Bitcoin: the little cryptocurrency that could

10th December 2017

The irony of innovation is that it is often discussed and rarely encountered. Most of what we marketing folk label ‘innovation’ is merely a twist, twirl or twinkle. So it should be. There isn’t anything new in the world.

Until, once in a while, there is.

In such moments, innovation can face a crippling problem: how to explain that which has never before existed? These challenges demand industrial strength marketing nous; unless you think imaginatively, communicate clearly and have luck to boot, your new-ness will fall on deaf ears and thin wallets.

As a culture, we enjoy greeting new ideas with scepticism and suspicion. We like to reframe something unthinkable as something unreasonable. A danger. A swizz. A conspiracy.

One of the first driving laws passed in the USA  (Vermont, 1894) mandated that a person holding a red flag should walk in front of any automotive vehicle. I like the law’s doubting text: “…while any locomotive is in motion, [a person] shall precede such locomotive on foot by not less than sixty yards, and shall carry a red flag constantly displayed, and shall warn the riders and drivers of horses of the approach of such locomotives”. 

The horses were clearly rattled by Mr Henry Ford’s colourful invention.

Copernicus’ sun-centred hypothesis explaining how the celestial planets rotate was first ignored and later derided by a Catholic Church anxious not to rock the boat, and the precept that Earth lay at the centre of the universe. It took a passionate advocate, Galileo, to take on the naysayers and turn things around.

The challenge ofna changing paradigm applies to malevolent forces too. Conspiracy junkies believe the World Trade Centre was not brought down not by misbegotten Muslims with box-cutter knives, but by a sophisticated inside job involving pre-set explosives and US government connivance.

Innovation in any realm is hard to come by, and must work especially hard to find acceptance.

Which brings me to Bitcoin. This imaginative, giddily new currency for the internet operating without recourse to governments or centralised intermediaries has suffered from a fundamental issue: its newness makes it impenetrable, and hence implausible.

The world’s leading cryptocurrency, invented in 2009, needs to explain itself a Bitmore, and a Bitbetter. But the anonymous Chinese entrepreneur at its heart appears to be leaving its discovery to market forces.

The passionate advocates most likely to enable its break-through into popular culture and acceptance are somewhat unexpected.

If you like technology or Aaron Sorkin or David Fincher, you may know Cameron and Tyler Winkelvoss. These square-jawed twins met Mark Zuckerberg in 2002 when all were Harvard students, asking for his help on a project called ConnectU. The relationship did not go swimmingly. In Fincher’s 2010 film The Social Network, their lawsuit against Zuckerberg is depicted as central to Facebook’s origin story. The brothers are presented as preppy buffoons who, unaccountably, win a $45 million settlement from Mark.

The truth is somewhat different. It transpires that Zuckerberg had indeed copied the seed of their social networking idea to make his social networking idea. Facebook became a reality, in small part one must admit, because of Cameron and Tyler Winkelvoss.

As if purely to contest the movie’s depiction of them as entitled, coat-tailing, entrepreneurial wannabes, Cameron and Tyler have parlayed their $45m compensation into a $1.5bn fortune. Almost all of it derives from a visionary belief in Bitcoin.

‘It’s binary’, Tyler claims. Either Bitcoin will transform how the world understands and uses money and makes internet transactions, or Bitocin will blow up and quickly fall to naught, because another idea has solved the central problem better. There is no middle ground.

The problem in question is a simple one: moving money on the internet creates friction – in terms of cost, security and transparency. Internet transactions right now need an intermediary, and such actors can create degrees of malaise and mayhem.

To hear the Winkelvoss brothers talk inspires a sense of awe, especially now that the chances of Bitcoin breaking through are now on the rise. Any single coin sold for around $1,000 in June 2017, and is now trading at upwards of $17,000.

But what is it? How can Bitcoin be explained?

‘It’s the gold of the internet’, says Cameron Winkelvoss, ‘Only it does a better job than gold. It’s more divisible, more fungible, more transferable and more scarce…’  Bitcoin, after all, can only be mined to the tune of 21,000,000 coins. Gold may be scarce, but Bitcoin is fixed.

They continue to push against the tide of our culture’s hardened assumptions around how money is transacted and how value is extracted. Bitcoin is an innovation in need of a prophet; or two.

Perhaps, in time, the true culture-shaker of the early 21st century will not be Zuckerberg, but a set of twins called Winkelvoss.

Implausible? Indeed.

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