The Breakdown - Narrative Watch - Meme Warfare: 'Bitcoin fixes this' vs. 'ETH is money'

Episode Date: September 23, 2019

Crypto markets are driven by memes. In point of fact, all markets are driven by memes and narratives, but emergent markets like crypto ratchet it up. In this Narrative Watch, we go meta to look at the state of meme warfare, going deep on two memes of the moment. Discover why 'ETH is money' is an Ethereum community response to a recent bitcoin meme talk and how 'Bitcoin fixes this' is becoming shorthand for the idea of bitcoin as a generational hedge.  Watch: https://www.youtube.com/nathanielwhittemorecrypto

Welcome back to another narrative watch. All right, guys. Happy Monday. First day of fall. First day of backed. Big week. Be interesting to see what happens. But we are here for another narrative watch as every Monday.

And we're doing an interesting narrative watch that actually comes out of my conversation with Ryan Selkis last Friday on the Masari Unqualified Opinions podcast. So we got into the state. of memes in crypto, the state of meming and meme warfare in crypto, which is obviously one of my favorite topics. You know, I spend a huge amount of time on narratives, which are, I think, closely related to memes. And so I want to talk today just a little bit about meme warfare in general, but then two specific memes that have been kind of lighting up crypto Twitter for the last few weeks and ask what they mean, why they're popular, maybe just as a way to get a sense of what people are thinking about, what people are care about in different communities within the crypto space. So let's talk first really quickly about what memes and narratives actually are. So this is from a presentation that I did at Ethereum earlier this year. So narratives I said, I define them as simple stories we use to make

sense of complex phenomena. And basically the idea here is that in a world where there's a huge amount of data, a huge amount of information, we need some simple heuristics to better make sense of what's happening. And in particular, we need heuristics that give us a sense of what's changing and what's evolving. That's why for me, the most interesting thing is narratives that are shifting, right? Emergent narratives, narratives that are taking down old narratives. I think that the most interesting part isn't just what the narrative is, but how it's changing and how it's shifting. Now, narratives are, I believe, a huge battleground in crypto for the reason that they're all competing for scarce resources, right? There's competing for scarce time and attention.

They're competing for scarce capital. Basically, your narrative, if you're in the crypto space, is the reason that someone would care about what it is that you think is important to work on versus what someone else thinks is important. This, I think, explains a lot of why there is such battle, you know, such a battle between things like Ethereum and Bitcoin is that they're effectively competing for the devotion and attention of the limited set, currently, at least, of people who care about this space, who are interested in spending money and investing in this space, et cetera, right? So that's narratives.

I think that memes are in some ways a subset where memes are the most kind of restricted, easy to grok, nuance-reduced version of a narrative, right? Memes try to capture a narrative in a way that's incredibly simple and incredibly memorable and incredibly repeatable, right? And that's kind of what makes them so powerful is they trade nuance on the one hand for viral potential on the other. And so let's talk about a really kind of interesting what now in retrospect was an inflection point. Last month at a Bitcoin conference down in Austin, Bittstein, so Michael Goldstein, gave a presentation called How to Meme Bitcoin to the Moon.

So you hear Matt O'Dell lauding it, quite possibly the best Bitcoin presentation I've ever seen. And it was hugely talked about as it happened. And it broke out of the BitBlock Boom conference really, really quickly, right? And the first part of that was controversial, and it had to do with questions about how the antagonistic disposition that Bitcoiners take and it used the word bullying and people were really kind of triggered and focused on that, which is fine, it's kind of a whole different conversation. But one of the,

really interesting things to me, holding all that aside, and it's easy to go find those debates and those questions if you want to get into them, is it basically is a meme blueprint, right? So you can see here, tri-giram memes good. Three-word memes are very powerful. We learn this from the art of the meme himself, the president of the U.S., Donald Trump, Orange Coin Good, number go up, Bitcoin fixes this. These are powerful memes. They are so simple that to an outsider, it seems repetitive and droning and ridiculous, yet for us insiders, orange coin goods, we're talking about the ethical implications of money production. Number go up, we're talking about Bitcoin being the most liquid good and liquid goods have a positive feedback loop. Outsiders don't get that. They just see number go

up. And Bitcoin fixes this. Bitcoin is a tool for the division of labor or whatever, but for them, they ask, how do you think Bitcoin fixes the food supply in modern art and real estate? It literally fixes all of that, by the way. So two things that I want to focus on here. One is the narrative blueprint, right? So hold aside the debate about bullying and the disposition of Bitcoiners to no-cointers or pre-cointers and what the right attitude is. And this was effectively saying that Bitcoin is already better at meming than other coins

and that they needed to extend that lead more or less. that they were in the lead in me more unfair and they needed to really rub it in. That will become important in a minute in the second half of this. But I want to hone in on the Bitcoin fixes this meme specifically, right? So when we were on this podcast on Friday with Ryan, he asked me what I thought the most recent powerful memes were. Like what was the, what were memes were kind of lighting up the space? And to me, the first place I go is like, well, what's the underlying, what are the underlying narrative shifts that memes are trying to cast? capture. And I think right now and for the last six months, the biggest shift in the narrative

in the crypto space in general, but particularly with Bitcoin, is the idea of Bitcoin not just as a alternative store of value, not just as a digital gold, but as a generational hedge against the kind of rampant increase in the ideology of money printing and quantitative easing and this experimental monetary policy that we've been in since 2008, where we keep the markets or central banks keep the markets on basically a tap of money. And the interesting thing about this is that it is, it's bigger than safe haven. So it's gotten kind of wrapped up a little bit over the past few weeks in questions of whether Bitcoin is or isn't or will or won't behave like a safe haven as in the context of market

turn down, right? And I think that's actually distracting. I think there's a difference between whether Bitcoin is a macro asset that moves in an anti-correlated or non-correlated way with other parts of the market versus whether Bitcoin is a more attractive option for an entire generation as a potential kind of shift in the economic paradigm happens. Those are related but separate phenomena. And I think what we're really talking about and what people are interested in and why all the macro guys are coming into the Bitcoin community and getting excited and interested, has to do with that second piece, not the first piece, right? It's not the short-term hedge as a safe

haven asset. It's where do you want to park your money over the course of the next decade as we go through some major, major shifts. So that's to me what the big narrative changes. Now, what is the meme for that? Is it Bitcoin as a safe haven? Not really. It doesn't exactly fit. In fact, that's kind of distracting. Is it digital gold? Again, not really. I think that in some ways both of those memes carry with them the baggage of their previous contexts, right? Like digital gold is, well, then you're just a gold bug and you're kind of screaming at the heavens. And that's, you know, that's come up in popular discourse, right? This is effectively Ben Hunt's point of view from Epsilon theory where he is worried that Bitcoin

basically just becomes the guy's screaming at the clouds because we're shunted over into that gold bug spot. So again, digital gold, safe haven, they get you part of the way there, but then in some ways they actually lead you down the wrong path. So what is the meme that captures this idea of a generational hedge? And I don't think that there is one exactly yet, but I do think that in some ways Bitcoin fixes this is the closest. So I want to go through a couple examples. So Jimmy Song here says at least with the 2008 bailouts and Vince Foster's death, there was a reasonable explanation. feels like they're really not even trying anymore.

The powers that be just expect us to take it, even if we don't believe them, Bitcoin fixes this. So he's obviously talking about the kind of increased money printing and Epstein's death. You have over here, Obi-Wan Kenobit says since 2008, the Federal Reserve has printed 31 million per hour. Simon Lutz says Bitcoin fixes this. A different context about money printing. Camillo JDL says Argentinian Central Bank formally announces 2.5% base monetary expansion each month for current month and next one. This is how local politicians steal everyone's future from under their noses. Bitcoin fixes this. So again, we're seeing this idea of Bitcoin fixes this.

Now, if we go back to Bittstein's speech, to Michael's speech, he talks about how Bitcoin fixes this isn't just for the obvious stuff. they also, it's used as a way to, uh, to kind of make almost outlandish claims about what Bitcoin can fix and bring it back to the monetary system. And so I want to pause for a minute, uh, just on what makes this a powerful meme. And I think it's a couple things. One is, uh, the, the, I think that there, he's exactly right that this short kind of three word type idea is resonant. It's easy to remember. It's very powerful. So there's that, that the actual architecture of the meme is powerful. But then secondly, one of the things that makes Bitcoin fixes this powerful is either it's obvious and it's powerful because it is obvious. Two, it is, it makes,

it implicitly basically connects the dots between what Bitcoin is and what it's trying to solve. So instead of it, it is a better way of saying this isn't just about payments. This isn't just about buying coffee, right? It's about this is a disruptive force that changes. and fix major problems in the world. I think that's powerful. Even if people don't buy it, that's firmly anchoring Bitcoin in that sort of narrative, which it's struggled with, right?

If you look five years ago, and I've talked about this before, when I was in Silicon Valley and first being introduced to Bitcoin, it was just a payments thing. It was just about buying coffee. It was unfathomably boring because of that. And certainly it's on me to not have gone deeper about it, but that was everyone.

That was everyone that I knew in the major tech world is that's how we were introduced to it. So Bitcoin fixes this anchor, it outside that. It is for areas where it's applied outlandishly, it's almost so ridiculous that it infuriates people and makes them want to go fight it, which just ends up amplifying it. So all of these things make it highly powerful. But I think that this idea of resonance is really the key one right now because, again, my argument is that the major narrative shift over the last six months has been Bitcoin as a generational hedge as MMT and money printing has just become kind of the

accepted ideological and economic paradigm of our time. Bitcoin fixes this is the way that people say Bitcoin has an opposite point of view of that world. So a couple more on that front. Connor Brown says in the past two days, the Federal Reserve has provided an emergency liquidity injection of over $100 billion. This cracks the found this the cracks in the foundation from decades of monetary manipulation are starting to form. Bitcoin fixes this. So this is obviously referring to last week's repo market interventions, right? So the overnight repo markets basically allow big institutions to lend money to one another.

They were having liquidity problems. The Fed first injected one group, $53 million the first night, and then $75 million for two or three more days in a row, right? So you see it again. Pomp on September 19 says, update. The NY Fed is planning to inject another $75 billion into the financial system on Friday tomorrow. That will be more than $275 billion total in four days this week. And add in the two recent rate cuts, and you could argue that the Fed is fighting the start of a recession. Samson Mao says Bitcoin fixes this, right?

So, again, the whole thing here is that Bitcoin fixes this has moved from just a, I believe, a generic, you can use it, you can apply it to a lot of situations, you can get people thinking differently about time preference and all the sort of stuff. right, to a very specific counter narrative in meme form to the Fed action, Fed monetary action, and what it means. So Bitcoin fixes this to me is the most relevant, the most important, the most contextual meme in the Bitcoin world right now, maybe in the whole crypto world. There is one more, though, that I think is competing for attention, if not directly, it's just in terms of the sheer number of times it appears on Twitter. And that is, ETH is money.

All right, so we see it here. Friendly reminder, ETH is money. So this started to pop up a few weeks ago. And, you know, obviously the Ethereum Bitcoin religious war on crypto Twitter is its own phenomenon. But one of the things that's fascinating is I started to see ETHERU. If his money pop up over and over and over again, right? You saw it just kind of like everywhere, right? If you go search Eiff's money, it went from nothing to all over the place.

And it happened after the how to mean Bitcoin to the moon speech. And interestingly, it feels to me as though in all those debates about, you know, whether the speech was crazy for suggesting that, you know, no coiners or whatever should be bullied or shit. or should be bullied and all those like that sort of whole debate, there was some portion of the Ethereum community who was reviewing the specifics, the tactical suggestions in that from a meme perspective and pushing it. And so what's the idea of eth is money? You know, we talked a little bit about what the idea behind Bitcoin fixes this. I think the idea of eth is money is to focus the attention back on the asset underlying the Ethereum community in general versus just

on the applications where it's used, right? It's to get away from the idea of Ethereum just being the thing that pays for gas. It's to enforce the idea that Ethereum is in fact competing for that monetary premium in the world of digital assets, that it is not just trying to be kind of a loyalty token for DAPS, but that it is a core monetary asset, right? There are many people who feel that the big game in cryptocurrencies is the competition, to be the new money, right? And they're less interested in all of the kind of what they perceive to be smaller uses of crypto tokens as, you know, governance tokens or loyalty tokens or whatever it is, utility tokens. They think that money is the game. This is a widely held view. This is obviously

kind of at the core of what Bitcoiners believe in part of what makes Bitcoiners so disinterested in general in other types of tokens is that they believe that the only interesting competition is money and Bitcoin is incredibly far ahead on the money game. Now, when they started doing the kind of eth is money meme, and it was these folks like Anthony Sassel and Ryan, Sean Adams, and David Hoffman and a number of others, it did elicit a bunch of response, right? So you have folks in the Bitcoin community. So in this example, someone says there's no Ethereum community wanting ETH to be money. It's literally like three guys. It's referring to the fact that there's, you know, a set of originators of this meme that we're really pushing it. Ryan Schott-Adam says,

I think your math is officer, retweet if you use Eith's money and it got 123 retweets. So, again, this is, I think, a good example of just meme warfare. And the battleground here is just crypto-Twitter. Whether that actually matters or not is hard to say. However, I think that there are, you know, people do pay attention, I believe. Like, markets do pay attention to what's going on, right? We're still a highly retail-driven market with a lot of the impact in the markets being driven by, you know, narrative shifts and meme shifts based on what whales think and what kind of big, big asset holders think. And so I think that people are watching. And this conversation has been filtering up from crypto-Twitter into some higher levels, right? So at a

summit in Tel Aviv last week. David Hoffman, he tweeted out, first question from me, there is a growing community of ethas money proponents, one that I'm a part of. How do you feel about ether as an improved money from alternatives? And this was to Vitalik on a panel. He says, ether can be money if the Ethereum community wants it to be. Ether is already acting as a great store of value in permissionless applications and is a great way to send and receive payments for people. The path for Bitcoin as a store of value and Ether as money are different paths. and Ether's path to be money is more through utility. So this is getting more into the specifics of it,

but again, it's now gone from just kind of a random Twitter thing to the kind of highest levels of the Ethereum community are talking about this. Ryan, Sean Adams repeats this. He says, Ether can absolutely be money if the community wants it to be. It's like we've been saying, ETH is money. And then last week, and this I think is really the power of memes to some extent,

BitPay launched and announced support for Ethereum, right? So merchants will be able to accept Ethereum as a payment option. That all of a sudden, instead of just being an interesting thing, it is an interesting thing that supports and is contextualized by a meme, right? So Cyrus, Unisey, who used to be at scalar capital and is now at Maker Dow, says, looks like BitPay thinks eth is money, right? Again, so a meme propagates itself by allowing people who are pushing that meme to bring in examples. to contextualize news that happens within the framework of the meme, right?

So again, you may not think that BitPay adding Ethereum constitutes Ethereum being money and ETH being money. However, for those kind of passively watching, it certainly seems like an example. Here's another one. Last week, those are the way that I said it on my LRS this week. Interestingly, there was evidence that, at least for Argentines, ETH's money is more than a meme. at Cameruso pointed out that in the wake of new capital controls, Dye was trading at a 27% premium.

So basically, Argentina has gone through some serious currency devaluation recently. And they're trying to rein in control. And so they reinstituted capital controls that had been kind of loosened for the last few years. And so you're seeing premiums basically for non-Peso assets. So Camille points out, or Camilla points out, Argentina's dollar premiums, black market USD is worth 7% more. So basically you can spend a dollar, a dollar 07 to get a US dollar that's not traded through a standard channel.

Bitcoin is trading at 12% right. So Bitcoin is 12% higher than the price elsewhere. Dai was at 27%. And she gets into a little bit about why die would be at that premium competitive thing else. But again, the point here is that when these things are going to be at that premium compared to anything else. happen when you have a meme to contextualize them, all of a sudden they don't feel like disconnected points, but they feel like part of a larger story, part of a larger narrative. And this again is the power of memes. So, you know, I kind of frame this as Bitcoin fixes

this versus Eth is money. But I don't actually think that they're necessarily particularly competitive from a meme standpoint right now. Like realistically, I think that they're, the eth is money is the Ethereum community's attempt to put its kind of stamp on the conversation about about kind of where, about Ethereum as a cryptocurrency that can compete for kind of the global digital future of money. And there's lots of people who are pointing out like Ariana Simpson here, you know, she says parking your capital in a high interest generating account, i.e. defy is ultimately taking a different path toward solving the same issue. To pit Ethereum and Bitcoin against one another is to majorly miss the big picture. Her argument is that they're both in different ways fighting for a different type of financial order and a different type of financial system. Now, there are big reasons why people who are hardcore bitcoiners don't accept the idea of Ethereum as money. Having mostly to do with monetary policy, having to do with the lack of a hard cap like Bitcoin has. And indeed, I think for a lot of those macro folks, a lot of the folks who,

are interested in gold and other assets like that who are coming into Bitcoin, that digital scarcity that ontologically secure 21 million. And by that I mean, you know, Nick Carter argued recently that 21 million isn't just a meme. That's the entire kind of core identity of Bitcoin. For it to lose that, it would cease to be Bitcoin. That is the thing that makes it so appealing as a counterweight to MMT. So again, that's kind of what I mean by the fact that they're not exactly competing for the same space. I don't think that you're going to go put Ethereum in front of someone who's worried about excess money printing and have it really solve things. However, in practical reality, to the extent that we see more things like this Argentina situation

where people are questing after die, you know, who knows, right? We're still very early days in what it looks like to have competitive market for money outside of sovereign currencies. But I think in either case, it will be memes that drive that conversation forward. And it's important for us to understand what memes are current, what memes are doing, and why memes matter. So kind of a pretty meta-narrative watch today, all about memes, but I hope you guys had fun with this. Thanks for watching. If you are watching, thanks for listening, if you are listening. And we will be back tomorrow for another crypto daily 3 at 3. Can't imagine we won't be talking about backed and what's going on with that. So yeah, let's do it, guys. Happy fall and I will see you tomorrow. Peace.