“At cocktail parties people always ask me: What does your daughter do?,” my father recently told me. “When I tell them you work in the blockchain industry, they go blank. Or they associate Bitcoin with the dark web. I try to explain, but it’s no use.”
I have had countless versions of this same interaction. Step outside of the crypto bubble and say the word “blockchain,” and you will often hear smart and sophisticated people say things like, “I tried to understand it...but then I gave up.” This mental block, so to speak, has real implications for an industry whose success largely depends on network effects and public participation.
The coronavirus panic has only made the problem worse. Some of us were drawn to blockchain because of Bitcoin, the digital currency that made the technology famous. Bitcoin appealed as a money that existed outside of traditional markets, and could act as a safe haven from financial turmoil and irresponsible governments. But recent events have put that narrative to the test, to put it mildly. The coronovirus crisis led Bitcoin to crash right alongside the stock market. If Bitcoin can’t act as a reliable safe haven, then what is the purpose of blockchain’s most visible ambassador?
The lack of a clear storyline may not have mattered during the 2017 crypto boom. Back then, the market was so frothy that a company could raise money just by saying the word “blockchain” — even if hardly anyone understood what it was. But now that the market has cooled, some may back away from a technology they view as opaque. I recently heard of a multimillion dollar deal falling apart because one of the parties shut down upon hearing the word “blockchain.”
These observations aren’t purely anecdotal. A Citigate Dewe Rogers survey on global professional investors asked about the level of understanding of blockchain technology by senior directors at large, established businesses. More than 50% of those surveyed said their understanding was poor or very poor, with 0% describing their understanding of blockchain as “excellent.”
Is blockchain tech really that complicated? Sure, if you are trying to master it at a technical level. But the average person doesn’t need to do that. They just need to grasp the general concept. Bitcoin is a good place to start. For the purposes of this essay I will often use Bitcoin as an example, because it is by far blockchain’s most famous use case.
I usually explain Bitcoin and blockchain like this. Bitcoin is a digital currency, and Bitcoin transactions are recorded on a blockchain, which is a digital ledger that is not stored in one single location Bitcoin’s blockchain is updated by people all over the world, and can be viewed by anyone. Every block of data is linked to the one before it, meaning that tampering with the data will compromise the chain. Blockchain technology allows huge sums of money to flow around the world, without the intervention of a government or a central bank.
If my summary isn’t the best, there are plenty of other articles, books and explainer videos out there. But they just don’t seem to be getting through to the general public. The question is: Why? Here are a few reasons.
First: Blockchain doesn’t have a storyteller
The blockchain industry has a storytelling problem, because there is no one designated to tell its story. “The milk industry spends $46 million a year to tell the story of milk. Milk. The pistachio industry spends $55 million a year to tell the story of pistachios,” Tomicah Tilleman, chairman of the board of the Global Blockchain Business Council, told me.
Tilleman added, “The blockchain industry has been trying to ram through adoption of what is arguably the most complex mass-market technology in history with effectively zero investment in coordinated, industry wide storytelling. When it comes to public understanding of new tech, you get what you pay for.”
Tech products, you could argue, need even more of a marketing effort. The tech industry has tended to spend more of its revenue on marketing than other industries, and with good reason — its products are often new and complex. They require some explanation. Marketing teaches people what the products do, and tells stories about how these products can fit into people’s lives.
Consider, for example, the ads for the original iPhone. Today, Apple can do all sorts of things to appeal to emotion with its ads, because most everyone knows what an iPhone is and what it does. But the ads for the original iPhone were just quick product demos, showing you what the phone actually does. People needed that explanation, because this was a new thing.
If the iPhone was a big leap from the flip phone, it’s certainly fair to say that Bitcoin is quite a leap from a dollar bill. And while it’s possible to seek out an explanation of what Bitcoin is, you have to be inherently interested in Bitcoin already to do that. By contrast, Apple marketing finds you — those iPhone ads were everywhere; there was a good chance you saw a few even if you weren’t interested in the iPhone, or had no idea what the iPhone was.
There’s no coordinated marketing campaign to let people know what Bitcoin is. Given that Bitcoin’s value as a currency will be largely defined by the number of people who actually use it, this is a pretty big problem. The decentralization that makes blockchain so revolutionary can be a liability when it comes to messaging.
Second: We don’t know what story to tell
Even if the industry miraculously united around one story, which story would it even be? Again, take Bitcoin, whose narrative is far from straightforward. When we say Bitcoin, what exactly are we referring to? Bitcoin the currency, or Bitcoin the network? If it’s the currency, what exactly is its purpose? Is it a long-term investment or a get-rich quick scheme? Is it a safe haven from traditional financial markets — and if so, then why did it recently crash with the stock market? Or should Bitcoin be used as an actual currency that can be used to pay for actual things? Meanwhile, apparent contradictions abound. In countries like the United States, Bitcoin may seem dangerously volatile, and a way for an uninformed investor to part ways with a lifetime of savings. But in places like Venezuela, Bitcoin is a relative anchor of stability amidst political crisis and rampant hyperinflation. The truth is that Bitcoin can be all of these things at once, but that just doesn’t make for the most coherent story. It doesn’t help that Bitcoin’s creator, Satoshi Nakamoto, has completely disappeared.
Some people know Bitcoin as a private form of money that is good for making secret transactions. The first problem with this narrative is that it’s not even really true. Bitcoin transactions are much more traceable than the average person might think. But even so, who exactly is benefitting from Bitcoin’s (relative) privacy? Criminals who want to conceal their tracks — or brave dissidents who are trying to protect themselves from authoritarian regimes? The other problem is that privacy doesn’t necessarily sell. Neeraj Agrawal, the director of communications at Coin Center, put it this way:
“The biggest storytelling problem seems pretty simple: Privacy is not a top of mind issue for most people. And for those who think about it, the convenience trade off for privacy is too high,” Agrawal told me.
And yet Bitcoin, for all its challenges, probably has the clearest story of any other blockchain-based token. Ethereum, the second most well-known blockchain, is even harder to explain to the general public.
Amanda Cassatt, secretary of Marketingdao, an organization that is helping to grow the Ethereum brand, told me that Ethereum’s technical people are not necessarily communicators. “They love talking to other technical people, the kinds of terminology they are creating is going to resonate with more technical people,” Cassatt said, “and the whole concept is just a little harder for people who aren’t computer scientists.”
Third: The industry isn’t helping itself
Some of these problems are legitimately hard to solve. But at the same time, the cryptocurrency industry is not helping itself. Instead of trying to communicate a larger vision, many are consumed by petty infighting about which tokens are best.
And even as much of the world has no idea what Bitcoin is, start-ups are investing their time writing nonsensical white papers and promoting products that even industry insiders can’t understand. Blockchain conferences are flooded with jargon and empty terms like “ecosystem,” which SEC Commissioner Hester Peirce aptly described as “a word people use when they don’t really know what they’re trying to say.”
Anthony Pompliano, founder of Morgan Creek Digital, says that the use of jargon can represent a deeper problem. In a conversation on his podcast, he told me, “When you get inside of crypto, my best test for founders is: Tell me in two sentences or less, what do you do? And if you can’t do it, or there’s any sort of technical jargon, or whatever, I’m not interested. And some of it is because you can’t articulate what you do, and also the other piece of it is, because you probably don’t do anything.”
Finally, does blockchain have a storytelling problem — or just no story to tell?
Blockchain technology has yet to touch most people’s lives, and even the best marketing campaign is not going to fix that. Marco Santori, president and chief legal officer of Blockchain, a software platform for digital assets, put it this way.
“There’s not a lot of ready-made, end products for consumers today,” Santori told me. “That’s changing rapidly, and I think we’re going to see a very different environment soon. But today, there’s not a whole lot to sell just yet,” Santori said.
Just look at the numbers for decentralized applications, or DApps, which are basically apps or software built on a blockchain. According to State of the DApps data as of mid March, out of the more than 2,200 DApps that it tracks, only one had over 10,000 users in the past 24 hours, and only 5 DApps had a 7-day total volume of above $10 million.
In late 2019 the Wall Street Journal reported that around 9 million Bitcoins, or slightly over 50% of those outstanding, hadn’t moved in at least six months. Use of Bitcoin by merchants went up in 2019, but remained a tiny fraction compared to credit cards.
Blockchain technology is being used by major corporations — the retail giant Walmart is one pretty big example — but these stories don’t seem to be gaining much traction. Some crypto purists will say that these use cases are not real blockchain, because they are not truly decentralized. Others will question if some of these companies need to use blockchain at all.
Nathaniel Popper, who covers technology at the New York Times, told me, “It is so hard to tell whether anyone is actually using a blockchain for something that they couldn't have done with their existing systems — people have an incentive to say that they are using blockchains because it seems innovative,” Popper said.
If more people were using blockchain technology in a meaningful way, they might not need to understand it. Hardly anyone can explain the technology behind the Internet. But they don’t have to, because the Internet is an indispensable part of our daily lives.
Blockchain’s lack of real-life use cases help explain why some people have a negative impression of cryptocurrency. In a recent New York Times article, Popper reported that even as Bitcoin’s value was sagging, the amount of cryptocurrency spent on so-called dark net markets rose 60% to reach a new high of $601 million in the last three months of 2019. Until more people experience the positive impact of blockchain technology, “negative” crypto stories could dominate the attention of policy makers and the general public alike.
So what can we do?
Cryptocurrency doesn’t — and shouldn’t — have a centralized marketing firm. So it’s up to the industry to tell its story. Here are a few suggestions for how we might do a better job.
Make products that people actually want.
Some of the most important work may lie with entrepreneurs and developers. For blockchain technology to truly touch ground, it needs to be applied to products that people actually use. If a start-up can’t concisely describe its product and the problem that it is attempting to solve, then does the world really need that product? And does that product even require blockchain at all? Startups and investors should be constantly asking these questions. A surplus of convoluted and esoteric products is not doing the industry any favors.
Lose the jargon.
If you have a product that does add value, put some effort into telling its story. Some startups confuse storytelling with “marketing” — or paying huge sums of money for self-promotion. Storytelling, by contrast, is explaining clearly what your product is, and why the world needs it. Some good ideas may never get funding because investors have no clue what the founders are trying to say. It’s also startling how the creators of some consumer-facing products don’t see the need to explain their product to actual consumers. Don’t pad your white paper with technical jargon and empty prose. Stop using industry cliches like “ecosystem.” Many technical people are not natural storytellers, and that’s fine. If you’re not a storyteller, then hire someone who is.
Coordinate the message, within reason.
The blockchain industry is decentralized, there’s no getting around that. There are many blockchain-based tokens, and we can’t expect them to unite around a common story. But the different players can work on better coordinating the messaging of their specific community. Let’s also cut down on infighting and toxic maximalism. It’s good to name and shame scams and nefarious actors, but it’s not helpful to publicly trash tokens or key crypto figures just because you don’t like them. These divisions add to public confusion or cause people to tune out completely.
Reasonably coordinated storytelling could have benefits for everyone, regardless of what project you are working on. It will be difficult to get people to use blockchain technology if they don’t understand what it is, or why it should exist.
This essay was originally featured on Laura Shin's Unconfirmed podcast. The audio version can be found here.