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Broken BTC Narratives

The Issue with Simple BTC narratives is that they are mostly not true, too simple or are not really helpful in advancing Bitcoin as a technology. For example, most people that have had any contact with Bitcoin, will have heard phrases like:

  • HODL
  • Deflationary Money
  • Money printer go BRRR.

The issue with these catch phrases: People stop thinking about Bitcoin and the future of the network, but instead they turn into parrots, mindlessly spouting out a learned but not understood narrativ that is unfortunately also not true.

I think this is pretty bad for Bitcoin in the long run, especially when Bitcoiners proclaim themselves to be “doing their on research”. If we do our own research - which I think we should do, let’s do it properly. Just repeating shit on the internet is not research.

I want to show these issues with narrative with two terms that are fundamental to the world of Bitoin: Inflation and Deflation.

Deflation vs. Price Deflation

Bitcoin and Crypto more generally proclaim themselves to be a deflationary currency. This is all good and well and many bitcoiners readily online hold the poistion that deflation is all we need and then prosperity will be right around the corner.

There is however a problem here that gets lost in the catch phrase: $$ \text{BTC = Deflationary money} $$

The nuance that gets lost in the reduction is the difference between monetary deflation and price deflation. Real monetary deflation is the lack of units of currency in a system to facilitate commerce. Nobody in Bitcoin should want that. This is in all likelihood a universally bad result, that would lead to mass unemployment, poverty and the rise of political ideas like fascism.

Money Printing, supply shock and QE

One big narrative in Bitcoin goes as follows: “Bitcoin is a protection again out of control money printing by the central banks around the world”. A very popular meme to underline this argument, is the famous Jay Powell (FED Chair 2018-present) printing crisp green backs.

Jay Powell 'Printing Money'

The problem with that meme/rallying cry is that it does not fundamentally match reality. QE is not money printing.

  • portfolio effects not money printing
  • interest rates not money printing
  • Sentiment not money printing

draft will be updated in the near future

There are nuanced argument to be made for Fiscal spending bleeding into the economy but I think that is not what people think about when they say money printer go brrrr..They mean it quite literally. And that is just not correct as outlined above.

It reminds me of Peter Thiele in 2016, saying:

“I think a lot of the voters […] took Trump seriously but not literally. What they hear with the muslim ban or the wall comments. The question is not is he going to build a wall like the great wall of china. What they here is, we are going to have a “saner, more sensible immigration policy”.

Do you really believe that? I certainly do not.

What is my issue with narratives and the memes?

There is a big problem here. People learn to see the world in a way that is not true and they will make decisions that are not true based of their misunderstanding of the world. Which is bad for them, but also bad for Bitcoin. Learning false things and spreading them uber-confidently online does not get us closer to a better world.

There is a real issue here. The money we use is broken and we need to find a solution that replaces the current “barely viable solution”. We need people to think about a working, inclusive and fair monetary system, because we need a solution to get out of a 15 year global monetary depression. Central bankers in NYC, Frankfurt, Tokyo and London have failed all of us, by loosing track of the money supply and international monetary system and covering it up with the current sentiment bullshit, that does not work. Hot air does not help in situations in which the shit really hits the fan.

Bitcoin is one attempt at a new system and it is one solution I am inclined to believe in. Bitcoiners and non-Bitcoiners can feel that there is something wrong with the monetary system/financial world, but in the process of identifying the issue, many Bitcoiners have dropped the ball and choose to follow overly-simplistic or wrong narratives. Doing research is hard in general. Doing your own reserach is hence also hard. Doing research on a nebulous financial system that has developed in the international ether detached from regulatory oversight is extremely hard.

Simple catch-phrases, like “Money printer go brrrr” just will not cut it and probably do more harm than good. And all bitcoiner who dream about the people understanding the financial world, should be wary of these narrarives and speak out against them.