When it comes to bitcoin, there is some disagreement as to what its function is intended to be, or perhaps more accurately, what its function will actually become.
In fact, if we refer back to the Bitcoin Whitepaper of 2008, we can read in Satoshi Nakamoto’s, the pseudonymous creator, own words the purpose for which bitcoin was first brought into existence. The very first line of the abstract reads as follows:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
The intent, then, is unambiguous: bitcoin is intended to be a currency, capable of replacing cash as a medium of exchange, but functioning peer-to-peer, digitally, and in a decentralized manner.
When a powerful creation is unleashed from a whitepaper
Whitepaper
A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and how the network will be used, and for what purpose. Some whitepapers may also contain information about the business plan behind the cryptocurrencies and the organization that created it. Whitepapers as a Component of ICOsToday associated almost exclusively with Initial Coin Offerings (ICOs), these documents actually seek to provide a roadmap for a business plan for the company. This can include information for potential investors about specific product, structure, mission, benefits, team, roadmap, future plans, etc. These documents proved essential to the rise of ICOs.Whitepapers today receive a generally negative connotation for this reason, given the amount of speculative and ultimately unsuccessful ICOs promoted via whitepapers.A troubling number of whitepapers severely lacked vital or in many cases accurate information. This proved one of the foundational elements of the ICO craze which consequently reached its apex in 2017.Most whitepapers delved into specific details for investors in ways that normal marketing channels could not readily transmit.In this sense, whitepapers were very effective in providing detailed information on products, security protocols, methodology, target users, and team members. Despite the propensity for scams or high failure rate, there have been several successful ICOs. This includes Ethereum, NEO, Spectrecoin, and others.
A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and how the network will be used, and for what purpose. Some whitepapers may also contain information about the business plan behind the cryptocurrencies and the organization that created it. Whitepapers as a Component of ICOsToday associated almost exclusively with Initial Coin Offerings (ICOs), these documents actually seek to provide a roadmap for a business plan for the company. This can include information for potential investors about specific product, structure, mission, benefits, team, roadmap, future plans, etc. These documents proved essential to the rise of ICOs.Whitepapers today receive a generally negative connotation for this reason, given the amount of speculative and ultimately unsuccessful ICOs promoted via whitepapers.A troubling number of whitepapers severely lacked vital or in many cases accurate information. This proved one of the foundational elements of the ICO craze which consequently reached its apex in 2017.Most whitepapers delved into specific details for investors in ways that normal marketing channels could not readily transmit.In this sense, whitepapers were very effective in providing detailed information on products, security protocols, methodology, target users, and team members. Despite the propensity for scams or high failure rate, there have been several successful ICOs. This includes Ethereum, NEO, Spectrecoin, and others.
Read this Term into the real world, there are no guarantees as to whether it will stick to its original course, or take a detour. And, there is a very strong likelihood that even if it does eventually reach its final intended destination (as bitcoin plausibly can), it will pass through transitory phases along the way, which some observers might mistake for a final state.
And, so we have debates about whether bitcoin is, in fact, a store of value rather than a potential currency, or something else entirely, perhaps even being best regarded as a web-based tech investment. Certainly, you can find advocates for Ethereum and other smart contract
Smart Contract
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist each time a song is played on the radio. The contract detects when the song is played, and then automatically sends a payout to the artist or artist. All parties involved in a smart contract must agree to the terms of the contract before it can be executed. They must also consent to any changes made to the contract. Transactions made through a smart contract are traceable and irreversible.Smart contracts were first proposed in 1994 by American computer Scientist Nick Szabo. Szabo created a digital currency called “Bit Gold” in 1998, over 10 years before the creation of Bitcoin.Benefits of Smart ContractsMany proponents of smart contracts point to many kinds of contractual clauses that could be made partially or fully self-executing, self-enforcing, or simply both. Conversely, smart contracts can lead to a situation where bugs or including security holes are visible to all yet may not be quickly fixed.The fundamental goal of smart contracts is to provide additional layers of security that are superior to traditional contract law. In doing so, this reduces other transaction costs associated with contracting. Smart contracts appear most prevalently in the cryptocurrency space, having implemented countless instances of smart contracts.
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist each time a song is played on the radio. The contract detects when the song is played, and then automatically sends a payout to the artist or artist. All parties involved in a smart contract must agree to the terms of the contract before it can be executed. They must also consent to any changes made to the contract. Transactions made through a smart contract are traceable and irreversible.Smart contracts were first proposed in 1994 by American computer Scientist Nick Szabo. Szabo created a digital currency called “Bit Gold” in 1998, over 10 years before the creation of Bitcoin.Benefits of Smart ContractsMany proponents of smart contracts point to many kinds of contractual clauses that could be made partially or fully self-executing, self-enforcing, or simply both. Conversely, smart contracts can lead to a situation where bugs or including security holes are visible to all yet may not be quickly fixed.The fundamental goal of smart contracts is to provide additional layers of security that are superior to traditional contract law. In doing so, this reduces other transaction costs associated with contracting. Smart contracts appear most prevalently in the cryptocurrency space, having implemented countless instances of smart contracts.
Read this Term blockchains who are of the opinion, likely erroneous or misguided, that Bitcoin has been superseded by its supposed competitors.
Corporate Interest
Wherever the end destination is for bitcoin, and aside from philosophical and practical debates about its utility, it increasingly functions as a speculative asset in investment portfolios, both retail and institutional.
The corporate aspect of this trend has ramped up significantly since 2020, with MicroStrategy as the most aggressive and outspoken bitcoin adopter. Not only has the company acted unequivocally and with remarkable conviction in purchasing bitcoin as its primary treasury reserve asset, but Michael Saylor, the Chairman and CEO, has taken on the role of public advocate/evangelist for a shift into bitcoin, doing so effectively and entertainingly.
This kind of corporate activity, see also interest from the likes of BlackRock and Renaissance Technologies, alongside the retail uptake that has always ebbed and flowed around bitcoin, often correlated with its halving cycles, leads to further debate, though, as to whether bitcoin functions as a risk-on or risk-off asset.
Risk-On or Risk-Off?
Along with the institutional interest in bitcoin, an increased correlation has come with the S&P 500, and at the same time, the S&P 500 has become more weighted towards what is regarded as riskier tech stocks.
It appears, then, that to the majority of corporate entities who are now comfortable engaging with bitcoin, the primary cryptocurrency is regarded as a high volatility risk-on asset to be loaded and unloaded in a similar manner to high-risk tech stocks.
However, this seems not to apply to MicroStrategy, which is taking the full long-term view of bitcoin as a profoundly transformative creation. MicroStrategy’s perspective is similar to that of true-believer bitcoin advocates and maximalists, which is itself reflected in the behavior of dollar-cost averaging individual buyers whose philosophy is to stack sats and HODL, through rain or shine.
For these investors (if investor is even the correct categorization), bitcoin is a risk-off long-term store of value that might conceivably become exactly what it was first proposed to be: an actual, working decentralized currency. And, even if that final transition doesn’t occur, the belief is that bitcoin will still be worth holding on to, and is safer and less uncertain than any other option currently on offer.
Also, it is worth noting that within the crypto markets, as broader conditions worsen, bitcoin dominance increases, emphasizing its status as an asset that is distinct from the wider, and riskier, blockchain-oriented web3 ecosystem.
Correlations Are Temporary
A lesson that can be drawn from all of this is that, at this current stage of bitcoin’s evolution, it makes no sense to place a definitive categorization on the digital asset. Or, if a designation is attempted, then it must have caveats attached, meaning that we can say what bitcoin is currently behaving similarly to, but we can’t accurately predict for how long any current correlation will continue, or whether it is actually meaningful in the long term.
What we can state with some certainty is that whatever bitcoin’s current characteristics might be, they are likely to change if they are dependent on public perception, rather than on its intrinsic nature.
So, is bitcoin risk-on or risk-off, and returning to earlier questions, what is it for, and what will it become? To answer that, it is perhaps best to defer to that original whitepaper, penned by a figure whose true identity we don’t know, and who stepped away from his own creation in order to let it fulfill its purpose.
According to the original intent, bitcoin is money, and every temporary stage it passes through, in terms of adoption, perception, and correlation with other assets, is leading towards that final state.
When it comes to bitcoin, there is some disagreement as to what its function is intended to be, or perhaps more accurately, what its function will actually become.
In fact, if we refer back to the Bitcoin Whitepaper of 2008, we can read in Satoshi Nakamoto’s, the pseudonymous creator, own words the purpose for which bitcoin was first brought into existence. The very first line of the abstract reads as follows:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
The intent, then, is unambiguous: bitcoin is intended to be a currency, capable of replacing cash as a medium of exchange, but functioning peer-to-peer, digitally, and in a decentralized manner.
When a powerful creation is unleashed from a whitepaper
Whitepaper
A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and how the network will be used, and for what purpose. Some whitepapers may also contain information about the business plan behind the cryptocurrencies and the organization that created it. Whitepapers as a Component of ICOsToday associated almost exclusively with Initial Coin Offerings (ICOs), these documents actually seek to provide a roadmap for a business plan for the company. This can include information for potential investors about specific product, structure, mission, benefits, team, roadmap, future plans, etc. These documents proved essential to the rise of ICOs.Whitepapers today receive a generally negative connotation for this reason, given the amount of speculative and ultimately unsuccessful ICOs promoted via whitepapers.A troubling number of whitepapers severely lacked vital or in many cases accurate information. This proved one of the foundational elements of the ICO craze which consequently reached its apex in 2017.Most whitepapers delved into specific details for investors in ways that normal marketing channels could not readily transmit.In this sense, whitepapers were very effective in providing detailed information on products, security protocols, methodology, target users, and team members. Despite the propensity for scams or high failure rate, there have been several successful ICOs. This includes Ethereum, NEO, Spectrecoin, and others.
A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and how the network will be used, and for what purpose. Some whitepapers may also contain information about the business plan behind the cryptocurrencies and the organization that created it. Whitepapers as a Component of ICOsToday associated almost exclusively with Initial Coin Offerings (ICOs), these documents actually seek to provide a roadmap for a business plan for the company. This can include information for potential investors about specific product, structure, mission, benefits, team, roadmap, future plans, etc. These documents proved essential to the rise of ICOs.Whitepapers today receive a generally negative connotation for this reason, given the amount of speculative and ultimately unsuccessful ICOs promoted via whitepapers.A troubling number of whitepapers severely lacked vital or in many cases accurate information. This proved one of the foundational elements of the ICO craze which consequently reached its apex in 2017.Most whitepapers delved into specific details for investors in ways that normal marketing channels could not readily transmit.In this sense, whitepapers were very effective in providing detailed information on products, security protocols, methodology, target users, and team members. Despite the propensity for scams or high failure rate, there have been several successful ICOs. This includes Ethereum, NEO, Spectrecoin, and others.
Read this Term into the real world, there are no guarantees as to whether it will stick to its original course, or take a detour. And, there is a very strong likelihood that even if it does eventually reach its final intended destination (as bitcoin plausibly can), it will pass through transitory phases along the way, which some observers might mistake for a final state.
And, so we have debates about whether bitcoin is, in fact, a store of value rather than a potential currency, or something else entirely, perhaps even being best regarded as a web-based tech investment. Certainly, you can find advocates for Ethereum and other smart contract
Smart Contract
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist each time a song is played on the radio. The contract detects when the song is played, and then automatically sends a payout to the artist or artist. All parties involved in a smart contract must agree to the terms of the contract before it can be executed. They must also consent to any changes made to the contract. Transactions made through a smart contract are traceable and irreversible.Smart contracts were first proposed in 1994 by American computer Scientist Nick Szabo. Szabo created a digital currency called “Bit Gold” in 1998, over 10 years before the creation of Bitcoin.Benefits of Smart ContractsMany proponents of smart contracts point to many kinds of contractual clauses that could be made partially or fully self-executing, self-enforcing, or simply both. Conversely, smart contracts can lead to a situation where bugs or including security holes are visible to all yet may not be quickly fixed.The fundamental goal of smart contracts is to provide additional layers of security that are superior to traditional contract law. In doing so, this reduces other transaction costs associated with contracting. Smart contracts appear most prevalently in the cryptocurrency space, having implemented countless instances of smart contracts.
A smart contract is a piece of software that automatically executes a pre-determined set of actions when a certain set of criteria or met. One of the key tenets of smart contracts is their ability to perform credible transactions without third parties and are self-executing, with their conditions written into the lines of code that form themAdditionally, these transactions are both trackable and irreversible. For example, a smart contract could be used to give royalty payouts to a musical artist each time a song is played on the radio. The contract detects when the song is played, and then automatically sends a payout to the artist or artist. All parties involved in a smart contract must agree to the terms of the contract before it can be executed. They must also consent to any changes made to the contract. Transactions made through a smart contract are traceable and irreversible.Smart contracts were first proposed in 1994 by American computer Scientist Nick Szabo. Szabo created a digital currency called “Bit Gold” in 1998, over 10 years before the creation of Bitcoin.Benefits of Smart ContractsMany proponents of smart contracts point to many kinds of contractual clauses that could be made partially or fully self-executing, self-enforcing, or simply both. Conversely, smart contracts can lead to a situation where bugs or including security holes are visible to all yet may not be quickly fixed.The fundamental goal of smart contracts is to provide additional layers of security that are superior to traditional contract law. In doing so, this reduces other transaction costs associated with contracting. Smart contracts appear most prevalently in the cryptocurrency space, having implemented countless instances of smart contracts.
Read this Term blockchains who are of the opinion, likely erroneous or misguided, that Bitcoin has been superseded by its supposed competitors.
Corporate Interest
Wherever the end destination is for bitcoin, and aside from philosophical and practical debates about its utility, it increasingly functions as a speculative asset in investment portfolios, both retail and institutional.
The corporate aspect of this trend has ramped up significantly since 2020, with MicroStrategy as the most aggressive and outspoken bitcoin adopter. Not only has the company acted unequivocally and with remarkable conviction in purchasing bitcoin as its primary treasury reserve asset, but Michael Saylor, the Chairman and CEO, has taken on the role of public advocate/evangelist for a shift into bitcoin, doing so effectively and entertainingly.
This kind of corporate activity, see also interest from the likes of BlackRock and Renaissance Technologies, alongside the retail uptake that has always ebbed and flowed around bitcoin, often correlated with its halving cycles, leads to further debate, though, as to whether bitcoin functions as a risk-on or risk-off asset.
Risk-On or Risk-Off?
Along with the institutional interest in bitcoin, an increased correlation has come with the S&P 500, and at the same time, the S&P 500 has become more weighted towards what is regarded as riskier tech stocks.
It appears, then, that to the majority of corporate entities who are now comfortable engaging with bitcoin, the primary cryptocurrency is regarded as a high volatility risk-on asset to be loaded and unloaded in a similar manner to high-risk tech stocks.
However, this seems not to apply to MicroStrategy, which is taking the full long-term view of bitcoin as a profoundly transformative creation. MicroStrategy’s perspective is similar to that of true-believer bitcoin advocates and maximalists, which is itself reflected in the behavior of dollar-cost averaging individual buyers whose philosophy is to stack sats and HODL, through rain or shine.
For these investors (if investor is even the correct categorization), bitcoin is a risk-off long-term store of value that might conceivably become exactly what it was first proposed to be: an actual, working decentralized currency. And, even if that final transition doesn’t occur, the belief is that bitcoin will still be worth holding on to, and is safer and less uncertain than any other option currently on offer.
Also, it is worth noting that within the crypto markets, as broader conditions worsen, bitcoin dominance increases, emphasizing its status as an asset that is distinct from the wider, and riskier, blockchain-oriented web3 ecosystem.
Correlations Are Temporary
A lesson that can be drawn from all of this is that, at this current stage of bitcoin’s evolution, it makes no sense to place a definitive categorization on the digital asset. Or, if a designation is attempted, then it must have caveats attached, meaning that we can say what bitcoin is currently behaving similarly to, but we can’t accurately predict for how long any current correlation will continue, or whether it is actually meaningful in the long term.
What we can state with some certainty is that whatever bitcoin’s current characteristics might be, they are likely to change if they are dependent on public perception, rather than on its intrinsic nature.
So, is bitcoin risk-on or risk-off, and returning to earlier questions, what is it for, and what will it become? To answer that, it is perhaps best to defer to that original whitepaper, penned by a figure whose true identity we don’t know, and who stepped away from his own creation in order to let it fulfill its purpose.
According to the original intent, bitcoin is money, and every temporary stage it passes through, in terms of adoption, perception, and correlation with other assets, is leading towards that final state.
