accept it and deem it to have value? Honestly, we could all just suddenly decide that jelly beans have value and decide to store value in our jelly beans and use them as currency and to transact and as long as enough people went along with it then - bam. It’d be real because we deem it so. It sounds silly but that’s all that value is. In prisons, cigarettes are used as currency and have real value within those walls and shared perceptions.
Where Do We Go From Here
So what is it that our collective imagination has deemed crypto and other forms of crypto? Well, the rise of cryptocurrencies during the last decade was meteoric. From a small initial band of true believers in Bitcoin’s technology to a max price of sixty nine thousand US American Dollarinos for one Satoshi Nakamoto issued Bitcoin, Bitcoin and crypto has captured the imagination of a generation. However the story of what it actually is has morphed and changed over time. Digital payments are made impractical by the volatility of crypto’s price and the speculative nature of financial markets. Its store of value narrative is so paradoxical with its medium of exchange narrative. The more people start buying it the more it rises in price making it even more impractical to sell and use for small purchases when your crypto can be worth a whole lot more in the future! We haven’t quite figured out what we’re doing with it but we know it's decentralized and it works.
The key takeaway from all of this is that Bitcoin and crypto in general got to the point we are now because a good enough story was able to find root in so many minds. The concept that Bitcoin is revolutionary and will reforge the future of money. Will it? Whatever path Bitcoin or any crypto takes will be made as real as we perceive it. If people within our society cumulatively come to accept it, then it will be successful and if they don’t, then it won’t. One thing is for sure though, there are many people out there dissatisfied with the current monetary systems, currencies in the world and how governments run them. There’s a reason that the seed of the idea of what crypto may one day be found such fertile soil to take root in people’s minds. There’s a collective growing desire for something better.
Stay tuned for next week’s hot take expanding on this week’s hot take: Fundamentals in crypto are a meme! Stop deluding yourselves.
Market Update
- Crypto Market Cap: $1.07B - Still holding above $1B
- Stablecoin Exchange Reserves: $27.423B - up slightly from last week’s $27.003B
- Stablecoin Total Market Cap: $135.21B slightly down from last week’s $136B
- DeFi TVL: $49B up from last week’s $47B
- Exchange Volume: January total volume of $797.23B up from December’s $467B
- Dex Volume: January total volume $59.77B up from December’s $43.65B
- NFT Volumes: January Ethereum total of $796.11M volume, up from December’s $541.23M
Charts You Need to Be Paying Attention To
What is happening with NFT Volume?
- January saw a total of $796.11M volume for Ethereum NFTs, up from December’s $541.23M. We can also see that Blur Marketplace is responsible for a growing chunk of that volume. Does this chart look like it bottomed and is increasing in a curve fashion?
- This data seems wild! $166.32M for January up from December’s $5.54M?? Does this make sense? Solana’s price hasn’t particularly taken off in comparison with other recent gainers and its DeFi TVL is still in the dumps but it has extravagant NFT volume? Definitely worth keeping an eye on.
Top Crypto Highlights of the Week
News
- Zhejiang, the first public withdrawal test network for the ETH Shanghai upgrade launched
- BonqDAO and AllianceBlock exploited for $120M
- Mastercard and Binance are launching a prepaid card in Brazil
- Osprey accused Grayscale of “false and misleading advertising” for the GBTC since late 2020
- DOJ claims SBF tried to influence witness testimony and asks for communications ban
- Yuga Labs co-founder diagnosed with congestive heart failure and is taking a leave of absence
- Alameda Research is suing Voyager Digital for $445.8M
- Celsius misled investors and used new customer funds to pay for other customers’ withdrawals
- Do Kwon is staging a comeback and working on several new products
- NFL reveals first Super Bowl 'Metaverse' concert in Roblox
- Amazon Web Services is hiring staff to help increase its clientele in the Web3 space
- Former chairman of Bithumb arrested on charges of embezzlement and market manipulation
- Bankrupt crypto lender Celsius used Quickbooks to keep track of its finances just like FTX
- Crypto Exchange Bitzlato plans to resume operations and allow partial withdrawals of user funds
- Crypto tax unicorn CoinTracker laid off about a fifth of its staff due to market conditions
- Chainalysis is laying off about 44 of its 900 employees, 4.8% of its workforce
- MetaMask launched a learning simulation platform, MetaMask Learn and new privacy features
- Coinbase Wallet will show transaction previews for transactions to help prevent NFT scams
- Coinbase NFT pausing drops to work on other features
- Mango Markets alleged manipulator Avraham Eisenberg waived bail at his first hearing
- Russia's Sberbank expects to launch its Ethereum-based DeFi platform by May
- Silvergate Bank faces US fraud probe over FTX and Alameda dealings
- Jack Dorsey backed Damus banned from Apple’s China App Store
- OpenSea launched a suite of tools to let people or brands launch their own NFT projects
- NFTZ, the world’s first exchange-traded fund for NFTs, is shutting down
Project Updates
- Sandbox’s SAND token unlock scheduled for Feb. 14 - releasing 12% of the token’s supply
- X2Y2 token unlock -12.5M Treasury and 25M Team tokens - team claims they will not sell
- NFT marketplace Sudoswap's airdrop is live
- LayerZero CEO denies accusations of critical trusted third-party vulnerabilities
- ImmutableX will soon launch the Immutable Passport
- Ethereum's total circulating supply reached a post-Merge low of 120.5M tokens
- Nostr, a decentralized social network launched Damus on the Apple App and Google Play Store
- Stargate proposed to reissue all STG tokens due to compromised Alamada wallets
- Fantom plans to introduce version 2 of its fUSD stablecoin
- RNDR launch of a new tokenomics model and establishment of the Render Foundation
- Terra Classic passed a proposal to relink LUNA Classic and the de-pegged USTC stablecoin
- Ordinals’ Bitcoin NFTs are evolving, now allows playing DOOM
- Sorare partnered with the Premier League on a multi-year licensing agreement
- Djed, a decentralized stablecoin pegged to the US dollar, launched on the Cardano blockchain
- Dedicated World Mobile Chain will bridge Cardano and Cosmos ecosystems
- The Floki Inu community successfully voted to burn 4.2 trillion FLOKI tokens
- Secret Network has seen a growing number of validators halt their services
- Virtual events platform Notable Live partnered with eBay to leverage NFTs for fan experiences
- Rally, a social token platform on Ethereum, sunsetting Rally sidechain on January 31
- SIMBA Chain received a $30M increase in funding from the U.S. Air Force
- Toyota is sponsoring a Web3 hackathon on multi-chain smart contract network Astar Network
- Axie Infinity partnered with MetaLend to allow borrowing and staking
- Wormhole Bridge launches on Acala EVM+, bringing cross-chain assets to Polkadot
- Cool Cats NFT project going multi-chain and adding customizable NFTs