A lot of people in the tech press are euphoric about Bitcoin, which as I explained in a post for Internet Evolution yesterday, reminds me a lot of the media hype wave over Second Life a few years ago. (Short version: Like Second Life back in the day, Bitcoin is being hyped even though it has few users, and its potential uses as a money are largely just that -- potential, not actual.)
Beyond that, there’s another point worth discussing here: Like Second Life, Bitcoin is a branding and communications nightmare.
Here’s just a couple reasons why:
Bitcoin’s Branding is Not Based on Money Per Se
At its heart, Bitcoin is code, and was launched as a currency before there was even an existing, diverse market of goods and services which accepted it as tender. (There still isn’t.) From a branding perspective, this means Bitcoin can probably never become a money-based brand like MasterCard/VISA, or for that matter, Square, which was designed to convey the entire shopping experience in its branding. This is all a massive challenge for any startup that would engage with Bitcoin, because they must then explain to the general public how Bitcoin is even money, and why they think it’s so important to use it. And unless you’re with a company as well-known as WordPress or Reddit (both of which take Bitcoin, likely because they have a userbase of techies who appreciate that PR gesture), you run the risk of your brand being defined by Bitcoin -- and not the other way around, as it should be.
Bitcoin’s Anti-Social Applications Will Always Draw More Attention Than Its Positive Ones
While Bitcoin does get a lot of media coverage, roughly half those stories seem to fit into a vast, scary, Bucket of Bad Things: Bitcoin used for assassinations, tax evasion, and so on. These aren’t addressable externalities to the currency -- they’re essential to what Bitcoin fundamentally is, since it’s designed to be law-neutral money (to put it nicely), and since many of its most passionate supporters tend to be extreme libertarians who actually approve of these negative applications. What’s more, the story of a virtual currency used to hire hit men, say, is too irresistible and cyberpunky not to cover. So coverage of that kind will always get more traction than the latest press announcement of, say, another mainstream retailer now accepting Bitcoin.
Despite these problems, I know a number of startups and well-respected Silicon Valley folks deeply involved with Bitcoin, so I put these points to them -- how do you deal with Bitcoin’s branding challenges (if you even think there’s any at all)?