The true anchor of value? A brief discussion on the “narrative economics” of the encryption market

"Narrative economics" is the view of Nobel Prize winner in economics Chairman Le. I understand what he means is that viral narratives can influence people's decisions and actions. More specifically, viral narratives can influence financial market judgments about the value of an asset. It's clear that narrative plays a huge role in Crypto or Web3. I am going to write a group to sort it out. This is the first group.

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2/ I’ll talk about it later, but let’s start with the least controversial narrative in this space: Bitcoin = digital gold. This is the narrative that has evolved through many rounds: - Originally "Peer-to-Peer Electronic Cash" - Global Payment Currency - Digital Gold - National Reserve Currency - BTC Commodity Futures - BTC ETF It can be seen that, except for short-lived payment attempts, Bitcoin The dominant narrative is "digital gold"

3/ The Bitcoin narrative is actually even more exciting than "digital gold". Gold is only valuable, and the narrative of Bitcoin has the implicit meaning of dozens of times of skyrocketing, such as To the moon and 1 million US dollars. Now it seems that the long-term curve is very flat, but the "long-term rise and short-term surges and collapses" are part of the narrative of Bitcoin's digital gold. In particular, the first narrative mentioned in Shiller's "Narrative Economics" is the Bitcoin narrative.

4/ Bitcoin digital gold has many derivative narratives: "Bitcoin gold, Lite silver" gives the value of Lite. Of course, no one has mentioned this sentence now. The story of a programmer who bought two pizzas for 10,000 Bitcoins has a human warmth in it, and it is also about missing out on getting rich. A few years ago, some people shouted "eternal bull market." Doge’s role as “poor man’s Bitcoin” was also the narrative before it gained its own meme momentum.

5/ The second dominant narrative in the crypto space is that of Ethereum. Vitalik's original white paper was that Ethereum is a decentralized application and smart contract platform. This was obviously obscure, so it was quickly replaced by the more informal "World Computer". Of course, this concept has not gone viral and has not spread virally. What really became viral was the word "blockchain" in 2017-2018

6/ The word "blockchain" became popular, and this word is a narrative. But when this word is spoken, Ethereum is not the protagonist. On the one hand, there are many competing chains, and there are also currency-less blockchains. On the other hand, there is the concept of Token. Nowadays, people don’t talk much about blockchain, but it is either Web3.0 or Crypto. I don’t want to argue, and I think both are acceptable: one with a slight emphasis on industry, and the other with a greater emphasis on finance.

7/ It can be said that the narrative of Ethereum has been quite vague. Some people also mentioned a "global settlement layer", but it was obviously not viral. Generally speaking, apart from Vitalik, the narrative of Ethereum is as follows, and none of them are exclusive to it: - Smart contract platform - DeFi - NFT - The current strong mentality of decentralized platforms is "decentralization" ” and “Builder Advantages” are actually DeFi.

8/ Let’s write this part first, this part seems to be all history. This may be because the big narrative is like this. No one believed it at first, but later it became logical, and many things can only be seen more clearly after the fact (but it cannot be said with hindsight, brother, I have said this before). An important point about narrative is that it is not about trying to change the narrative of others/the public, but how to change the narrative in your own head - change your mind.

9/ Tulip Mania Forgot to mention the “Tulip Mania” narrative surrounding Bitcoin. Now indeed no one mentions it. The only small thing to add about the tulip bulb craze is that it actually lasted only half a year. Shorter than many memes.

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