Author: Liu Xiaofan: Assistant Professor of the Department of Media and Communication at City University of Hong Kong, Chief Scientist of Eurybia

Bitcoin: The embryo of a new world

From 2008 to 2009, Bitcoin was born as the native internet currency, laying the foundation for a number of future technological innovations. In the context of the time, Bitcoin was a rebellion against the traditional oligarchic financial system and attempted to represent a utopian society where everyone is equal. The decentralized concept it pursues deeply reflects the core idea of ​​cypherpunk culture, which is to protect privacy through encryption technology and give individuals economic autonomy. However, these ideas were initially spread primarily among a small circle of a few technical elites.

Satoshi Nakamoto “retired” and became a spiritual leader

In 2011, a groundbreaking event occurred in this area: Satoshi Nakamoto, the author of the Bitcoin white paper, completely disappeared from the Internet. The anonymous founder was shaped into a mysterious hero, a symbol of freedom and decentralization that transcends individuals. Satoshi Nakamoto’s “retirement” not only made the concept of Bitcoin seem purer, but also made him almost a religious leader.

Cryptocurrency: Bubble, Stigma and Trends

As the value of Bitcoin was gradually discovered by the market in 2010, a number of other cryptocurrencies based on the same technical framework were born, such as Litecoin in 2011. However, the early application scenarios of cryptocurrencies were quite embarrassing. They were often used for illegal transaction payments, such as distribution on darknet markets, and appeared to represent a “gray area.”

There are interest groups behind nouns

Over time, cryptocurrencies have become increasingly associated with market bubbles. In 2015, the Ethereum system came online, significantly reducing the cost of creating cryptocurrencies while creating a speculative bubble market. In 2018, the cryptocurrency market experienced its first major crash. In 2021, the wave of decentralized finance (DeFi) and non-fungible tokens (NFTs) swept the market and triggered another investment frenzy, only to collapse again in 2022. With the attention and intervention of global regulators, cryptocurrencies are facing ever greater challenges and compliance constraints are further exacerbating their market stigma.

The birth of blockchain and the reconstruction of its meaning

Many people believe that “blockchain” appeared almost at the same time as Bitcoin or even earlier, but this is not the case. According to Google Trends data, the word blockchain was not used to describe the distributed systems technology behind Bitcoin until 2012 and 2013 (Figure). This term was later translated as “blockchain” in mainland China. The emergence of the word blockchain as a symbolic construction strategy has given new symbolic meaning to a technology stack. From then on, the technology was freed from the label of market speculation and molded into a neutral and universal image: “trust machine”. Technology companies have therefore started to promote the market in a wider range of areas such as finance, supply chain, medical care and government data management. Whether the market has actually adopted this technology is of course beyond the scope of this article.

Metaverse and Web3: The Industry’s Self-Redemption

The cryptocurrency industry is unaware of its own stigmatization. The industry has been trying to reposition itself with new terms for a long time. The two most influential terms: Metaverse and Web3, are examples of old terms being used in new ways.

The concept of the metaverse comes from the 1992 science fiction novel Snow Crash, which refers to a virtual world with entertainment and economic systems parallel to the real world. The cryptocurrency industry has adopted this concept to express its vision of rebuilding the economic system in the internet world. The good times didn’t last long and the traditional technology industry quickly discovered the charm of this word. When Facebook changed its name to Meta, the narrative of the Metaverse was completely rewritten and transformed into a vision of a digital world closely linked to VR and AR. This trial shows the struggle behind discourse manipulation: tech giants defeated upstarts.

When Facebook changed its name to Meta, the narrative of the “metaverse” was completely rewritten. This process showed the struggle behind discourse manipulation and led to the defeat of the upstarts by the tech giants.

Web3 was proposed by Gavin Wood in 2014 to express the ideal of a user-sovereign Internet controlled by cryptocurrencies (you may have also heard of the famous “read, write, own”). However, this concept was on the sidelines for a long time and was only rediscovered in 2021 and is still used today.

From these two words we must realize that the naming of technology and industry is actually a process of social construction. Behind every word there is an interest group that influences society in different ways to achieve their own goals.

Local market: a policy-driven innovation path

Today, there are countless nouns and terms derived from cryptocurrencies around the world, and each country and region has its own, more popular usage. The Hong Kong government hopes to build a hub for the global digital economy through specific application scenarios and regulatory frameworks and create a stable market to maintain its status as an international financial center. Currently, the most commonly used words in Hong Kong are Virtual Asset, Tokenized Asset, Real World Asset and Web 3.0. They all have one thing in common: they try to use neutral words to distance themselves from the speculative and bubble-inducing image of cryptocurrencies in the hope of reshaping the trust and narrative of the market.

Conceptual innovation is not necessarily technological innovation

I do not intend to delve into the subtle differences, vested interests, and conspiracies behind each term here. However, it is important to remind you that some of them reflect the cryptocurrency industry’s quest for legitimacy, others show the acceptance of technical narratives in the traditional finance industry, and some of the motivations are not entirely clear.

Conclusion: There is nothing new under the sun

As we can see, there is a social construction logic behind the birth of every new concept from Bitcoin to Blockchain, from cryptocurrency to Web3 and tokenized asset markets. A concept innovation is not necessarily a technological innovation, but may simply be a reshaping of discourse by various stakeholders to respond to market changes and attract users and capital. Exchanging concepts does not mean eliminating risks. Although they bring new hope, they also pose risks in new labyrinths. No matter how the nouns change, we must clearly understand that human nature will not change.

Financial markets, whether traditional or emerging, are places where there are strong undercurrents – whether you are a beginner or a veteran.