Narratives In the 21st Century: How They Are Shaping our Society.

A narrative is a widely accepted belief. Simply put, it's what "the people" think. Narratives can exist in the limits of a community, a population, a religious group,... As long as there is some form of communication between the individuals, a narrative can exist.

There are multiple types of narratives. Some have a very short lifespan. We often call them "trends". Using Signal instead of WhatsApp is a trend. Others are so deeply implemented into our society that we don't even have a term to describe them. Money is an example. Lastly, there are midterm narratives, like veganism or Bitcoin, for example.

The only difference between these three types of narratives is their impact and longevity. Everything else is similar, including the major similarity which all narratives have: the catalyst.

The catalyst

WhatsApp and its privacy policy update

Narratives are always driven by a catalyst event. They are the public's response to something that happened. Take WhatsApp's update of its privacy policy, forcing users to hand over their data to Facebook. When this was announced, the downloads of Signal, its privacy-focused alternative, immediately started going up impressively. It went to a point where Signal was placed it in front of WhatsApp in terms of popularity in the top charts on the app stores.

It's as if suddenly, people cared about their data. They don't though. Privacy is just another narrative.

The WhatsApp "exodus" is a great example to illustrate how narratives are a response to something that happened. It also demonstrates how narratives can very easily be crafted by influential individuals. One of the major drivers of this move to Signal, was Elon Musk himself. Three hundred and forty thousand likes were enough to get a little but still significant part of WhatsApp's users to make the move. Signal wasn't even able to keep up with the SMS delivery to verify new users due to how many people were joining the service.

Bitcoin and the 2008 crisis

Bitcoin is all about narratives. From its genesis block to the status it nowadays has as a non-governmental store of value, Bitcoin's growth has always been driven by narratives.

In the genesis block of Bitcoin (the first block created on the network), Satoshi Nakamoto, creator of Bitcoin, wrote the following: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

The message was probably written to prove that the creation of Bitcoin took place on the January the 3rd, but also to indicate the instability caused by fractional-reserve banking. Bitcoin is a response to that event, exactly like a narrative.

Like in the WhatsApp and Signal case, a lot of influential people and entities have reinforced the narrative that Bitcoin is. Whether it's Chamath Palihapitiya, Naval Ravikant or many other prominent people in the "modern" (looking at you Warren) investing world, they have all been praising Bitcoin for its benefits.

Bitcoin is seen as a store of value instead of a currency nowadays. It's seen as an asset which is independent of any other asset class or government. But that way of seeing it is clearly a narrative, as Bitcoin is nothing more than a highly sophisticated belief system in the end. Precisely like money, another narrative.

Narratives are a response to an event from the public and are often driven by influential individuals.

Rationality in an irrational world

Electric cars and Bitcoin

Because narratives are popular beliefs, they can be the subject of very irrational behavior. Mix the electric vehicle and Bitcoin narratives, and all you get is irrationality.

Bitcoin is by far one of the most popular investment assets for Millenials. On the other side, Millenials are also by far the generation looking the most forward to electric cars. This is a clear contradiction because Bitcoin is by far definitely not climate-friendly, while electric cars are a step towards that.

Bitcoin has a carbon footprint comparable to the carbon footprint of New Zealand and consumes nearly as much electricity as Chile. Just a single transaction made on the Bitcoin network equals the power usage of an average U.S. household over 21.41 days at the time of writing this blog post.

Interestingly, a lot of hardcore Bitcoiners are constantly spreading narratives that most of the energy powering Bitcoin is energy which would have been wasted otherwise. It's a valid argument, as that's what makes that energy so cheap, making it suitable for mining. Though, it's definitely not a valid reason to deny how absolutely horrific Bitcoin is for our climate. But who cares about that? As long as there is money to be made, which is again just a narrative, everything is fine.

At the same time, the electric car market is growing at an insane pace. Tesla has never delivered so many cars, Apple apparently wants to create its own and Volvo created its own Tesla-like rival, Polestar.

So electric cars are gaining traction, but on the other hand, Bitcoin too. If only one of these two were succeeding, it would make sense as they are both contradicting each other in their impact on the environment. They are both thriving, though.

Funny are the investors who place climate change as one of the top priorities for the 2030s, but who also invest in Bitcoin. Here is Chamath Palihapitiya, CEO of Social Capital, in defense of Bitcoin and here he is defending our planet. While his perspective is obviously biased as his job is to make money, this still reflects how powerful narratives are.

Narratives are so powerful that no one seems to realize that owning an electric car and investing in Bitcoin is in and by itself contradictory.

Long-term narratives

Becoming rich was seen a few centuries ago as something wrong. Making money was seen as a zero-sum game. If I win money, you lose money.

Fast-forward hundreds of years, money dictates nearly everything now:

  • People start companies to make money.
  • Farmers farm for money, not to feed themselves like it was the case in the Middle Ages.
  • The higher your "rank" in society, the more you are paid.

Everything is possible with money, everything. It's the basis of our society. But when you think about it, money is nothing. It's just paper and numbers on a screen. Money only has value because everyone values it, because we collectively seek it.

It's a popular belief (narrative) that you should work hard to earn a lot of money so you can stop working early in your life. But why work for money in the first place? Again, money is just a narrative used to structure our society, like governments are, or companies in that regard.

On top of that, money isn't backed by gold anymore since 1972. And even if it were still backed by gold, it would still have zero value, as gold is like money, a very sophisticated belief system. At the end of the day, gold's value comes from the fact that we each give it value, but it's just a mineral in the end. Nothing more.

Those who don't get why people are ready to pay tens of thousands of dollars to acquire just a single Bitcoin, don't understand or realize either that gold, stocks, money and our society in general are entirely based on fiction. Fiction unites us.

To create this uniting fiction, we need narratives. The idea that gold is a reliable store of value is a narrative. The idea that making money is great, is a narrative. The idea that you should go to university, then work for 40 years, then retire, is a narrative. All these "ideas" are just popular beliefs, also called narratives.

Weirdly enough, we seem to take all these narratives for granted, but remember, they are just beliefs. Nothing more. Those who mock religions because they are based on beliefs, probably don't understand that everything in our world is based on beliefs. Everything:

  • We believe in the existence of money, even if it's just paper.
  • We believe in the existence of a government, even if they are just regular people "governing" a fictitious entity with fictitious borders called a "country".
  • We believe in the existence of companies, even if they are just people working together under the same name.

Narratives dominate our world and are essential for the survival of humankind. Without narratives, we wouldn't have been able to create countries, empires, companies,... In order to create these things, unity is needed. And for unity, fiction is needed. And for fiction, narratives are needed.

Our whole society is based on a mix of short-term narratives (WhatsApp vs Signal), midterm narratives (Bitcoin, electric cars) and long-term narratives (capitalism is great, go to university before working 40 years before retiring).

But in the end, the longevity of the narrative isn't significant. What matters is that you believe it, without realizing it's a narrative. A narrative, which again, is just a popular belief. And a belief is nothing more than a lie.