The evolution of Bitcoin from Scarcity to Sovereignty

[Rubuchi]

To me the greatest strength of Bitcoin is that its uses have changed over time but its core principles have not. Initially many saw it as just a peer to peer payment system but in reality it has gradually evolved into a global store of value.  So this is not a departure from the original purpose but a natural evolution and even with solutions like the Lightning Network, the payment opportunity is still there. The only difference is that now many people are more comfortable holding Bitcoin as a long term safe asset than for everyday transactions.

I came across this reply earlier about bitcoin which speaks about the topic “What makes Bitcoin Stronger over time” and I think this is all a part of the development process for bitcoin. People started using it for the peer to peer transactions like you mentioned but before then, people began by accumulating the coin in its early days. When the coin saw its light towards alot of the people’s heart and wallets, it gradually evolved into a peer to peer payment system which brought about the creation of P2P platforms and the devolution of international transactions from the old and centralized systems into a modern decentralized network that can move the funds easier and faster without the involvement of the banks and other government centralized systems.

Now it is in the phase where people are using it as a long term store of value in large numbers and quantity, an hedge over inflation, where people see it as the future currency and are investing heavily on it, soon it will become the safest currency for the forex market and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

Let me demonstrate this in a diagram. Picture it this way:



- the first phase was when Bitcoin was still new and unknown to many. Only early adopters bought and mined it.
- the second phase was when users started using Bitcoin to send and recieve money directly across boarders.
- the third phase was when developers created exchanges and p2p platforms to buy, sell and traded Bitcoin.
- the fourth phase was when people started seeing bitcoin as a digital gold and a long term store of value. This is the phase we are currently.
- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

[hd49728]

- the first phase was when Bitcoin was still new and unknown to many. Only early adopters bought and mined it.

Early adopters mined Bitcoin first before they exchanged it for other things like pizzas, honeypots, drugs, cash, ... Because people mined bitcoins for months before they tried to exchange it with a first trade "bitcoin for pizzas", trades on first Bitcoin exchanges.

- the second phase was when users started using Bitcoin to send and recieve money directly across boarders.

At the time of first P2P transaction from Satoshi Nakamoto to Hal Finney, it can be an across border transaction already. You did not know where Satoshi Nakamoto lived.

I don't know about sovereignty, what is this and why did you want to use it for Bitcoin?

[Ambatman]

I would commend the effort and love the chart by the way but i would like to point out something's

Only early adopters bought and mined it.

It was never bought in the early days
It was mined and gifted among themselves.
The only exception was by Sirius who sold for Fiat around 2009.

the second phase was when users started using Bitcoin to send and recieve money directly across boarders.

Not really an evolution because all these has always been possible with Bitcoin
They were among its features.

the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

Too optimistic.

[Die_empty]

- the fourth phase was when people started seeing bitcoin as a digital gold and a long term store of value. This is the phase we are currently.

Should we add another phase when there is massive institutional investment in Bitcoin? The approval of Spot ETFs gave rise to another phase of Bitcoin, where several asset management companies began to offer ETF services to customers.

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

Maybe before this time, we might have another phase when Bitcoin would be used as a reserve currency by many countries. Most rich nations would have to make Bitcoin a legal tender before it would be adopted as a popular currency globally.

[348Judah]

Bitcoin is the answer in many of today's financial and economic which challenge, right from inception, everything about bitcoin has been pointing on the needs for decentralization and freedom for the people and this is why we have to enjoy every stages of its development until we achieve a unified success by seeing Bitcoin as the mainstream currency just as we have Fiat already, it is just about time to get all these achieved, because this current disposition is all about digital opportunities and this has been what bitcoin has set as an eye opener to every other individual, corporate body or government willing to adopt it.

[DubemIfedigbo001]

Now it is in the phase where people are using it as a long term store of value in large numbers and quantity, an hedge over inflation, where people see it as the future currency and are investing heavily on it, soon it will become the safest currency for the forex market and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

This is a big speculation, We would start with a stage where clear regulations given to bitcoin in the countries where their government are not yet clear with it, another stage where institutions are adopting and transacting with it properly within and accross all countries of the world which means it would've been legalized everywhere, including places where it is banned at the moment.
Another stage where every country uses bitcoin as a strategic reserve asset.

Finally, many governments would not adopt bitcoin as their legal tender because they cannot totally control it due to decentralization, the government doesn't give in totally to what isn't within their control, they would always choose fiat over bitcoin since it is directly under their control and they can manipulate it easily for obvious advantages.

[tbct_mt2]

Finally, many governments would not adopt bitcoin as their legal tender because they cannot totally control it due to decentralization, the government doesn't give in totally to what isn't within their control, they would always choose fiat over bitcoin since it is directly under their control and they can manipulate it easily for obvious advantages.

El Salvador did not actually control Bitcoin blockchain in hashrate and bitcoins they own compares to Bitcoin whales but they still made Bitcoin legal tender for several years in their country.

All governments did not actually control how cash circulates in their countries but cashes are legal tender as there are still money laundering by cashes.

From El Salvador case study you can see that they got problems with IMF, and the other nations might face with same problems. It can be biggest barrier for them to enforce Bitcoin legal tenders nationally.

https://www.globalgovernmentfinance.com/el-salvador-imf-agreement-confine-bitcoin-use/
https://www.imf.org/en/publications/cr/issues/2025/03/19/el-salvador-selected-issues-565394

[Awaklara]

by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

If the market only moves based on daily transactions made using Bitcoin, it might be able to curb its volatility. The concern still lies with large holders. They really could move the market price. 
I'm sure Bitcoin usage is becoming more real. But for global use, maybe not anytime soon. I believe government policies can also be adjusted if needed, especially for countries that still ban Bitcoin usage.

[MarryWithBTC]

by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

If the market only moves based on daily transactions made using Bitcoin, it might be able to curb its volatility. The concern still lies with large holders. They really could move the market price. 
I'm sure Bitcoin usage is becoming more real. But for global use, maybe not anytime soon. I believe government policies can also be adjusted if needed, especially for countries that still ban Bitcoin usage.

I am of the opinion that bitcoin will never witness the less volatility we clamor for. Remember that some years back, we said that if institution joins the industry, volatility will be less. Today we have institutions are fully involved and yet, volatility is raking us.

The institutions are not into bitcoin to promote its utility, rather they are here to make gain, so they will continue to time the market and influence it. There must continue to be the bull market and the bear market. There must continue to be the effect of the 4 years cycle in the industry.

So, the presence of the institutions or the government will not tame volatility as it has not.

[Smartprofit]

I don't quite agree that Bitcoin has gone through these exact stages of development. In my opinion, it's much more complex. 🙋

For example, the first cryptocurrency exchange appeared back in 2010 (MtGox). Initially, people mined Bitcoin simply because they liked the idea and blockchain technology. At that time, Bitcoin was primarily of interest to tech geeks.

Then there was a brief period when Bitcoin was used as virtual money. Then, people began to view it as a convenient asset for speculation. A little later, people noticed its limited supply and the fact that its price was rising over time...

At the same time, alternative cryptocurrencies were developing, the emergence of stablecoins, attempts to create digital currencies for large corporations... And, as the icing on the cake, the creation of central bank digital currencies (CBDCs).

In other words, we're not dealing with a linear process, but rather a branching tree of the evolution of money in virtual space.  And this evolutionary process began with the creation of Bitcoin!

Somewhere around 2017, institutional players began to take an interest in Bitcoin. Futures, options, regulated exchanges, spot Bitcoin ETFs, BlackRock, Michael Saylor, AML, KYC, FATF... We are witnessing these processes in real time... Institutional players are trying to distort the core essence of Bitcoin, and they are largely successful. 🙎

Bitcoin's path is based on an evolutionary process and dialectic (the unity and struggle of opposites). Currently, in my opinion, Bitcoin is in a deep crisis, and I don't know what will happen next. However, I remain optimistic!💁

[cryptoaddictchie]

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

This is so optimistic. I think as long as currency system is strong bitcoin will not be used more like a paper money and will still be considerate as asset like gold which people usually keep and sell when price goes up. Bitcoin is powerful and indeed many are believing on it. The same with everyone else here but the whole world might see it differently.

Im just wishing bitcoin continue to progress and no tech will replace its position as one if the potential of digital usage.

[aoluain]

Now it is in the phase where people are using it as a long term store of value in large numbers and quantity, an hedge over inflation, where people see it as the future currency and are investing heavily on it, soon it will become the safest currency for the forex market and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

Governments have two main tools to react to their countries economies movement.

Interest rate manipulation and adjustments and Quantitative easing -

The printing of more and more money at will is solely dependent on money being centralised
in oder to control the supply.

How will governments be able to manipulate and control money with a decentralised currency
such as Bitcoin? they cant. So I cant see Bitcoin emerging as a global currency adopted by
governments.

It already is a global currency for everyone to use.

[lionheart78]

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

I highly doubt this phase will happen.  Even El Salvador, that acknowledge Bitcoin as legal tender do not adopt it as their country's currency.  I always believe the world will see Bitcoin as an alternative but never a main currency of any nation, the decentralized feature of Bitcoin makes it impossible for any country to adopt it as their national currency.

As Bitcoin becomes scarcer, more people will avoid spending it on their day to day transaction.  People love to see the value of their holdings increase, so they will choose to hodl or hoard rather than spend it every day when they have the fiat currency for daily spending.

[Alphakilo]

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

This is so optimistic. I think as long as currency system is strong bitcoin will not be used more like a paper money and will still be considerate as asset like gold which people usually keep and sell when price goes up. Bitcoin is powerful and indeed many are believing on it. The same with everyone else here but the whole world might see it differently.

Im just wishing bitcoin continue to progress and no tech will replace its position as one if the potential of digital usage.

What OP described is nothing short of how a raw commodity ideally changes into a real and acceptable form or medium of exchange also known as money, because this was how gold became valued till date and Bitcoin is walking same path and we hope it achieves the end phase when it becomes a worldwide acceptable means of exchange.

In all of this though, volatility has a huge role to play in distribution and adoption, but stability is what would make Bitcoin become an everyday currency.
Perhaps a world economic crisis or rise of another currency may trigger the worldwide use of Bitcoin as an acceptable currency for exchange or not, but it remains to be seen how the 5th phase stage gets implemented.

[EL MOHA]

This is so optimistic. I think as long as currency system is strong bitcoin will not be used more like a paper money and will still be considerate as asset like gold which people usually keep and sell when price goes up. Bitcoin is powerful and indeed many are believing on it. The same with everyone else here but the whole world might see it differently.

Im just wishing bitcoin continue to progress and no tech will replace its position as one if the potential of digital usage.

I will not actually agree with the context that the OP is actually putting it but at the same time I wouldn’t be agreeing that bitcoin would be reduced to been used as asset alone, I personally think bitcoin would be used as means of payment too but unlike what OP said I think it will be hard for it to get that global recognition accepted as the only currency or anything near legal tender. But I am optimistic it will be used as an alternative currency for payment method most especially for cross boarder transactions,

[PrivacyG]

and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

It all went great until here where you started to derail from reality.  'Decentralization of Money' and 'Bitcoin will emerge as the future Currency' are ideas of utopia.  In other words.  Of an unrealistically great world.

The only way to get Governments to give up power and accept Bitcoin as 'THE' Currency is through world wide revolution.  And even that only works if it is a successful revolution and not replacing the current power hungry people with other power hungry people.

Good luck.

[Cryptohygenic]

Now it is in the phase where people are using it as a long term store of value in large numbers and quantity, an hedge over inflation, where people see it as the future currency and are investing heavily on it, soon it will become the safest currency for the forex market and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

The store of values of bitcoin is not an evolution, bitcoin has all time been programmed to be a store of value that is why it is has a limited supply at 21 millions to give it the hedge through scarcity, supplies and demands.
The bitcoin market has also been of Fud and psychologically driving holders emotions due to volatility.
Peer to peer was just a means to transact bitcoin payment without authority intervention like it is in the traditional system.
Don't also except centralized adoption before bitcoin would be dominant as a world influential financial assets, individuals in the future will still find it values and embrace it.

[X-ray]

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

This is an awesome scenario if that were to happen, unfortunately the world isn't as good as you think it is, each country impose sovereignty through their own currency, by then individual won't have a choice but to use legal tender enforced by the government.

That, on itself will become biggest hurdle for Bitcoin to be used by the world and getting adopted seamlessly.

Although I hope Bitcoin will become the future currency, which in turn strengthen it from volatility and make it even more decentralized, but I know for a fact that governments aren't going to give up control through fiat easily like that.

My guess is within years to come, Bitcoin is still being recognized as just a commodity because governments don't want to have fiat competitor.

[cryptomaniac_xxx]

Now it is in the phase where people are using it as a long term store of value in large numbers and quantity, an hedge over inflation, where people see it as the future currency and are investing heavily on it, soon it will become the safest currency for the forex market and the next thing is the world will raise a huge campaign on decentralization of money and the financial sector and bitcoin will emerge as the future currency to be adopted by the entire world’s economy.

The store of values of bitcoin is not an evolution, bitcoin has all time been programmed to be a store of value that is why it is has a limited supply at 21 millions to give it the hedge through scarcity, supplies and demands.
The bitcoin market has also been of Fud and psychologically driving holders emotions due to volatility.
Peer to peer was just a means to transact bitcoin payment without authority intervention like it is in the traditional system.
Don't also except centralized adoption before bitcoin would be dominant as a world influential financial assets, individuals in the future will still find it values and embrace it.

It was designed to be P2P in the beginning. However, when people find that they could trade in, hence we have the first Bitcoin exchange in Mt. Gox, then that's where it became a store of value and later, as a hedge.

So there is a process in-between and it was not overnight that investors finds a way to make profit. The only way in the beginning is that you need to be a miner although it also evolved as well as the difficulty to find a block rises, hence we need asics machine.

[AVE5]

Absolute bitcoin is amazing being utilized more broadly with the cryptography and technologies on evolutionary and catching more of the people's interests and so on the adoption phases increases.
It has also been facing backlash from individuals and authorities due to doubts over the financial systems digitality and decentralization but as adoption erupts from the earlier adoptors and proven its financial innovation as real-word-utility as a hedge of values against inflations and the peer to peer reality, so it gains more adoption interest.

- the last phase is the future, where I believe the world will finally adopt Bitcoin as their currency for every day transactions and everybody will begin to use it because they already have enough of it in their wallets and it begins to go into circulation from one hand to the other, by then it is believed that bitcoin will have reached its maturity stage and will not be susceptible to much volatility any more.

Don't you think bitcoin will also loose it characteristics as a store of value at that maturity stage when it is no more volatile?