Reflections on 2022 / Predictions for 2023
Think Bitcoin™ Issue #47
Hey friends, welcome back to Think Bitcoin™ for issue #47. Special welcome to the new subscribers. I’m glad you’re here. As always, if you have any questions or comments, feel free to reach out. You can also find me on Twitter (@TheWhyOfFI) and connect with me on LinkedIn.
In this issue:
Long Reads: Reflections on 2022 / Predictions for 2023
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Long Reads
First, Looking Back on 2022
I’ll be brief here, since I know predictions for 2023 are more interesting than reflecting on 2022. The past year has been an incredible one for me in Bitcoin. If a year ago on January 1, 2021, you would have told me that by the end of the year I would have published a half a dozen articles in Bitcoin Magazine, recorded an episode of What Bitcoin Did (among many other podcast episodes), connected with some CEOs of Bitcoin companies, and grown this newsletter to where it is today, I’m not sure I would’ve believed you.
But, as the meme goes, a year in Bitcoin is like a lifetime in any other field. And I feel that acutely today, as I write.
Which is all to say I’m very grateful for Bitcoin and its incomparable community. I’m grateful for the ways Bitcoin has challenged me, subverted many ideas I once thought unimpeachable, and transformed how I think about so many things.
I have tried to bring my own unique set of experiences, interests, and training to the space, in the hopes that, by contributing what I have to contribute, I can do my small part in advancing this technology we all care so deeply about. And I will continue to do so.
Because we have much work yet to do and, to paraphrase Robert Frost, miles to go before we sleep.
Predictions (not wishes) for 2023
Alright, predictions for 2023. I’m not going to make any absurdly sanguine, hype-machine predictions because, well, there’s a difference between a prediction and a wish, and I intend to respect that difference. Not respecting the difference leads to “predictions” that are little more than thinly-veiled self-promotion/marketing (and also wrong).
Sure, I could say I predict Bitcoin will be $250k by the end of next year, entire continents will adopt it as legal tender, central banks will start holding it, and heaven on earth will appear just over the horizon. But that’s not what I actually think.
As I’ve written before, if you’re in Bitcoin to get rich in a year or to fulfill some kind of prelapsarian fantasy you will likely be disappointed.
So, anyway, here goes:
PREDICTION 1: Regulation Arrives (in some form)
I think there are a couple of different scenarios here. But it’s no longer politically feasible, in light of FTX, to simply maintain the status quo. One scenario is SEC Chair Gary Gensler, in an effort to save face and say “SEEEEE, LOOK I’M DOING SOMETHING,” goes after some huge company (think something like Coinbase), effectively grabbing the Securities Act of 1933 by the neck, putting a gun to its head, and daring Congress to test him.
This could provoke a Congress with a newly Republican House and newly Republican committee chairs to say fine, we’ll call your bluff Gary and actually write some legislation. In the hostage metaphor, this would be Congress telling Gary they’re okay with the Securities Act (and all its definitions re: what is a security) dying some sort of death and writing some new, updated laws. (The alternative is Congress saying “No Gary, don’t shoot!” and allowing him to run around wielding the Securities Act like a machete in a parade of enforcement actions).
Anyway, if Congress chooses the former and actually writes some new legislation, this would certainly provide the much-sought-after regulatory clarity.
This would no doubt be good for Bitcoin (for starters because it would almost certainly establish formally that Bitcoin is not a security).
However, I think it’s arguably potentially better for other coins, IF they’re spared the regulatory guillotine. By this I mean that if Congress were to pass legislation that redefined securities to account for digital assets, created certain decentralization requirements, reporting requirements, etc. and, most importantly, allowed some (though obviously not all) altcoins to live, this would be very positive for those coins.
Anecdotally it seems to me that there are lots of Bitcoiners who want Congress (or the SEC) to essentially shut down all non-Bitcoin projects, treat the Securities Act as a tablet of Moses, and wipe the sinners off the face of the earth.
I have many, many thoughts on this perspective and the bizarre attachment of morality to securities laws that some of my Bitcoiner brethren traffic in, but that’s a topic for another essay. For now, suffice it to say that I think this scorched earth, death-to-all-non-bitcoin-cryptos approach is highly, highly unlikely.
I do think many altcoins will die and many will get killed by any new legislation. But the idea that the government, strapped for revenue and as indebted as it is, will opt not to regulate and tax a growing industry and instead opt to smother it in its infancy is, I think, foolish thinking.
In any case, I think Bitcoin is sitting in a strong regulatory position (from a securities regulation perspective, at least), because under both existing securities laws, as well as any yet-to-be-written securities laws, it is not a security and will likely not be deemed a security.
As an aside, I think it’s possible that Congress is probably more incentivized to protect crypto, as opposed to merely Bitcoin, because (a) it’s perceived to be more environmentally friendly and (b) there’s no even theoretical threat to dollar hegemony at this point from something like Eth, which looks more like a tech company. Allowing crypto to live might, in the minds of certain members of Congress, continue to create more and more competition for Bitcoin and eventually bleed out its market share.
There is, of course, a regulatory scenario in which the trauma of FTX is so great that all of crypto gets bludgeoned, leaving Bitcoin as the least bludgeoned, sole surviving asset. As far as probabilities go, I think this is significantly less likely than iterations of the scenario articulated above.
We may also see a scenario in which a plethora of legislative proposals get presented but, given the gridlock in Congress and its characteristically slow way of doing things, none get passed into law.
PREDICTION 2: The Macro Narrative Recedes + Payments Narrative Ascends
In 2023 I think the macro narrative will recede a bit and the payments narrative will ascend. 2020-2022 were all about macro. First it was the money printing, Paul Tudor Jones’ great monetary inflation bit, Saylor’s melting ice cube, etc. Then money supply actually shrank in 2022 and everyone became a Fed-watching expert waiting for the big pivot so that we could go to the moon again. At least half of Bitcoin Twitter now consists of folks who didn’t know what money supply was two years ago but are now macro experts and commentators (I’m not absolving myself for dabbling in this either).
Which is all to say, Bitcoin became entirely dependent upon, wrapped up in, and inseparable from Fed policy. This is a particularly western view of Bitcoin, and I think the bear market will drain some of the oxygen from this narrative in favor of a different, ascendent narrative: advances in payments technology, adoption, and actual use, particularly in developing nations, where Bitcoin is not viewed as simply a passive investment asset.
There have been lots of folks working indefatigably on this for years, greatly overshadowed by more popular monetary inflation narratives from the PTJs, the Stanley Druckenmillers, and the Michael Saylors of the world (which is to say the very, very wealthy Westerners looking to stay very wealth or get even wealthier).
PREDICTION 3: A New Crop of Public Bitcoin Voices Emerges
I very much believe (and it’s also my personal experience) that the Bitcoin space is a kind of decentralized mind, comprising folks from myriad backgrounds with myriad areas of expertise, all contributing to the advancement of Bitcoin. In terms of public content and educational material, however, there’s a sort of Bitcoin intelligentsia. In other words, there’s a relatively small group of people who appear nonstop on podcasts and at conferences, whose acknowledgment is always sought, and whose opinions are rarely questioned.
I think this changes in 2023. There is a groundswell of new Bitcoiners who don’t fit the archetype of previous cycles and who are willing to challenge some of the opinions of the space’s anointed high priests.
This, if it happens, is a really good thing, and I think it would be an excellent indicator of the growth of the space. And this is not because I have anything against the current set of Bitcoin influencers. I do not. Quite the contrary. I just think that long-term growth of Bitcoin is obviously going to require bringing more people into the space, which means a wider, fresher array of people serving as informational/educational on-ramps.
As an aside, I know someone is going to have a paroxysm at me using the word “influencer” because yes, yes, we know, Bitcoin has no influencers and we’re all plebs, etc. But ten minutes on Twitter and a modicum of intellectual honesty will reveal ample evidence of the contrary.
PREDICTION 4: Ethereum Doesn’t Die and Continues to Accrue Value
I could lie and throw some red meat out there by saying I think Ethereum will die, but I think this is an exceptionally low probability. In fact, I think the opposite will happen. I think with any degree of regulatory clarity that doesn’t radically curtail or kneecap Ethereum, it will do quite well. The Merge went off without any technical hitches, the ability to withdraw staked Eth appears like it’ll be implemented in March, and it has a carefully crafted environmentally friendly image (which governments love). We obviously know that much of the environmental angst directed at Bitcoin is nonsense based on debunked “research,” but it’s still a narrative we have to contend with, while Ethereum will continue to get plaudits for its switch to Proof-of-Stake.
In the wake of the FTX collapse, I keep seeing my fellow Bitcoiners assert that droves of new Bitcoin maxis have been minted and an increasing amount of folks are getting out of crypto and just buying Bitcoin to put into cold storage. As much as I think we’d all love to believe this is true, I don’t see a lot of anecdotal evidence that the Ethereum community is selling their Eth, moving to Bitcoin-only, etc. As I write, both Bitcoin and Eth are down 75% from their respective highs. If anything, it appears folks are moving out of the more speculative altcoins into Bitcoin and Eth. Which is to say I think many outside the Bitcoin community now consider Eth, in addition to Bitcoin, as a quasi-safe-haven assest in the space.
This is not an endorsement of Ethereum. I’m just calling it how I see it and not how I’d like it to be.
In light of this, I think a growing number of Bitcoiners will start to shift their focus away from Ethereum diatribes and toward Bitcoin’s own growing capacity to effect positive changes in the world. People tend to respond more to a positive vision of something, anyway, which is better for adoption. And there is so much about Bitcoin that is singularly positive and worth shouting from the rooftops, much of which is far more important than excoriating Ethereum.
PREDICTION 5: Bitcoin Remains Our Best, Most Credible Hope To Definancialize the World
Everything else contributes to, partakes in, or accelerates the financialization of everything.
Anyway, that’s it for predictions. No price targets. We’ll check back on December 31 and see how these check out.
Healthy Reminders For 2023
One big one here.
Bitcoin is the most intellectually exhilarating journey I’ve ever been on. I imagine many of you feel the same way. As such, it’s pretty easy to let it permeate every aspect of our lives and bend everything else toward it. With certain values of Bitcoin (proof of work, say), this can actually be beneficial. If a proof-of-work mindset gets you hitting the gym, hitting the books, or just generally aligning your actions with your stated values, that’s obviously great.
But, as I’ve said before, if Bitcoin becomes the Beatrice to your Dante (meaning an end in itself) you have lost the plot.
Which is all to say, continue to have other interests, continue to have a life outside of Bitcoin.
Why?
Because the whole point of Bitcoin is to create a world where we collectively have to think LESS about money - not ONLY about money. If we get to a bitcoinized world and our interests are only Bitcoin, that’s going to be a pretty boring world.
Additionally, if you don’t have any grounding outside of Bitcoin you’re far more likely to find yourself in an echo-chamber where there’s a whole lot of trusting and not a whole lot of verifying going on.
We need everyone bringing their best selves to Bitcoin (which includes being inspired by Bitcoin to pursue their best selves) - not everyone turning Bitcoin into their entire identities.
What You Can Expect From Me In 2023
First and foremost, I’ll continue to write. I plan to bring my legal background into these essays more frequently, particularly as there are so many interesting legal/constitutional questions around Bitcoin worth exploring.
At some point, I will roll out a paid tier to the newsletter. I’d like to put out more content, do Q&As, maybe some interviews/conversations, and open up possibilities for more fun stuff. A paid tier makes sense for this, I think. There will always be a free tier, because I think that’s important, but some of you have generously asked for ways to support the effort that goes into creating this thing (you know who you are and I thank you) and I want to open that option up.
In the spirit of having interests outside of Bitcoin, I want to lead by example a bit and share a little more about myself, my own interests, and how the values of Bitcoin inform and illuminate and interplay with these other interests (or not, as the case may be).
My Goals for 2023
Short and sweet, but I want to speak this into the universe:
1. 10,000 subscribers
2. More partnerships with bitcoin companies
Lastly
Remember, we are living through one of the most significant technological transformations in human history. Enjoy the ride.
As always, thanks for reading! If you enjoyed it or found it useful, share this newsletter widely and freely!
In the meantime, as Bob Dylan said, “Don’t follow leaders, and watch your parking meters.”
See you in next time,
Logan
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DISCLAIMER: I am not investment advisor and this is not investment advice. This is not, nor is it intended to be, a recommendation to buy or sell any security or digital asset. Nothing in this newsletter should be interpreted as a solicitation, a recommendation, or advice to buy or sell any security or digital asset. Nothing in this newsletter should be considered legal advice of any kind. This newsletter exists for educational and informational purposes only. Do your own research before making any investment decisions.
© Copyright Logan Bolinger, Think Bitcoin LLC