The world of cryptocurrency is always evolving. It’s a transient space where the world’s most talented technologists, entrepreneurs and visionaries constantly make moves that shape the future of the market. Just like in the music industry or sports, the rise of user-generated brands is one of the most exciting developments in recent times.
Cryptocurrency is a buzzword that has been around for a few years now. It has become a quick-money scheme for many, as it has gone from being used by criminal organizations and individuals who cannot get loans from traditional financial institutions, to being a popular way to make money online as it has been touted as a way to fund life projects. However, there are cryptocurrencies that have a solid foundation to them, and the most famous of these is the cryptocurrency, Monero.
Cryptocurrency has evolved from a niche hobby to a possible legitimate business model, and I can trace a lot of that growth to the rise of the user-generated brand. If you take a step back, cryptocurrencies are just a more efficient way of crowdfunding a new business idea, and as a result they’ve attracted many new users who are using the same techniques they learned at Kickstarter and Indiegogo.
Amidst the whirlwind of excitement and debate about where cryptocurrencies are headed and whether they are a legitimate, sustainable and smart investment, one conversation that matters to marketers remains obscure: Are Bitcoin (BTC), Ether (ETH), ADA Cardano, Litecoin (LTC), XRP, Dogecoin (DOGE), etc. crypto tokens?
If so, how are these marks created and what role do they play in the acceptance of the coin in question? Or, for that matter, how does branding collectively promote (or weaken) the legitimacy of cryptocurrencies in their pursuit of wider adoption/use?
Related: Decentralization versus centralization : Where is the future? The experts’ response
To answer this question, let’s look at the definition of a brand by David Ogilvy, the British advertising magnate known as the father of advertising: The immaterial sum of the product’s characteristics. This often includes identity, voice, empathy, value proposition and consistency in keeping promises. Ultimately, these and other attributes surround the core product/service like atomic particles, creating trust, preference and loyalty (or lack thereof).
One could argue that fiat currencies are tokens to the extent that the issuing states strive to create value and trust in them. However, since there is little competition in their country of origin, they are given a commodity identity (dollar, pound, euro, yuan, etc.) and governments (brand owners) or other entities make no real attempts to change the perception or even use of the currency.
If we look at other examples in the financial world, stocks are a way of owning the brands that produce them. Mutual funds also have the halo of the brands they manage – although in some cases funds such as Fidelity’s Magellan Fund and Vanguard’s Wellesley Income Fund have become household names. Funds can also be considered baskets of brands.
In addition, commodities such as gold, silver and copper are commodities. And that brings us to crypto-currencies.
Consider the following:
- Bitcoin has many features of its own, such as: 1) an epic heroic story in the form of Satoshi Nakamoto’s pseudonymous quest to create a decentralized currency, culminating in the famous 2008 White Paper; 2) a recognizable and evolving personality and perception of him as the founder of digital currency; 3) revolutionary advantages with which all other brands (cryptocurrencies) must be compared or contrasted.
- There are perhaps two dominant players, or established brands – Bitcoin and Ether – and a growing list of challengers in the form of altcoins.
- Each of these competing brands has its own selling points and – with names like Avalanche, Sushi and Chiliz – tools to help investors/consumers remember them.
- The buzz around Dogecoin and other memcoins, which Crypto Dictionary describes as a joke that turns into a cryptocurrency, illustrates how pop culture (and by extension, marketing) influences markets. People of older generations may be outraged, but it is not unusual for younger generations of investors in particular to position Dogecoin and others as a consumer currency.
- Finally, and perhaps most importantly, there is a growing cryptocurrency market where technologies/platforms are competing not only for financial participation, but also for social currency, i.e. a share of the social media voice in the cryptocurrency community and beyond.
Despite all these truths, some intriguing questions remain: First, if decentralization is the core of the crypto-currency concept, who controls and develops each token? And if trust is a fundamental principle of brand health, how can a technology that doesn’t require trust fit in?
Related: The evolution of the bitcoin story makes it anti-fragile
Cryptocurrencies – the first real tokens created byusers
Unlike user-generated content (UGC), which is solicited by marketing organizations to enable consumers to express themselves, have an authentic opinion and actively engage, branded user-generated content (UGC) is largely unsolicited and uncontrolled. Like a sourdough, all you have to do is start with it and it grows by itself. (This analogy seems appropriate, given the worldwide popularity of the pandemic starter COVID-19).
In the absence of a central owner or equivalent brand or marketing manager, these brands are created and developed by project founders, user communities, investors, miners and others. They participate in meetings, forums, chat rooms and sabreddits. In fact, brand health can be correlated to the activity of conversations on these channels.
Brands are shaped by an active and growing community of influencers, including crypto heroes like Andre Cronje and Vitalik Buterin, tech pioneers like Marc Andreessen and Elon Musk, financial sector stars like Katie Wood and Jamie Dimon, and popular voices like Mr. D. Wonderful (Kevin O’Leary) and The Fly (Anthony Scaramucci) from Shark Tank. All this suggests that the performance of these GPMs and how they are perceived by individual investors, institutional investors and the media is largely unpredictable. Or is it?
Related: Expert response: How is Elon Musk influencing the crypto-currency space?
Create a crypto currency token
Many, if not most, cryptocurrency projects have a fund or a decentralized autonomous organization (DAO). Think Bitcoin.org, Ethereum Foundation, Cardano Foundation and other open source resources too numerous to mention. These foundations produce white papers that are de facto advertisements and raise capital through crowdfunding, using Initial Coin Offerings as a medium of exchange. And yes, ad agencies are hired and other resources are brought in to build their tokens – though who actually approves the creativity may vary, perhaps it’s the user community itself or those who own the token managers.
Ultimately, control in terms of traditional brand management is limited as long as these projects establish and maintain their BHMs. Thanks to this active, involved and very passionate community, they can:
- Take advantage of the herd mentality that drives most of this category. It is a heuristic that describes an investor’s tendency to join the conga line – to follow other investors based on more emotion (fear of missing out on something) than rational considerations – and encourages rapid growth in that direction. Arm yourself with influencers and let the race begin.
- Momentum of the content of the action. User-generated content is a kind of street performance: Get a few people yelling and screaming and more people watching what’s going on, increasing the number of viewers. So good content attracts a crowd and leaves even better content. The key word here is quality.
- It makes learning fun. Let’s face it: Most people don’t want to spend time deciphering how Merkle and Nesa trees work. They want to understand what this new asset class is, why they should consider it and how it will help them achieve their personal goals. Therefore, a strategic appeal is needed to make the content easy and enjoyable to consume.
To return to the second question: Probably the most important task of a foundation, and indeed of its supporters in GHB, is to build trust with those who cannot be trusted. In other words: Differentiate a coin and highlight it based on how proven its technology/project is, how secure it is, how truly independent it is and, perhaps most importantly, how quickly it can answer a question: What is the point of all this?
Of course, this last point is not unique to cryptocurrencies and their UGBs. Institutions that need to communicate their decisions to their customers, companies that sell exchange products, exchanges themselves, wallet apps, etc. in this category that is growing at lightning speed and yet remains a colossal mystery to all but a few will eventually break away from the mainstream by doing what other big brands have done: Clarity, simplicity and keeping promises.
In other words, it’s about debunking the misconception held by the vast majority of non-cryptomaniacs that all cryptocurrencies are meant to copy fiat to buy conventional goods and services, and instead clarifying their very specific purposes.
It will be interesting to see how cryptocurrencies continue to evolve. Ark Invest recently called bitcoin the purest form of money ever created. Ironically, this could be the purest form of marketing ever created.
This article contains no investment advice or recommendations. Any investment or business transaction involves risk, and readers should do their own research before making a decision.
The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent those of Cointelegraph.
Rich Feldman is currently director of marketing at Finario, a SaaS provider of capital planning for enterprises. Prior to that, he was director of marketing at PrimaHealth Credit, owner/partner of an agency and director of strategy at Doner CX (part of MDC Partners Network), where he led CRM, analytics, digital media and other strategic business units. Rich has taught on strategy at New York University’s Master of Marketing program and at Syracuse University. He is also an adjunct professor at Western Connecticut State University, where he serves on the advisory board of the Ansell School of Business. He is also the author of Deconstructing Creative Strategy.The cryptocurrency ecosystem is evolving at a rapid pace, and gaining traction in many markets. One of the most exciting developments is the rise of decentralized, user-generated brands. Brands such as Mastodon, Steemit, and Gitcoin have become powerful tools for building communities, building a personal brand, and sharing an idea.. Read more about future of cryptocurrency 2021 and let us know what you think.
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