I’ve written before about how a company’s branding can play an oversized role in how it is perceived by investors. Something similar is happening now with cryptocurrency, as investments are driven less by the financial promise cryptocurrencies offer than the sense that blockchain and the underlying technology are hot areas to invest in. Case in point: Dogecoin, a currency created as a joke, recently hit a market cap of over $2 billion. Granted, an individual dogecoin is worth about two cents -- but that’s still a remarkable valuation considering its inauspicious beginnings.
The issue is that it’s not just one currency that’s seeing massive growth. It’s all of them: Bitcoin, Ethereum, Ripple, Litecoin -- each one of these is currently worth tens of billions of dollars, and given the general volatility of the cryptocurrency market, I wouldn’t be surprised to see more cryptocurrencies surging above the billion-dollar mark.
But what is it exactly about these currencies that’s causing so much frenzy? Is it that people like the decentralized nature of blockchain technology and the privacy that it facilitates? Or is it, as author Steven Johnson writes in The New York Times, that the “real promise” of blockchain “lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralized and egalitarian system”? In other words, it’s not really about what Bitcoin is or how much it’s worth. It’s about what the currency stands for -- basically, how it’s branded.
It might seem odd to say that a system built by an anonymous person or persons, and built with the central tenet of ensuring that no one person or entity could control it, has a distinct brand identity. After all, branding is usually associated with corporations, which are about as far from the democratic premise of Bitcoin as you can get. And yet, Bitcoin has a logo. It even has brand colors.
Branding, just like cryptocurrencies, is decentralized because companies don’t control the brand image -- the public does. Even though Bitcoin isn’t overseen by a giant corporation with a huge brand marketing budget, the cryptocurrency’s brand value continues to grow in the marketplace through changing public perception.
One interesting thing about the current boom is how, in a few short years, people have moved from initial skepticism and outright derision of cryptocurrencies to enthusiastic acceptance. For Randall Stone, a branding expert who has worked with companies such as Samsung and Starbucks, the sheer number of cryptocurrencies that have popped up in the last few years in some ways “undermines the legitimacy of cryptocurrency” because it can easily become all about the gimmick; just look at Cagecoin, a currency designed to appeal to devotees of Nicholas Cage.
But Stone sees a larger trend in cryptocurrency and altcoins: “It does look like, eventually, these altcoin sites, these could be part of your cyber identity. What coins do you pay with? It’s going to be an expression, whether it’s an overt expression, or an anonymous expression, of who you are.” In essence, the craze over cryptocurrencies is less about the potentially game-changing technology behind blockchain (although that’s important too) and more about what using or investing in cryptocurrency says about a person.