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What is Bitcoin? Evolving Definitions and Perspectives

What is Bitcoin? Depends who you ask:

“Mother of All Scams” - scoffs Nouriel Roubini - sentiment echoed by many on Wallstreet as well, though this is starting to change. In my opinion, Bitcoin itself is NOT a scam, but more like an experiment. But some people involved in promoting bitcoin and other crypto projects are definitely scammers.

“Programmable money” - touts Andreas Antanopoulos

“An investment asset that serves as a diversification vehicle” - proposes Chris Burniske, in co-author of the book “Crypto Assets”

“Open-Source P2P Money” - Slogan for

“Digital Gold” - A lot of people see bitcoin as digital commodity, not currency. It’s also the title of a very educational book on bitcoin’s early years.

“Access to a financial system for the unbanked” - Another common concept in what purpose bitcoin and cryptocurrencies can fulfill.

The list goes on…

The fact that there are so many views and perspectives on bitcoin suggests it is still young, and its essence is still being shaped by its community as well as the larger global society as more people get involved in this space.

I find that the current perspectives fall into these 4 groups:

1) Technology
2) Utility
3) Political Implication
4) Financial Investment


1) Nothing new: The technology components of Bitcoin is nothing new. But the way they are implemented is a novel way of combining cryptography, the blockchain structure, and the incentive/governance algorithms.

2) A new application layer: The internet was designed with 7 layers. The consumer facing layer is the application layer. This is where the Amazon’s and Netflix’s are built. Bitcoin is the largest decentralized application on this layer and continues to grow to a point we can consider it an additional layer that deals with value.

This begs the question: If the internet is NOT decentralized, how can Bitcoin be decentralized? (There are several projects looking to decentralize the internet, so this concern is being addressed).

3) Open-Source: We should not underestimate the influence the Open-Source Initiative (OSI). There’s an elegant parallel in how OSI evolved out of Microsoft’s seeming monopoly on the industry to Bitcoin’s birth out of centralized control on the financial system. The open-source format of Bitcoin’s protocol is what makes it a novel application that allows almost anyone to participate.


1) Too volatile to be money: Bitcoin is relatively more volatile than most asset classes and is therefore not suitable as a currency at the moment. But this is a feature of the market, not a fundamental feature of bitcoin. Theoretically, the network can grow to a point where the market is large and mature and therefore will maintain a more stable Bitcoin system.

2) Store of Value: Many argue Bitcoin can be digital gold, or a store of value. At the moment, the value is too volatile. However, the security, immutability, and scarcity are features that do support utility of Bitcoin as a store of value. So technically, yes Bitcoin is a good store of value, but it is not so because of market forces.

3) An On-going Social Experiment: Bitcoin is also an experiment. We have many issues with the existing financial system, and Bitcoin is simply a proposed border-less solution. It has survived so far, but if it can’t grow to critical mass, it will be nothing more than a fad. But even if it fails, it will teach us many lessons and can be the basis for the next “experiment”.

4) Crime-Fighting Tool: One of the new “uses” of Bitcoin’s blockchain is to prevent fraud, money laundering and other financial crimes. While BTC was originally perceived as a coin for the dark-web, it is now apparent that it is an even better tool for crime-fighters to “follow-the-money”.

Financial Asset Class:

1) Speculation/Investment: For most people, Bitcoin is a speculative or investment asset. It’s volatility is a double-edged sword. While the swings can be seen as too uncertain to many, others see the volatility as a good diversification tool to their traditional portfolio.


In Nicholas Taleb’s book Antifragile, he discusses the barbell approach. Essentially this approach involves investing in both very low as well as very high risk assets, but not ones considered “medium-risk”. Bitcoin would obviously be considered the high risk asset to diversify from the low risk ones.

2) Non-Income Generating: Bitcoin does not generate income and thus does not pay dividends like many stocks do. However, the industry is creating vehicles to allow lending, either for P2P lending/micro-financing, or simply for another trader to short (kind of like a repo agreement).

Political Implication:

1) Libertarian Roots: Bitcoin has libertarian roots and is still perceived as something outside of the law. The early adopters share a disdain for institutions, particularly banks. IF the current system were perceived to be fair, we might NOT have Bitcoin in the first place. Alas, central authorities have disappointed, so Bitcoin was born was a solution to decentralize value control.

2) Globalization 2.0: Bitcoin is also a product of globalization. If it garners enough support, it will also become a factor for further globalization. The internet has already slimmed down national borders by being a platform for cultural exchange and global communication, all by simply allowing data to move around. Bitcoin can make the internet also an infrastructure for capturing and moving value, which can be considered a type of data as well.

3) Sovereignty Reduction: Bitcoin’s potential force in expanding the globalization is a disruption to sovereign capital control. Governments surely are concerned. This is probably the BIGGEST BARRIER for bitcoin. You can count of Russia, China, and many other nations to resist or even attack Bitcoin’s network growth. Meanwhile, it will take enormous effort even for crypto-friendly nations to adopt a new type of money.

Bitcoin’s Evolving Definitions and Implications:

At the end of the day, Bitcoin has different meanings for people from different walks of life. The above is NOT an exhaustive list of perspectives, especially as new entrants get involved in this space.

Satoshi never explicitly discussed the crime-fighting, or speculative aspects bitcoin. Thus, even a crypto OG who’s been with Bitcoin since the beginning should have an open mind to what Bitcoin CAN AND WILL BECOME.

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