Cryptocurrency and the rise of the user-generated brand
In the whirl of excitement and debate over where cryptocurrencies are going and whether they are legitimate, sustainable and prudent investments, there is an overshadowed conversation of interest to those in marketing: Are Bitcoin (BTC), Ether (ETH), Cardano’s ADA, Litecoin (LTC), XRP, Dogecoin (DOGE), etc., crypto brands?
And, if so, how are those brands created, and what role do they play in each coin’s adoption? Or, for that matter, how does branding collectively contribute (or detract) from the legitimacy of a cryptocurrency as it seeks increased mainstream acceptance/use?
To begin to answer that, consider David Ogilvy’s — a British advertising tycoon, known as the “Father of Advertising” — definition of a brand: “The intangible sum of a product’s attributes.” These often include an identity, voice, empathy, value proposition and consistency in delivering on promises made. Ultimately, attributes like these, among others, circle the nucleus of a product/service like atomic particles to create trust, preference and loyalty (or lack thereof).
One could argue that fiat currencies are brands insomuch that their issuing countries work to create value and confidence in them. However, with little to no competition in their native countries, assigned commodity identities (dollar, pound, euro, yuan, etc.), and no real attempt by the governments (the “brand” owner) or other entities to change how the currency is perceived or even used, it’s difficult to consider them as such.
Looking to other examples in finance, stocks are a way to own the brands that issue them. Mutual funds also assume the halo of the brands that manage them — though there are instances where funds such as Fidelity’s Magellan Fund and Vanguard’s Wellesley Income Fund have become prominent brands. You can also think of funds as baskets of brands.
Moreover, commodities such as gold, silver and copper are, well, commodities. And this brings us to cryptocurrencies.
Consider the following:
- Bitcoin has many unique attributes for a currency, such as: 1) a hero’s epic narrative in the form of Satoshi Nakamoto’s pseudonymous pursuit of a decentralized currency culminating in the now-famous 2008 white paper; 2) a recognizable and evolving identity, as well as its perception of being the founding father of digital currency; 3) “first-mover” advantages that all other brands (cryptocurrencies) are forced to compare or contrast to.
- Arguably, there are two dominant players, or established brands — Bitcoin and Ether — and a growing, very long list of “challenger brands” in the form of altcoins.
- Said challenger brands each have individual selling propositions and — with names like Avalanche, Sushi and Chiliz — a means of helping investors/consumers remember them.
- The swirl around Dogecoin and other so-called memecoins — which the Crypto Dictionary describes as a “joke that turns into a crypto coin” — illustrates how pop culture (and by extension, marketing) influences markets. Older folks may cringe, but for younger generations of investors in particular, there’s nothing unusual about it at all, positioning Dogecoin and others as a consumer currency.
- Lastly, and perhaps most importantly, there is a rapidly-growing marketplace for cryptocurrencies in which technologies/platforms compete not only for financial engagement but also social currency — that is, a share of voice on social media within the cryptocurrency community and beyond.
For all these truths, a few intriguing questions remain: First, if decentralization is core to the concept of cryptocurrency, who is controlling and nurturing each of the brands? And if trust is a central tenet of brand health, how does a trustless technology fit in?
Cryptocurrencies are the first true user-generated brands
Unlike user-generated content (UGC) — which is solicited by marketing organizations to provide a voice for the customer, authentic perspectives and active engagement — a user-generated brand’s (UGB’s) content is largely unsolicited and uncontrolled. Like sourdough, get it started and it’ll grow on its own. (That seemed like an apropos analogy given sourdough’s global COVID-19 pandemic popularity.)
Lacking a central owner or the equivalent of a brand manager or chief marketing officer, these brands are created and nurtured by project founders, user communities, investors, miners and more. They’re at Meetups, on forums, chat rooms and subreddits. In fact, brand health can be correlated to just how robust the conversation is on channels like these.
Brands are molded by a vocal and growing community of influencers who include crypto heroes like Andre Cronje and Vitalik Buterin, tech pioneers like Marc Andressen and Elon Musk, finance stars like Cathie Wood and Jamie Dimon, and popular voices like Shark Tank’s Mr. Wonderful (Kevin O’Leary) and The Mooch (Anthony Scaramucci). This all suggests that the trajectory of these UGBs and how they will be consumed by individual investors, institutional investors and the media is largely unpredictable. Or is it?
Building the crypto brand
Many, if not most, crypto projects have a foundation or decentralized autonomous organization (DAO). Think Bitcoin.org, the Ethereum Foundation, the Cardano Foundation and other open-source resources of which there are too many others to mention. These foundations release white papers as de facto advertisements and raise capital through crowdfunding using initial coin offerings as their currency. And, yes, advertising agencies are hired and other resources are implemented to mold their brands — though those who actually approve the creative can vary widely, perhaps the community of users itself or those holding governance tokens.
Ultimately, from a traditional brand management standpoint, only so much control exists while these projects seed and shepherd their UGBs. Armed with that active, engaged, highly passionate community, they can:
- Tap into the herd mentality bias that drives much of the category. This is heuristic and describes an investor’s tendency to want to join the conga line — to follow other investors based more so on emotion (fear of missing out) than on rational consideration, and contributes to much of the space’s rapid growth. Be armed with influencers, and let the races begin.
- Stoke content momentum. User-generated content is a bit like a street performance: Get a few people to hoot and holler, and more people will look to see what’s going on, thus causing the audience to swell. As such, quality content drives a crowd and bequeaths more quality content. The operative word here is “quality.”
- Make education entertaining. Let’s face it: Most people don’t want to take the time to decipher how Merkle trees and nonces work. They want to understand what this new asset class is, why they need to consider it and how it will help them meet their personal goals. So, there needs to be a strategic call to arms to make the content easy and enjoyable to consume.
Returning to the second question, the most important task of any foundation, along with its community of followers within a UGB, may be to create trust in the trustless. To put it another way, to distinguish and differentiate the currency based on how its technology/project is vetted, secure, truly independent, and — perhaps most importantly — how it can quickly answer the question: What is it for?
This last point, of course, isn’t unique to cryptocurrencies and their UGBs. The institutions that must communicate their choices to customers, the companies selling exchange-traded products, the exchanges themselves, wallet applications and so forth in this category that is growing blisteringly fast while still being a colossal mystery to all but a few, will ultimately distinguish themselves in the mainstream by doing what other great brands have done: Making it clear, making it simple and delivering on a promise.
In other words, to dispel the misconception among the vast majority of non-crypto nerds that all cryptocurrencies are intended to replicate fiat for the purchase of common-day goods and services, and instead, articulate their very specific purposes.
Where cryptocurrencies will go from here will be fascinating to watch. Ark Invest recently described Bitcoin as “the purest form of money ever created.” In an odd way, it may also become the purest form of marketing ever created.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Rich Feldman currently leads marketing for Finario, an enterprise capital planning SaaS provider. Prior, he was chief marketing officer at PrimaHealth Credit and was an agency owner/partner and chief strategy officer at Doner CX (part of the MDC Partners Network), where he led the CRM, analytics, digital media and other strategic areas of the business. Rich has lectured on strategy at the New York University master’s program in marketing, at Syracuse University and is an adjunct professor at Western Connecticut University — where he is an advisory board member of the Ancell School of Business. He is also author of the book Deconstructing Creative Strategy.