(High-quality version here)

In this chart, we lay out the relative influence of the seven narratives we identified above. As you can see, the e-cash proof of concept was the dominant view at the start, although the p2p payments network and digital gold views were also espoused at the time. Later, Bitcoin as an anonymous darknet currency gained steam with the Silk Road. The idea never really died off, and Bitcoin is still used on the darknet today, even though other privacy-oriented alternatives exist.

As ICOs were invented and a broader market of altcoins began to proliferate, BTC became the reserve asset for that larger economy. This grew to become a significant feature of Bitcoin, especially in the bull markets of 2014 and 2017. We note that the p2p payments contingent remained influential until mid 2017, when they largely migrated to Bitcoin Cash (some had already left for Litecoin and Dash). However, with the emergence of Lightning in 2018, there has been an upswing of enthusiasm for online microtransactions and fee-less internet payments.

In 2015 and 2016, sidechains became a popular talking point, and it was assumed that Bitcoin would soon boast a much-expanded functionality, obsoleting most altcoins. Related functionality-extending projects like Mastercoin (now Omni), colored coins, Namecoin, Rootstock, Blockstack, and Open Timestamps, contributed to this general view. However, as sidechains proved complicated to implement, non-money uses of Bitcoin fell out of favor.

As Bitcoin emerged from the 2014–15 bear market, analysts began to contemplate its status as a differentiated commodity-money. In November 2015, Tuur Demeester published an investment note entitled “How to Position for the Rally in Bitcoin,” arguing that it had unique characteristics as a portfolio asset. In mid-2016, Burniske and White influentially argued that Bitcoin represented an entirely new asset class. These analysts noticed Bitcoin’s stubbornly low correlations with traditional assets, and as this persisted, Bitcoin as a portfolio diversifier gained steam among certain forward-looking corners of the asset management industry. Today this is a popular view, driving much of the demand for financial products which would give traditional investors exposure to Bitcoin.

Throughout all these regimes, the digital gold conception has remained influential, and now is the consensus view, predominating over the p2p petty cash faction, which largely departed with Bitcoin Cash. Today, after years of strife and infighting, this is the majority view. However, not all Bitcoin users are ideological bitcoiners, and wanted to reflect this in the chart. Many Bitcoin holders hold it as a portfolio diversifier, some still use it for anonymous darknet transactions, and the p2p cash contingent has re-emerged alongside Lightning.

Tension and release

If you scrutinize the above chart, you’ll notice that some of the visions of Bitcoin are entirely incompatible. For instance, a move to a global on-chain payments network conflicts with the digital gold view, as emphasized by Spencer Bogart. We’ve depicted the conflict between these views of the world by isolating them on this chart.

The conflict really began to be fought seriously with the release of BitcoinXT in 2015, although rancorous discussions had long preceded that. Further provocations including Bitcoin Classic, Unlimited intensified the conflict. It reached its peak in mid 2017 when Bitcoin Cash finally forked. During the bull run of late 2017, Bitcoin fees reached extreme levels, leading to defections to the Bitcoin Cash camp. However, since then, fees have settled down and the need for big blocks appears less urgent.

Additionally, in early 2018, Lightning implementations became viable, and micropayments with Bitcoin emerged. Thus, the tension dissipated, as both camps were able to pursue their own objectives. We noted an uptick in the cheap payments school of thought from within the Bitcoin crowd in 2018, as there has been a resurgence of optimism for payments through second-layer solutions.

An interesting conclusion that we think can be drawn from the analysis is that Bitcoin is currently benefiting from a rare period of relative harmony. While there is no single view that entirely dominates, the digital gold narrative is certainly most prevalent right now. The civil wars of 2015–17 ended with the Bitcoin Cash fork, and migrations to other p2p payment factions like Litecoin, Dash, and Nano. For now, the tension seems to be largely resolved, and we find ourselves in an unusually placid era in Bitcoin’s history. Subjectively, it appears that under this comparatively peaceful regime, development seems to be progressing more rapidly. Endless social media battles, conference-driven agreements, and positioning for contention forks certainly created a drag on developer efforts. There is another battle looming, however.

As depicted in this chart, the anonymous and fungible vision of Bitcoin (generally preferred by the digital gold camp) is somewhat at odds with the financialised, transparent version which is growing in popularity. Individuals that want exposure to Bitcoin the financial asset tend to prefer a Bitcoin which is compatible with AML/KYC and tend to put a lesser emphasis on privacy or fungibility. Many pundits believe this will be the next bitter fight for the soul of Bitcoin.

Ultimately, both the conflict and the peacetime phases are important. Conflicts reveal where power structures reside, and tend to yield informative signals about how key stakeholders truly feel. Under duress, business, individuals, and developers are forced to take sides, revealing their genuine preferences for the development of the protocol.

Timeline of events

We are aware that much of our analysis relies on our subjective interpretation of old BitcoinTalk posts. If you disagree, we welcome you to suggest an alternative. To make subsequent analyses easier, we’ve put together a timeline of key Bitcoin events, tracking its entire history. (We drew heavily on the 99bitcoins annotated price chart to make this.) We recommend considering our colorful ‘changing tides’ chart alongside the below timeline. The juxtaposition should help elucidate why exactly we made the decisions that we did.