Talking about the seven themes related to Bitcoin in 2023
Compilation of the original text: The Way of DeFi
Compilation of the original text: The Way of DeFi
This is an opinion piece by Stephan Livera, host of the "Stephan Livera Podcast" and managing director of Swan Bitcoin International.
With the 2022 chapter wrapping up, it’s time to turn our attention to what’s to come in 2023, and here are some of the themes I think will be relevant to Bitcoin in 2023.
Over-regulation
The Financial Action Task Force (FATF) travel rule is forcing trading platforms and bitcoin service providers to record and share more information about customer transactions. We’re seeing politicians like Elizabeth Warren speaking out against Bitcoin, and even though her digital asset AML bill has no real chance of passing, it does bode well for future battles over Bitcoin .
But on the other hand, we should also keep in mind that governments were originally against Voice over Internet Protocol (VoIP) technologies (like Skype, etc.), and now they are using VoIP as well. This is similar to bitcoin, where some countries use bitcoin as legal tender, hold bitcoin reserves, provide bitcoin services to citizens, and encourage bitcoin investors and entrepreneurs.
CBDCs and the War on Cash
In the war on cash yields, many countries have removed large denominations of cash from circulation, or banned physical cash transactions above a threshold. There is a lot of talk of central bank digital currency (CBDC) experiments in many countries, but my guess is that most countries will not have the technical and overall economic capacity to establish a fully functional CBDC by 2023.
2023 will be mostly about experimentation and rhetoric in preparation for a future CBDC rollout. In countries with high welfare, the government can especially force people to adopt CBDC, which you can understand as "If you want your welfare check, you will treat it as a CBDC."
Once upon a time, CBDCs might have been seen as a “conspiracy theory,” but now they are clearly a threat to financial freedom and privacy. Sadly, most won’t see the threat until it’s too late and CBDCs are in front of them — and the pain of CBDCs will push more people to use Bitcoin and the Lightning Network.
Maxis is making a comeback
Bitcoin maximalists are seeing a renaissance as casual “crypto” fans are being harvested for platforms like Celsius, BlockFi, FTX, Voyager, vault, and more. So it's very cyclical in a way, the 2014-2015 bear cycle was followed by the Mt. Gox crash, and in the 2018-2019 bear cycle we saw the QuadrigaCX crash. So, we just went through another round of people having to learn the hard way.
By 2023 we will see a stronger culture of self-hosting, since the pain of 2022 is more recent. This is not to rule out future cycles and waves of new adoption, as newcomers come in with less caution. Yield and shitcoin scams will return sooner or later in another form, but this will belong to a new wave of people who succumb to them.
We are seeing more content and webinars related to self-hosting. Offering easy automatic withdrawals, or 100% non-custodial, will be an important feature of Bitcoin onramps in 2023.
Miniscript wallets and functions
According to Pieter Wuille's website:
“Miniscript is a language for writing (a subset of) Bitcoin scripts in a structured way, supporting analysis, composition, generic signatures, etc.”
For those unfamiliar with it, Miniscript is an easier way of expressing different scripts or spending conditions for Bitcoin. This can be built into different wallets for easier compatibility across hardware and software.
You might first think, "Why should I care about it?" At first, you're right to ask that question. But over time, this will enable more complex self-hosting, enterprise and even succession planning scenarios. Want to have a 3/3 multisig wallet setup that downgrades to a 2/3 multisig wallet setup after 90 days? Or have different "exit" conditions in a business context? Miniscript makes these things easier, And allow people to use their existing software or hardware to do so. To be clear, some of this is already possible with Bitcoin Script, but Miniscript makes it more technically feasible, or easier to implement in practice.
Building these solutions will take time, but the functionality looks promising. This may be of particular interest to enterprises and enterprise customers, as it can make their self-hosting practices more practical for employees and keyholders.
Currently, there is work on this front with Liana (developed by the same team behind Revault) and Ledger, which has announced support for Miniscript in its hardware, and Specter DIY, which has enabled support in 2021! Rob Hamilton also talked about the application of Miniscript in the insurance field. I expect in 2023, Miniscript will get more support.
This could help push bitcoin usage in a self-custody direction and away from the "old model" of financial services, where you had to trust governments, banks, and fiat financial institutions more to keep their word, or else will reduce your wealth.
Lightning Network First
It's time to introduce a Lightning-first model for both types of Bitcoin transactions (low-value transactions and face-to-face transactions). We see the mempoolfullRBF debate erupt in late 2022, but the real answer for most of us is to promote and use the Lightning Network as first as possible.
As a brief anecdote, I remember a conversation with Giacomo Zucco, who explained his experience paying with Bitcoin in a supermarket in El Salvador. Unfortunately, the Chivo terminal at the time used Bitcoin on-chain payment by default, and when he paid on-chain, the people behind him had to wait for confirmation, which was very embarrassing. In contrast, a Lightning-first experience would look more like this:
We should show people the best of Bitcoin, and for face-to-face, low-value commerce, we should choose the Lightning Network first. I believe we will start to see more Bitcoin enthusiasts and local communities pushing and encouraging this in 2023.
Expansion of the Bitcoin community and activity
We will see more events and smaller meetings in countries around the world. Contrary to some people who think there are too many conferences in Bitcoin, this question is more about assuming you have to attend them all!
Instead, you should attend events and conferences that match your interests and/or geographic location. Having more meetings is a good thing, as long as they are conducted in a low-cost, efficient manner. Bitcoin bush bash, for example, is a model we're likely to see around the world - free to attend, held in a lobby or other free/cheap venue, no recordings, smaller events at cost-effective locations reunion.
By lowering expectations for things that typically cost more money (eg, fancy, professional operations, live broadcasts, lots of international speakers), Bitcoin enthusiasts can expand their local scene and meetups. This is not to disparage the larger Bitcoin events and conferences, as they also play a key role - but I see a "middle ground" that can be occupied by low-cost local events.
overall mood
In the absence of a 2023 crystal ball, I think Bitcoin's fiat price will remain mostly sideways. Forget what the fanboys are posting and talking about, they're usually chasing engagement, or getting too caught up in their own echo chambers. It takes time for the cycle to bottom.
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