The Five Stages of Bitcoin Acceptance

Andrew Throuvalas

@andrew

BitcoinBitcoin AdoptionCrypto Adoption

Bitcoin is inevitable – but we all come to terms with it at a different pace. Here’s how that reconciliation process will probably look for you.

(Article inspired by a tweet from @skwp)

There are two types of people: those who love Bitcoin, and those who are irrationally frustrated with and baffled by its success.

There are also plenty of people that don’t spend much time thinking about Bitcoin at all – but they won’t last for long. With both institutional and nation-state adoption on the horizon, Bitcoin’s presence will soon be too large to ignore. At that point, every average no-coiner will be forced to adopt Bitcoin – whether as a monetary network, inflation hedge asset, or daily currency. 

While some will curiously welcome this change, others will be hostile to it – at which point they’ll collapse into either of the aforementioned categories. If you’re reading these words, then you’ve probably joined one of these groups already.

This article will focus on the latter category: the confused, the skeptical, and the bothered. If you’re one such person, keep reading. If not, send this article to your friend who is – you definitely have one. 

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I’m about to outline the exact, stage-by-stage process by which you will eventually become a Bitcoiner. That’s not because I know you. It’s because it represents a highly predictable, already well-traveled path by those who once fervently opposed the technology. If you know what’s coming, then perhaps you can avoid some of the more painful parts. 

Here are the five personal stages of Bitcoin acceptance that you’re undergoing right now.

1. Denial (Can’t Scale, Will be Banned)

When something sounds too good to be true, anyone with common sense will probably dismiss it. Likewise, when you heard that Bitcoin is a neutral, global, censorship, and inflation immune digital money, you understandably assumed that whoever told you was off his rocker.

“Surely there must be a catch,” you thought. Then, after a split second of online research, you found a couple of objections that helped you dismiss Bitcoin and its many experts without experiencing cognitive dissonance. 

For example, you discovered that Bitcoin could never work because of its inability to scale. 1 megabyte blocksize? 7 transactions per second? That pales in comparison to the sort of throughput that Visa and Mastercard handle on a regular basis. 

Of course, what you failed to notice at the time were the various decentralized layer-2 scaling solutions that Bitcoin has had available for years. Some include the lightning network – an off-chain layer for payment processing that lets users batch hundreds of thousands of transactions before settling. Another includes side chains such as liquid, which use faster block times to allow for more transaction scalability. 

The same could be said for many of your objections. When you thought Bitcoin would be hacked, it wasn’t. When you thought it was too traceable, people found ways to cover their digital tracks. Finally, when you thought a government ban would crush the network, Bitcoin continued working without missing a beat. 

Bitcoin is undeniable. It’s stuck around through 13 years of being racked with civil war price fluctuations, and will likely stay alive for a long time to come. 

2. Anger (Criminals, Climate, and Crypto Whales)

This is the stage that most of you are probably stuck at right now. Since Bitcoin has obviously become real and valuable, your smug dismissal of the technology has quickly morphed into moral outrage. Hence, the Bitcoin rager is born.

Every Bitcoin rager comes pre-packaged with a carbon copied list of Bitcoin FUD that they’ve been spoon-fed through cable news and other forms of legacy media. But unlike the previous stage, this list is not related to what Bitcoin can’t do, but what it supposedly shouldn’t do.

Its contents include: 

• Some such nonsense that Bitcoin is a haven for criminals (even though blockchain data continues to show that this isn’t true)
• An endless stream of environmental fear-mongering about how Bitcoin is melting the planet (although analysis shows that mining can actually incentivize renewable energy)
• Finger wagging at how some Bitcoiners are really rich (even though wealth concentration in Bitcoin is trending down over time).

The problem with this list is not only that its criticisms are wrong, but totally subjective. For example, if Bitcoin was used by criminals, would it not just serve as proof that the network is effective at granting people financial sovereignty? 

Furthermore, if Bitcoin was truly a scourge to the environment, is that such a strong reason to not mine it? Bitcoin’s proof-of-work is a necessary component for ensuring network security and fair distribution of the coin. Many would argue that this is worth the cost of an environmental footprint. 

Finally, let’s assume Bitcoin is exacerbating inequality or creating new rich people. So what? The wealth divide is nothing new, and is just as prevalent on a dollar-based system. It also isn’t a crime to be rich – especially after having the patience to accumulate Bitcoin early on and hold it over many turbulent years.

At least with Bitcoin, inflation can no longer be used by governments to sap people of their savings and devote money to whatever cause they please. 

3. Bargaining (Blockchain > Bitcoin)

If you’ve already reached stage three, kudos to you! Not only have you accepted that this crypto-thing is really happening, but also that being upset about it isn’t going to change that. Bitcoin has no ministry of corporate affairs, nor a formal complaint department, and will continue to do its whole censorless, proof of work thing until long after we’re dead.

Still, being completely wrong and behind the curve on this technology has made you envious of your peers. Between the time they told you about Bitcoin and the time you started listening to them, its price has already added another digit.

“If only I got in sooner,” you think. “I’ll never have as much Bitcoin as my friends now!”

You start searching for a way out. A way to become wealthier than them. A way to feel smarter than them. To appear like you weren’t actually wrong about Bitcoin this entire time, and that you understood its strengths – and weaknesses – better than they do. 

Enter altcoins. 

“Blockchain is bigger than people realize,” you say to your Bitcoiner friend, the next time he broaches the topic. For a moment, he almost thinks you’ve come around to his point of view. Not true, you tell him – you’ve evolved his point of view.

“People are f***ing with it, like, on a Bitcoin level,” you say to quote Gary Vaynerchuck, without referencing him. “People who are a little smarter are on the Ethereum level”. 

After all, look at all of the things Ethereum can do! Faster transactions, smart contracts, decentralized exchanges, NFTs – way more versatile than boring old Bitcoin. Heck, didn’t you hear about EIP-1559? Ethereum burns its supply now, making it ultrasound money. Even as an inflation hedge, it beats Bitcoin. Mark Cuban said so – it must be true.

And what about Solana? Or Avalanche? All of these coins outperformed Bitcoin in 2021. There are over 18,000 coins and tokens available today which are far earlier in their life cycle. May as well diversify across the whole crypto-sphere like Kevin O’Leary, and leave Bitcoin to the old whales who bought it in 2013, right?

But it doesn’t convince your friend. Of course it doesn’t – he is still the slave of old habits. He’s still talking about first-mover advantage and some other nonsense about money and network effects. He doesn’t understand the true implications of the blockchain that makes Bitcoin what it is today. Only when Bitcoin gets flipped will he realize that it’s carried by a foundation of sand. Any time now. Any day now!

4. Depression (Getting REKT)

Boom! The bear market strikes.

Mass liquidation cascade. Hundreds of millions of dollars lost. 20X leverage traders collectively cleared of their overzealous positions.  

You check the price. The news is true. Bitcoin is down 30% in a day. Multiple resistance levels are breaking. All the bullish commentary channels were wrong. But you were right! Bitcoin is breaking. The markets are wiser now. The bubble has popped. Surely they’ve fled to all the smart contract platforms, where blockchain’s true potential lies! Right?

Not right. For every percentage point Bitcoin has fallen, Ethereum has fallen by 2. Solana has fallen by 5. Don’t even ask about Avalanche. 

Hmm, that’s strange. A lot of your investments are getting the hit today. Good thing you diversified, across the entire top 20 coins, right?

Still not right. Everything is down. Everything. A sea of red. How can this be? The indicators, the VC funding, the partnerships – did it mean nothing? Why would your investments be down

You then come to terms with two very ugly, sobering truths. Firstly, when Bitcoin pumps, altcoins pump harder. Secondly when Bitcoin dumps, altcoins dump harder too. Sometimes, they dump forever.

If you invested in IOTA back in 2017, you probably already know this. The coin emerged in June of that year, and rallied under Bitcoin from $0.3 to over $5 at year’s end. Later, as Bitcoin receded back to $3000 throughout 2018, IOTA collapsed with it – and never truly recovered. To this day, it only trades at $0.7, despite its attempts at revival. 

For those ‘mainstream’ alts that have clung to top-ten relevancy throughout the years, they have all still failed to decouple from Bitcoin in price. Even Ethereum – the king of Defi – still has a 0.7 correlation with Bitcoin, according to Coin Metrics data. As CME Group stated last year, Ether has a “close correlation” to Bitcoin in price, “but has seen even higher volatility”.

In other words, it turns out that altcoins are still largely dependent on Bitcoin for price action – not the other way around. Bitcoin, however, is at least not likely to crumble and die when the market gets messy. 

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5. Acceptance (Embracing a Bitcoin Based Future)

Finally, after doggy coin #69 has failed to see price action for three months straight, you accept reality. You were wrong about your no-name s***coin basket, and your friend was right about Bitcoin. 

You cash in your losses and use whatever money you have left to buy Bitcoin. In all, you net only half of the Bitcoin you could have if you’d just invested at the end of Stage 2. You feel pangs of regret, yet also much relief.

The denial and negativity have left your mind. That prideful weight has been lifted from your shoulders, and you may now look forward to watching your Bitcoin appreciate over time as the world wakes up to its beauty. 

It’s not just Bitcoin, either. As you continue to study it on your free time, you realize that entire industries are developing around the asset, and the network. You could choose to invest in a Bitcoin miner, or payment provider allowing Bitcoin to effectively scale. 

The financial possibilities are out there. But whatever you do, you avoid saving in dollars – or any fiat currency – at all costs. After reading a bit of monetary history, you understand why today’s record inflation isn’t just economically harmful, but inevitable when dealing with debt-based money. As such, you search for every opportunity to be paid in, or save in Bitcoin, and ignore your fiat-earning friends that call you crazy. 

After all, Bitcoin is more than just a meme stock or speculative asset. Its fundamentals appeal to long-term savers, who can grasp the bigger picture of their savings. Also, it is for those who understand Bitcoin as the ultimate savings technology.

Michael Saylor – CEO of MicroStrategy and major Bitcoin whale – goes beyond calling it digital gold, and deems Bitcoin the “apex property of the human race”:

“I believe Bitcoin is critical technology to the human race,” he told CoinDesk in November. “It’s digital property, and as apex property, it should presumably demonetize gold, investment properties, second homes, monetary indexes, and ETFs… I think that the asset class over the long term is gonna dramatically appreciate. “

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Overall, BItcoin is nothing to grieve over – as long as you get on board while you can. Assume that your Bitcoiner friends know something you don’t, and try to get off zero.