The underlying reason why Bitcoin will succeed and why banks are onboard 🧐 It's not tech or usability

Of course we are used to all the different reasons why Bitcoin will or won't succeed, according to it's proponents and opponents. Usually the discussion involves philosophical or technical issues such as scalability, usability or spendability. In my opinion these are secondary factors to the real reason.

HUMAN EMOTION

The real reason why I believe Bitcoin will succeed was in fact mentioned by Bitcoin's creator years ago and is the underlying reason for most of us to invest in Bitcoin. Let us hear from Satoshi himself:

“It might make sense just to get some Bitcoin in case it catches on. If enough people think the same way, that becomes a self-fulling prophecy” - Satoshi Nakamoto in 2009.

It is the underlying seed of FOMO, the biggest FOMO the world has probably ever seen. While banks were discussing the pro's and cons of Bitcoin, and generally looking negative upon it, what really toppled them over to get involved was the question: What if we're wrong? Can we afford to miss out?

Surely there are risks involved with investing in Bitcoin, we all know this. But in reverse: What is the risk of missing out on this opportunity? Should Bitcoin succeed and become a world currency, what would happen to any bank that was not onboard? If you are 95% certain that Bitcoin will fail, are you willing to bet 100% of your global, world leading company on it? Or instead, would you try to insure yourself against this by, for instance, allocating 1-5% to investing in Bitcoin. Hedging bets: that is what they do, after all.

Last year during the summer I saw this argument come up in articles again, and I believe it is what kickstarted the bull run last year. While many corporations and banks were still on the fence, some of them decided they would not run the risk and started buying in. This kickstarted the self-fulfilling prophecy that Satoshi was talking about, the seed that may be the cause of the biggest FOMO the world has ever seen. Not because of desires for riches, but perhaps even out of sheer survival-instinct. Remember, the F in FOMO stands for 'fear', not 'greed'.

It doesn't take much, after all, to make this a reality. It only needs a few people/companies, to put in some money. And as the price goes up, the risk of missing out and the necessity to get in as soon as possible increases as well. Whereas last year institutions were recommending to invest at most 1% into crypto's, today recommendations are up to 5% or even 10%. They are, in effect, bidding eachother up and solidifying Bitcoin's position by infecting eachother with belief in it's adoption and not so much the fear of not being ahead, but rather the fear of behind left behind.

This fuels the Bitcoin economy, as more companies jump on board to insure themselves against missing out, causing continuous price rises. That of course leads to more trust in the future of Bitcoin, and coupled with a price rise I believe that 1% quickly grew into 5%. By that I mean that those companies that put in 1%, didn't put in 4% additional percent per se, but instead their 1% holdings probably grew to 5% because of the price rise. Now they are comfortable with this, and telling others about being comfortable with it. Newcomers to the space, therefore, are likely to start putting in more than 1%.

THE FUTURE

As long as there is room for Bitcoin to grow, I do not see this FOMO changing. It's continued success will only lead to a higher level of trust and more willingness to invest more. Perhaps if Bitcoin one day has topped out, the incentive to step onboard will be gone. But also, if that should be the case then everybody will be onboard anyway.

The only logically sound way to not invest in Bitcoin is if you are 100% certain that it will never succeed. And by now, I don't think there are many serious financial instutions left which are that certain. Even the most ardeous opponents have jumped ship and are now offering Bitcoin or Bitcoin related services, or planning to do so.

It doesn't even matter of Bitcoin is usable, scalable or spendable in this regard. The only thing that matters is that people agree on the idea that it has value of some kind, that it is an asset of some sort. It is a measure of wealth, just like any other kind, and it's importance is expressed by it's value. As it's value goes up, so does it's importance and thus legitimates increasing one's position in it, further fueling the cycle.

IN BUT NOT OUT

Bitcoin adoption is further solidified by the fact that anybody who does jump onboard immediately becomes a stakeholder in Bitcoin's success. Once you're in, you need Bitcoin to succeed, and it would be terrible if it turns out that another crypto would succeed instead. As such all those involved are highly incentivized to make it work and provide additional ways to increase adoption; either by becoming evangelists, or offering services related to Bitcoin such as ETF's.

I believe enough money has entered Bitcoin, and enough stakeholders exist with plenty of reasons to want to see this succeed. Because if it doesn't, those stakeholders will have lost more than if they hadn't invested in Bitcoin to begin with. It doesn't say much about altcoins, because Bitcoin investors may (likely) invest in multiple projects, but Bitcoin is the one universal crypto investment that everybody has, or even needs.

I believe, especially for billion-dollar-investors, once you enter the Bitcoin space, you've committed yourself to Bitcoin's success. It is death or glory, you either succeed or lose worse than if you hadn't entered the space.

It's funny that human psychology and emotions play such a huge role in markets and indeed I have found it to be one of the more fascinating aspects of investing into crypto. Satoshi was truly a brilliant game theorician.

FOMO and FUD are thrown around in jest, and veteran crypto investors will have numbed themselves down to ignore it but it is still a very real thing and it applies perhaps even moreso to huge corporations with billions on the line, than it does for us average people looking to make a buck. Perhaps we're just looking for a nice bonus, but these corporations' livelyhood and existence is at stake. And whatever happens, they just can't risk that. And then 1% is a small price to pay to insure yourself against that.

(Art by Roy Lichtenstein)