Authored by: Stephan Livera
As the 2022 Bitcoin chapter closes, it’s time to turn our eyes to what’s coming in 2023. Here are some themes I see for the leading cryptocurrency in 2023.
The Financial Action Task Force’s (FATF) Travel Rule is forcing exchanges and bitcoin service providers to document and share more information about customer transactions. We are seeing politicians such as Elizabeth Warren publicly go against Bitcoin. Even if her proposed digital asset AML act has no real chance of passing, it does foreshadow that future battles are coming on this.
But, on the other hand, we should also remember that governments were initially against voice-over-internet protocol (VoIP) technologies (e.g., Skype, etc.), and nowadays, they use VoIP. It’ll be similar to bitcoin, where some countries adopt it as legal tender, hold bitcoin in reserves, provide Bitcoin services for citizens and encourage bitcoin investors and entrepreneurs.
The war on cash proceeds, with many countries taking high-denomination cash notes out of circulation or banning physical cash transactions above a threshold. Many countries are talking about central bank digital currency (CBDC) trials. Still, most will not have the technical and overall economic capability to stand up a fully-functioning CBDC in 2023.
2023 will mostly be about trials and rhetoric in preparation for future CBDC rollouts. Governments can especially force people into CBDCs in countries with large welfare states, with the understanding being, “If you want your welfare check, you’ll take it as a CBDC.” Just like Darth Vader in “Star Wars,” it’ll be a case of, “Pray I do not alter the deal any further.”
Once upon a time, CBDCs might have been seen as a “conspiracy theory,” but by now, they are coming as a threat to financial freedom and privacy. Sadly, most people will not see the danger until it is too late and CBDCs are upon them — but the pain of CBDCs will push more people into using Bitcoin and the Lightning Network.
Bitcoin Maximalists are being minted as casual “crypto” fans get rekt on platforms such as Celsius, BlockFi, FTX, Voyager, Vauld, etc. So, in some ways, it’s very cyclical, the 2014 to 2015 bear cycle followed after the collapse of Mt. Gox, and during the 2018 to 2019 bear cycle, we saw the breakdown of QuadrigaCX — so we’re just going through another round of people having to learn the hard way.
For 2023, we will see a more robust self-custody culture, given the pain of 2022 is more recent. This is not to preclude future cycles and waves of new adoption with people coming in who are not as careful. Yield and shitcoin scams will be back in another form sooner or later, but it will be a new round of people who succumb to them.
We see more rounds of content and webinars that relate to self-custody. For example, with Swan Bitcoin, I hosted some self-custody 101 webinars (which will be ongoing). These webinars had some of the highest interest and registrations of any Swan webinars. Offering an easy auto-withdrawal feature or being 100% non-custodial will be essential for Bitcoin on-ramps in 2023.
Per Pieter Wuille’s site: “Miniscript is a language for writing (a subset of) Bitcoin Scripts in a structured way, enabling analysis, composition, generic signing, and more.”
For unfamiliar users, Miniscript is a way to express different scripts or spending conditions for bitcoin easily. This could be built into other wallets to enable easier cross-hardware and -software compatibility.
You might first think, “Why should I care?” and, at the start, you’d be right to ask that. But over time, this will enable more sophisticated self-custody, enterprise, or even inheritance planning scenarios. Want a three-of-three multisig setup that degrades to a two-of-three multisig setup after 90 days? Or do different “back out” conditions exist in a business context? Miniscript makes it easier to do these things and lets people use their existing software or hardware for this purpose. To be clear, some of this is already possible with Bitcoin script today, but Miniscript makes it more technically feasible or easier to achieve in practice.
It will take time for these solutions to be built out, but the functionality does seem promising. Businesses and enterprise customers may be particularly interested in this because it could make their self-custody practices more practical for employees and key holders.
Liana (by the same team behind Revault) and Ledger, which has announced Miniscript support in its hardware, and Specter DIY already enabled support in 2021! Rob Hamilton has also spoken about Miniscript uses in the insurance world here. I anticipate more help coming in 2023.
This could help push the use of bitcoin in self-custodial directions and away from the “old model” of financial services where you have to place more trust in government, banks, and fiat financial institutions to honor their word or not debase your wealth.
It’s time to introduce a Lightning-first model for two bitcoin transaction types: low-value and in-person commerce. We saw the mempoolfullRBF debate blow up toward the end of 2022, but the honest answer for most of us is to promote and use Lightning first, where possible.
As a quick anecdote, I recall talking with Giacomo Zucco, who explained his experience in El Salvador of paying with bitcoin at a supermarket. Unfortunately, the Chivo terminal at that time defaulted to Bitcoin on-chain, and as he paid on-chain, the people in the line behind him had to wait for confirmation, which was very awkward. Contrast this with a Lightning-first experience which could look more like here.
We should show people the best of Bitcoin, and for in-person, lower-value commerce, we should go for Lightning first. We’ll start seeing this being driven and encouraged by more Bitcoiners and local communities in 2023.
We will see more Bitcoin events and small-sized conferences in different countries worldwide. Contrary to some who believe there are too many Bitcoin conferences, the issue is more one of assuming that you must attend them all!
You should instead attend events and conferences that align with your interests and/or geography. Having more conferences is a good thing, so long as they are done in a low-cost, effective way. For example, the Bitcoin bush bash is a model that we may see replicated around the world — free to attend, held in a hall or other free/cheap area, with no recordings, smaller-size gathering that is hosted somewhere that is cost-effective.
By lowering the expectations about things that typically cost a lot more money (e.g., fancy, professionalized operations, live streaming, lots of international speakers), Bitcoiners can grow their local scenes and meetups. This is not to detract from the more significant Bitcoin events and conferences, as they also play a crucial role — but I see a “middle ground” that low-cost, local events can take up.
Without a crystal ball for 2023, I believe bitcoin’s fiat price will remain mostly sideways. Forget what the bull-hopium people are posting and talking about; they are usually chasing engagement or getting too caught up in their echo chambers. It takes time for the cycle to bottom out.
But let’s look on the bright side; it’s an excellent time for stacking sats and building something. Remember, in prior cycles, it wasn’t so clear that “Bitcoin would come back,” whereas now, the world slowly realizes that Bitcoin is here to stay.
This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This article was printed from TradingSig.com