Bitcoin: The Asset We Pretend to Understand
Bitcoin is back in the headlines — from sovereign wealth funds and corporate treasurers to policy debates and high school trading accounts.
By the classic tests, it fails. No cash flow, no intrinsic value, no claim on future earnings. And yet, it commands billions.
That’s the point. Bitcoin isn’t just narrative-driven — it is narrative. A market stripped to its essence, where belief alone drives value.
And that’s why it matters. Not because you should own it (I don’t). But because it shows how stories shape economic decisions — not just in crypto, but everywhere fundamentals are supposed to rule.
What It Is (Without the Jargon)
Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin was designed as money no government could control.
The Ledger. A public record of every transaction — the blockchain.
The Scarcity. Hard cap of 21 million coins. No central bank can print more.
The Creation. New coins enter through “mining,” where computers solve puzzles to validate transactions. Every four years, rewards are cut in half, slowing supply until it stops altogether.
In plain English: Bitcoin is part math experiment, part economic protest, part speculative commodity. It exists because enough people keep believing in it.
Why People Buy It
Three narratives keep Bitcoin alive:
Scarcity. A fixed supply makes it feel like digital gold.
Distrust. A hedge against governments and central banks.
Speculation. The chance to catch the next wave of easy gains.
These are narratives, not fundamentals. They’re stories. And belief in those stories is what holds up the price.
The Tradeoffs
Volatile. Prices soar and collapse.
No floor. Unlike oil or copper, Bitcoin has no industrial use; its value is purely social consensus.
Correlation. Despite the “digital gold” label, it often trades like a high-beta tech stock.
Network risk. Regulation or better tech could unravel its network effects.
That’s why Harvard Business Review recently concluded corporate treasurers should cap allocations at 1–3% — enough to matter if it wins, not enough to sink the ship if it doesn’t.
Beyond Bitcoin: Dogecoin, Ethereum, and Others
The rest of the crypto universe shows the same dependence on narrative.
Dogecoin. Launched as a joke, unlimited supply, no utility. Its value is pure meme.
Ethereum. A different story: not “digital gold,” but “digital infrastructure” for smart contracts and decentralized apps.
Others. Solana, stablecoins, and more — each pitching speed, stability, or programmability.
All of them rely less on fundamentals than on adoption of the story they’re telling.
The Lesson
Whether Bitcoin succeeds or fizzles isn’t the point. Its existence proves that belief alone can move billions.
Every high-stakes choice — M&A, brand bets, capital allocation — rests on narrative as much as on numbers. Fundamentals tell you what something is worth on paper. Narrative determines whether anyone believes it.
Bitcoin just makes that impossible to ignore.
So the real question isn’t, “Does Bitcoin belong on your balance sheet?” It’s, “What’s the narrative powering the decisions on yours?”