Nobel Laureate, economist, best-selling author, and serving Sterling Professor of Economics at Yale University Robert J. Shiller analyzes how Bitcoin narratives influence any economic event in his recently published book, “Narrative Economics: How Stories Go Viral and Drive Major Economic Events.”
Shiller recently discussed the significant role and influence of narratives and how they tend to change or shape economic events such as recession, boom, or even market behavior. He further explained this phenomenon with the story of the origin of the leading cryptocurrency Bitcoin, and how impactful was that origin story on its popularity.
The American economist stated that for him the narrative economics is a study of popular narratives that underlie the thinking of the people and not that of the economists’.
According to him, it is imperative to know the reason behind people spending more in the boom while less in the bust. Other than that, why people pay attention to the stock market and what makes them believe that the stock market is the instrument that measures the economy’s health.
Nobel Laureate on Bitcoin narrative
Shiller believes that storytelling is an art that can turn any complex concept into a compelling conversation. So, the most powerful element of Bitcoin narrative is the mystery behind the creator of Bitcoin persists, and mystery is what hooks the attention. Hence, this intense nature of the Bitcoin narrative telling the tale of the cryptocurrency is what spiked the popularity and price of Bitcoin up to $20,000 in the year 2017.
Furthermore, he stated that for many years, various computer scientists dreamt of Bitcoin. Now when Bitcoin is here, the identity of its creator remains a mystery. An individual named Satoshi Nakamoto is known as the creator of Bitcoin; however, it is still not verified. Even his existence poses so many questions. This was one narrative that created the hype for this cryptocurrency.
The other narrative could be that the Bitcoin always supports the idea of decentralization of the economy, and governments are untrustworthy. This fostered a powerful narrative about young people being able to create a financial institution that is out of the reach of governments. This whole idea seems striking and exciting, just like the trending viral videos, though this does not imply any validity on the core concept of Bitcoin.
Featured Image by Wikimedia.