What is Bitcoin?

The institutionalization of bitcoin, the most important cryptocurrency, is imminent. This will make the perennial and still unresolved issue of its purpose more urgent.

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Does bitcoin act as an alternative store-of-value, similar to gold, which is a bulwark in the face of monetary debasement? This is the Michael Saylor Perspective.

Does it serve as a payment method for those who, for whatever reasons, are locked out of the system? (The El Salvador perspective, perhaps.)

Is it a tool for activists, or a way to challenge power? ( Human Rights Foundation’s perspective.

Is it better to think of it with an open-ended perspective, seeing it as a platform that users can use to create a variety of valuable content on? ( Taproot Wizards perspective. )

I would like to believe that the answer is “all the above.”

If the U.S. Securities and Exchange Commission approves BlackRock, WisdomTree, Invesco, and Invesco’s recently submitted exchange-traded funds (ETFs) – admittedly a huge “if” given the SEC’s past stubbornness – and if they show support for the new EDX cryptocurrency exchange from Fidelity Charles Schwab Citadel and other major financial players, then that liberal, anything goes framing is likely to get less airtime.

Financial advisors who are pitching these products in mainstream markets will want to use a simple narrative. Which one is it?

Inflation hedge?

The most honest way to describe bitcoin is as an asset that moves in a manner independent of other assets. This provides more stability for a portfolio of diverse assets and preserves value even when commodities, stocks or bonds are falling.

This will be disappointing to Main Street clients and financial advisors. They’re used to thinking in terms of hedges and diversification, but there is usually a story that’s underlying. When a recession is imminent and earnings are expected to fall, your exposure to fixed income assets like bonds will balance the value decline of your variable-income stocks.

This is the most common application of “inflation-hedging” for bitcoin. It’s not easy to explain. In 2022, when inflation kicked up the economy, the cryptocurrency’s losses defied popular short-term thinking that the price of an inflation hedge instrument should increase as consumer prices rise.

With a longer-term view, however, the inflation hedge story of bitcoin is still valid. Bitcoin’s 150x increase over the last decade has allowed long-term investors to offset the continuing depletion of the dollar’s buying power more effectively than other investments.

Financial professionals are usually rewarded based on quarterly results. It wants to know that if bitcoin does Z, then X will do Y. It’s not predictable.

Wall Street is likely to gravitate towards the Saylor perspective. The industry needs a narrative – even though many ETF investors would be happy to place “number going up” wagers on bitcoin, without giving a second thought as to why the price would rise, the heavily regulated sector can’t present things as if they were gambling. And the idea of storing value for the long term is the most appealing.


The story is best told in terms of “digital gold”, a familiar analogy to U.S. investors. It describes an asset which can be independent of monetary policies. (Skeptics are likely to bring up the 2022 example, where bitcoin’s value declined and gold’s increased as Federal Reserve rates were expected to rise. Wall Street ETF hawkers are going to have to get through this with a story about long-term buy-and hold retirement strategies.

The Implications

This is important because it will influence policy. The ongoing regulatory push in Washington D.C. will be influenced if bitcoin is only viewed as an investment tool. Although bitcoin is not included in the Securities and Exchange Commission dragnet at the moment, labeling every other crypto token as a “security” – with the exception of perhaps ether will strengthen other regulatory views that could, indirectly, curb bitcoin’s growth.

The most important involve privacy, <a href="https://www.coindesk.com/learn/what-is-kyc-and-why-does-it-matter-for-crypto/#:~:text=KYC%20means%20%22know%20your%20customer,use%20its%20product%20or%20platform. Know-your-customer rules, for example. The case for greater privacy would be stronger if the establishment accepted bitcoin as money, instead of just an investment vehicle. If the U.S. conversation is more focused on the investment strategy of a store of value, it will be harder to argue for greater KYC requirements by regulators.

These investment institutions have nothing to gain by supporting this kind of surveillance. They are already compliant with the rules. If consumer demand is strong, as some financial institutions claim, then there’s a lot of gain to be had, even at the depths in the bear market.

This is not good news for millions of people who are hoping that the Bitcoin protocol will be used to help financial inclusion, or to allow those living under oppressive regimes to move their money safely.

The new breed of developers who are working on Bitcoin-based tokens, such as the Taproot Wizards project based on the Ordinals protocol and the BRC-20 Tokens is also in a bad position. KYC at exchange level is a barrier to the global mainstream reach of innovative projects. This is especially true if initiatives such as the Financial Action Task Force’s crypto “travel rule” are able to find a way around reporting requirements for self-custody Wallets.

Let’s take a breath. Fans of Bitcoin refer to it as “The Honey Badger of Money“. At the end of day, Bitcoin doesn’t really care.

Bitcoin’s protocol cannot be stopped. The Bitcoin protocol is unstoppable.

Innovation will continue to be the norm when innovators have this unstoppable and uncensorable protocol available. There will, therefore, be workarounds. There will be new ways to interact with all the other Bitcoin use-cases without getting caught in a Washington/Wall Street regulation bind.


This institutionalization issue is a sign of an intensified battle between Bitcoin and the financial establishment. Bitcoin wants to be free from labels and roles and control, while the financial establishment wants to define and control it.

As I see it the mouse is the eventual winner (or if you like, the sewer rodent).