There have been many charts that compare the growth of Bitcoin with the growth of other world changing technologies or inventions, namely the internet. It all depends on what you count and how you count it, but the growth of Bitcoin has roughly matched the growth of the internet in its inception. Here is one chart from 3 years ago:
Here's another similar chart:
You can find charts like these all over the place. You can quibble over the exact numbers, but generally speaking, Bitcoin is following the internet's path when it comes to mainstream adoption. And while that is objectively good for Bitcoin users, block-chain technology, and anyone with price exposure to Bitcoin, it might not be as great of an outcome as we think.
By now, you've probably heard about the 'cold wallet disasters' going on in the BTC space. First it was the wallet 'ColdCard'. Cold Card came onto the scene in response to the Trezor hacks a few years ago. Cold Card was sold as the ultimate, un-hackable, open source cold storage wallet. It was marketed for hardcore Bitcoin guys and a super secure but kind of hard to use cold wallet. And guess what happened? They were fucking compromised. Apparently, they didn't randomize their private keys enough, so a bunch of people who had Cold Card wallets got absolutely fucked through no fault of their own.
And NOW, there's been another self custody breach. Ledger wallets sold through a trusted re-seller somewhere in Asia got sent out with spyware in them. What apparently happened was that some shady Chinese company bought a Ledger wallet reseller named CryptoBills, but did it secretly and made the reseller sign an NDA. So this certified-by-Ledger reseller quietly gets sold, and now this new company tampered with the actual wallets themselves and put spyware in them. Anyone who used these wallets all got hit with a coordinated attack last week and are now shit out of luck. (By the way, if you are going to buy a cold wallet, only buy it directly from the company. I thought that was pretty common knowledge. I didn't even know about these 'trusted re-sellers' but if you can't buy from the company directly, then just don't buy one).
And let me tell you something. This is a fucking disaster. Self-custody was always, to me anyway, the weakest link in mainstream Bitcoin adoption. It's difficult, scary, and there's pretty much no recourse whatsoever. I'm a hardcore bitcoin guy and even I really don't like interacting with my wallet. It's foolproof on paper. But click the wrong thing, enter the wrong address, take the wrong picture, lose your private pass-phrase, and you are FUCKED. And now you have to physically open your device and check for spyware? Some people online are weighing their devices down to the gram to see if anything is in them that shouldn't be. Does that seem like a suitable solution longterm?
And the answer to this always was 'with great freedom comes great responsibility'. It's on you to learn and not get hacked. And sure, that's mostly fine for me and you, guy reading a blog about bitcoin, but think about the average person. Can you picture your parents using a cold storage wallet?? Have you ever tried explaining self-custody to a regular person?
As we know, leaving it on exchanges isn't the answer either. They are not guaranteed like stocks at a brokerage or even cash in a bank. And obviously this isn't just theoretical either. OG's remember the infamous Mt. Gox exchange debacle, plus FTX and BlockFi blowing up in recent past, plus other smaller exchanges that have blown up or gone under or gotten hacked.
So what's the answer? Where can you realistically keep your bitcoin? I can't believe I'm about to say this, but more and more it's looking like ETF's are the answer. I'm even considering it and I never would have thought in a million years that that's something I would seriously consider. It feels like that is where Bitcoin acceptance is headed though.
And thinking about that, it really does bum me out. Sure, Bitcoin is going to keep growing. Its price will appreciate and everyone holding it will make money. But I don't think it's going to do what we really wanted it to, which is meaningfully replace the US dollar. Not in our lifetimes, at least. It's a perfect store of value and will always have monetary value because of that, but the dollar ain't going anywhere.
Which brings me back to my internet point. I'm 40 years old now, so as a member of the last generation ever to know a world pre-internet, I am the perfect age to have seen the rise and adoption of it.
When the internet first came out, it was a completely different animal than what it is today. It was ours. It really was just a free exchange of information. The idea of an online ad was absurd. It was MySpace pages, livejournals, message boards and pictures of your friends passed out from the party the night before with drawings of dicks on their faces. There's a great verse in the Bo Burnham song "Welcome To The Internet" that encapsulates it:
"You know kids, it wasn't always like this
Not very long ago, just before your time
Right before the towers fell, circa '99
This was catalogues, travel blogs, a chat-room or two
We set our sights, and spent our nights
Waiting
For you"
The internet was home grown. It was fun. No ones fucking parents or teachers were on it. It was open source, free wheeling, fun. No ads, no 'search engine optimization', no one competing for your eyeballs. There weren't teams of autistic slobs making millions of dollars fighting each other to find the best way to addict teenagers to their products. Then Zuckerberg introduced the 'Like' to Facebook in 2013 and everything changed. The Patagonia vest guys got involved and now the internet is unrecognizable from the early days. This slot-machine-zombie, doomscroll, 24/7 dopamine hit in your pocket, 13 year old girls hanging themselves, nightmare fuel it has become. (Seriously, look into that 2013 stat. The 'Like' button came onto Facebook and spread everywhere else soon after. And that really was the turning point. That gave internet posts some sort of value system and drew all the wrong people into it. 2013 is where you see sharp increases in teen suicide and overall bad mental health outcomes for kids, too.)
So my point in all this is to say that Bitcoin IS following the internets path, and that's not really a great thing. Its price will go up and we'll all be happy we own it, but it'll probably just get folded into everything else, just like the internet. You'll 'own' shares of an ETF that give you a piece of paper saying that someone else bought Bitcoin for you, and it'll be insured like stocks are. And, again, the number will go up and we'll be happy to sell it to someone else someday. But this big Bitcoin revolution? The end of fiat and all its evils? I don't know man. I'm down on that thesis right now. If we can't really figure out self-custody, we're probably fucked there.
That's it for me today. BIG teaser week brewing. I'll have my Week 6 recap up next week but I might do a look ahead post before that. There are a ton of interesting spots this week with a lot of stand alone teaser possibilities. Thanks for reading, check back soon!
BTC price: $81.5k
BTC marketcap: $1.63T
BTC dominance: 59.8% (including stables)
ETH dominance: 10.8%
Total crypto marketcap: $2.74T
Total cryptos on coin market cap: 63.9M
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