cryptocurrency, bitcoin, ethereum, crypto
A handful of cryptocurrencies argue they will rightfully replace BTC as “the” currency, like Litecoin, Bitcoin Cash and Dash.
They claim they’re better due to faster blocks or less centralize-able mining.
But none of that likely matters in the long run.
Yes, marketing. Effective marketing builds an association. It makes you think Kleenex when you want a tissue.
It’s important to remember what marketing is. It’s not sales. It's is your ability to communicate your value to the people who value that value.
And in marketing, the first-to-mind player has a big advantage.
The first law in the seminal marketing book The 22 Immutable Laws of Marketing is: “It’s better to be first than it is to be better.”
“Cryptocurrency, what, like Litecoin?”
Said no new investor. Ever.
The Bitcoin alternatives ("alts") define their benefits relative to Bitcoin. “We’re better than Bitcoin because X.” If you justify your worth relative to a competitor, you’re in a position of weakness.
Bitcoin just needs to continue to exist. AltCurrencies need to (1) continue to exist in an increasingly diluted world of alts, (2) rise above the other alts, and (3) establish dominance over Bitcoin.
We're specifically talking about cryptos intended for use as currency. As the second law of marketing from The 22 Immutable Laws says, if you can’t be first in a category, create a new category to be first in. Ethereum, for example, is the first-to-mind for utilitarian crypto. As a result, it will likely be the dominant cryptoasset. This will hold true for others that serve unique purposes like anonymity or money transferring.
It’s true that not all first-movers are successful; there are downsides to being first. First-improvers often win out over first-movers, for example.
But most of those first-movers aren’t forkable. A company like AirBnB can pivot, true. But a fork is way more malleable than a traditional pivot. Bitcoin can adopt solutions that alts test out and prove for it, much more easily than any traditional business can copy a competitor.
When Longevity Indicates Longevity
Bitcoin is also a good example of a non-perishable asset. Non-perishable assets don't degrade over time. Books are a good example (note that the "non-perishable" refers to consumption by society, not any instantiation).
Non-perishable assets are subject to the Lindy Effect (go read anything by Nassim Taleb. Seriously). The Lindy Effect says the life span of a non-perishable object or idea correlates with its current lifespan.
For example, a book that’s been a continuous best seller for 100 years is likely to be around longer in the future than a book that’s only been a continuous best seller for 10 years.
As applied to crypto: Bitcoin is the digital currency with the longest continuous use, and, as such, it is likely to be the digital currency that is continuously used in the future.
Layer Two: Why Marketing Isn’t Mentioned
Why isn’t marketing part of the normal discussion of the growth and dominance of a cryptocurrency?
Marketing is typically imagined, shaped and implemented by a central enterprise behind a good or service. It’s consciously done by the entity that’s there, behind every ad and social media campaign.
But with Bitcoin, there is no there there.
There is no enterprise leading the charge. One of my favorite descriptions of blockchain is by Naval Ravikant in the Hash Power podcast series: a blockchain seems to be something that bootstraps itself into existence.
Yes, there are proponents like Coin Center, and exchanges like Coinbase and Poloniex.
But these are like third-party vendors or distributors. They aren’t the machine behind the magic.
Lessons To Learn
What can we learn about marketing from the success that Bitcoin has seen and will continue to experience?
An easy lesson is: creating something of substantive value is enough to give you market dominance.
The backbone of this digital asset was built by tech, not MBAs (thank god). So it wasn’t structured within traditional schemas of “product, sales, marketing, operations, etc.” How Bitcoin has grown, and will grow, can shed new light on these traditional concepts.
What other features of traditional business can we reexamine by looking at an asset that has no there there?
What are your thoughts?