Narratives driving crypto part 1- intro to the series

Do you understand the narratives driving crypto? Welcome to part one of the last crypto series you’ll ever need to read! 

Ok, maybe not ever. 

But it’s going to be high-level and all-encompassing to the point that anything new you read after this can be mentally placed into the existing frameworks of context that this series will provide. It will give you a bird’s eye view of the crypto industry, which puts you ahead of the game both in understanding what moves the space and seeing where to make your crypto investments.

Right now, crypto has a problem—a big one. Not enough people know about it beyond “Bitcoin is internet money” and “Yay, NFTs!” Even worse than that, many of the people that know enough to open a wallet on a centralized exchange don’t actually understand the narratives driving crypto or how they shape the future of crypto tech, public sentiment, and group action. 

But you’re smart. You have the big-picture savvy to get your arms around these ideas and you can aim for where the puck will be, not where it’s already been, right?

What’s in a narrative?

It can be easy to dismiss the power of narratives because, after all, they’re just stories aren’t they? Half the time they’re not even accurate. But art and culture have always demonstrated how people are moved by stories much quicker and easier than by facts and exposition—why do you think Greek mythology continues to be retold in superhero stories over and over? 

Narratives are powerful because they convey concepts in a way that people can understand, influencing them often before they even realize they’re being influenced. 

The father of public relations (or propaganda, depending on how you look at it), Edward Bernays, understood how narratives influence people and drive them to change their behavior. He is the reason bacon became a staple of the American breakfast. He was hired to increase bacon sales. So, by telling people the story that, “a bigger breakfast like bacon and eggs is healthier, according to doctors,” he completely changed people’s understanding, actions, and purchases. Before this, most Americans ate light in the morning. That’s the power of a narrative.

Narratives driving crypto

Narrative stories are everywhere and crypto is no exception. The stories about crypto that take root in public consciousness are the forces that drive both innovation and crypto investment. Stories of what’s possible in the future drive development. Stories about how crypto improves lives drive crypto investment.

The story of Bitcoin was that it would challenge the financial status quo. And it has, to the tune of trillions of dollars. The story of NFTs was that everything could be valuable and unique. And in just two years, NFT market value blew past $40 billion in 2021. 

How narratives impact the ecosystem

When developers, investors, and the larger public hear a story and accept it, that affects the ecosystem. The narrative that “crypto is only used by criminals,” slowed down adoption in the early days. Vitalik Buterin’s narrative that “blockchain functionality was too limited,” created an explosion of development with smart contracts. Elon’s narrative of “Doge to the moon” created a market frenzy that made a bunch of memesters into millionaires. What people believe affects what they do and how they spend their money. And narratives shape what people believe.

How narratives impact you

Knowing how the stories within crypto shape and direct its movement as an ecosystem, how can you take advantage? Well, it’s simple: learn how to spot narratives as they’re being woven. If you understand the stories that capture attention and influence, you’ll understand how and where people will respond. And you’ll have a better chance of positioning yourself to capitalize on that understanding with your crypto investments.

Types of narratives

Overarching narratives — These are the biggest stories that everyone hears and repeats. Things like, “Bitcoin makes billionaires” and “Doge to the moon.” These don’t have to create deep understanding, they just have to influence collective attitudes.

Industry narratives — Within crypto, there are stories that require some prerequisite knowledge. The general public will only be influenced indirectly, if at all, by industry narratives. They’re things like, “scalability is required for progress.” And, “the future is multichain.”

Micro and short-term narratives — Smaller stories that play out quickly and change quickly can be useful. They may help you trade better or they may help you assemble pieces to a larger narrative. These are things like, “The Fed needs to manage inflation.” And, “The Tether lawsuit could hurt stablecoins.”

Narratives driving crypto in the past

A good way to learn how to distinguish influential narratives from irrelevant ones is by looking at past narratives that would have informed good crypto investments. What are some of the stories that have driven the crypto ecosystem to where it is today?

“Digital gold”

The OG narrative was that Bitcoin would be a digital store of value like gold is a physical store of value. It is scarce, secure, and sound. This story is still driving the biggest blue chip crypto on the block, as Bitcoin maximalists will tell you.

“Blockchain not Bitcoin”

Once people began to realize the possible uses of blockchain, the idea that crypto’s value came from tech development, not Bitcoin itself, became a strong narrative. It saw Ethereum blow up and an explosion of new protocols. It’s not as strong a narrative today because the ecosystem has become so broad.

“Memecoins can make you rich”

Dogecoin started as a joke but when the laughing turned into raking up fortunes, people started paying attention. Because it was so outrageous, the story blazed through pop culture and public awareness like no other narrative had.

Narratives driving crypto in the future

Now that you understand why the stories that exist in and around crypto are so important, you’ll want to identify the narratives that will likely shape crypto in the years to come. That’s what the rest of this series will be about! Some of the emerging narratives driving crypto seem to be things like “governments want CBDCs,” “NFTs and tokenization will revolutionize ownership,” and “the metaverse is humanity’s newest frontier.” 

In the rest of this series, we’ll walk through more of the potential stories that will continue to move the cryptosphere forward. You’ll read about things like Web3, Bitcoin’s status as an alternate monetary system, memecoins, DeFi, play-to-earn games, and more.