Defining Bitcoin in 2023 – Bitcoin Magazine

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This is an opinion piece by Stephan Livera, host of the “Stephan Livera Podcast” and Managing Director of Swan Bitcoin International.

As the 2022 chapter comes to an end, it’s time to turn our eyes to what’s to come in 2023. Here are some themes I see for Bitcoin in 2023.

Overbreadth of regulation

The Financial Action Task Force (FATF) Travel Rule requires bitcoin exchanges and service providers to document and share ever more information about customer transactions. We see politicians such as Elizabeth Warren publicly opposing Bitcoin, and while her proposed AML Digital Assets Act has no real chance of being passed, it portends that there are future battles. to come about this.

But, on the other hand, we must also remember that governments were initially against Voice over Internet Protocol (VoIP) technologies (eg Skype, etc.) and today they are using VoIP. It will be similar with bitcoin, where some countries are adopting it as legal tender, holding bitcoin in reserves, providing bitcoin services to citizens, and encouraging bitcoin investors and entrepreneurs.

CBDCs and the War on Money

The war on cash continues, with many countries withdrawing high-denomination banknotes from circulation or banning physical cash transactions above a certain threshold. Many countries are talking about Central Bank Digital Currency (CBDC) trials, but I suspect most will not have the overall technical and economic capacity to have a fully functional CBDC in place in 2023.

2023 will be mostly about testing and rhetoric, in preparation for future deployments of CBDCs. Governments can especially force people into CBDCs in countries with large welfare states, with the bargain being, “If you want your welfare check, you’ll take it like a CBDC.” Much like Darth Vader in “Star Wars,” it will be “Pray I don’t change the deal any further.”

Once upon a time, CBDCs might have been considered a “conspiracy theory,” but now they clearly pose a threat to financial freedom and privacy. Unfortunately, most people won’t see the threat until it’s too late and the CBDCs are upon them – but it’s also the pain of the CBDCs that will push more people to use Bitcoin and the Lightning Network.

Maxis being hit and resurgence of interest in personal guarding

Bitcoin maximalists are being hit while casual “crypto” fans rekt on platforms like Celsius, BlockFi, FTX, Voyager, Vauld, and more. So in some ways it’s very cyclical, the 2014 to 2015 bear cycle followed after the Mt. Gox crash, and during the 2018 to 2019 bear cycle we saw the QuadrigaCX breakdown – we so let’s go through another set of people having to learn the hard way.

For 2023, we will see a stronger self-guard culture given that the pain of 2022 is more recent. This is not to prevent future cycles and waves of new adoptions with people who are not as careful. Yield and shitcoin scams will return sooner or later in another form, but it will be a new set of people who succumb to them.

We are seeing more content series and webinars related to personal custody. For example, with Swan Bitcoin, I have hosted Self-Custody 101 webinars (which will be ongoing), and these webinars have had the highest interest and registrations of any Swan webinar ever offered. Offering an easy automatic withdrawal feature or being 100% non-custodial will be an important feature for Bitcoin on-ramps in 2023.

Miniscript wallets and features

From Pieter Wuille’s website:

“Miniscript is a language for writing (a subset of) Bitcoin scripts in a structured way, allowing parsing, composition, generic signing and more.”

For those unfamiliar, Miniscript is a way to more easily express different scripts or spending conditions for bitcoin. This could be integrated with different wallets so as to facilitate compatibility between hardware and software.

You might first think, “Why should I care?” and, at first, you would be right to ask that. But over time, it will allow for more sophisticated scenarios of personal custody, business, or even estate planning. Want to have a three-of-three multisig setup that degrades to a two-of-three multisig setup after 90 days? Or are there different “withdrawal” conditions for a commercial context? Miniscript facilitates these operations and allows users to 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 do in practice.

Setting up these solutions will take time, but the functionality looks promising. Companies and enterprise customers may be particularly interested in this, as it could make their self-custody practices more convenient for employees and keyholders to perform.

Currently, there’s Liana (by the same team behind Revault), and Ledger, who announced Miniscript support in their hardware, and Specter DIY had already enabled support in 2021! Rob Hamilton also talked about the uses of Miniscript in the insurance world here. I anticipate more support to come in 2023.

This could help push bitcoin usage in self-custody directions, and away from the “old model” of financial services where you have to rely more on government, banks, and fiduciary financial institutions to honor their word or not to degrade your wealth.

lightning first

It’s time to create a Lightning-first model for two types of bitcoin transactions: low-value transactions and in-person trade. We saw the mempoolfullRBF debate explode towards the end of 2022, but the real answer for most of us is to promote and use Lightning first, whenever possible.

For a little anecdote, I remember talking with Giacomo Zucco who was explaining his experience in El Salvador of paying with bitcoins in a supermarket. Unfortunately, the Chivo terminal at that time defaulted to Bitcoin on-chain, and since it paid on-chain, people in line behind it had to wait for confirmation, which was very inconvenient. Contrast that with a first Lightning experience that might look more like this:

We should show people the best of Bitcoin and for lower value in-person trading, we should opt for Lightning first. I think we will start to see this being driven and encouraged by more Bitcoiners and local communities in 2023.

Expansion of Bitcoin-only communities and events

We will see more small events and conferences in different countries around the world. Contrary to some who think that there are too many Bitcoin conferences, the question is rather to assume that you all have to attend!

Instead, you should attend events and conferences that match your interests and/or geography. Having more lectures is a good thing, as long as they’re done inexpensively and efficiently. For example, the Bitcoin bush bash is a model we can see replicated around the world – free, held in a hall or other free/cheap area, no registrations, a smaller sized gathering hosted in a profitable place.

By lowering expectations for things that usually cost a lot more (e.g. fancy and professionalized operations, live streaming, lots of international speakers), Bitcoiners can grow their local scenes and dating. This shouldn’t harm 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.

General feeling

Without having a crystal ball for 2023, I think the fiat price of bitcoin will remain in a mostly sideways trend. Forget what the bull-hopium folks post and talk about, they’re usually either looking for engagement or too caught up in their own echo chambers. It takes time for the cycle to collapse.

But let’s look on the bright side, now is a great time to stack sats and build something. Remember, in previous cycles it was not so clear that “Bitcoin would come back”, whereas now the world is slowly realizing that Bitcoin is here to stay.

This is a guest post by Stephan Livera. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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