Is the blockchain industry facing a narrative dilemma, or is it that it has no stories to tell?

Source: LongHash

Editor’s Note: The original title is “The Narrative Dilemma of Blockchain Technology: Its Solution”

“At cocktail parties people always ask me: What does your daughter do?” my dad told me recently. “When I tell them you’re in blockchain, they get blank stares. Or they associate Bitcoin with the dark web. I try to explain, but nothing works.”

I’ve had this conversation countless times. Outside of the crypto bubble, mention the word “blockchain” and you’ll often hear smart, professional people say the same old thing, “I tried to understand it … but then I gave up.” This mental block has real consequences for an industry that relies heavily on network effects and public participation to succeed.

The coronavirus panic has only made matters worse. Some of us were drawn to blockchain because of Bitcoin, the digital currency that put the technology on the map. Bitcoin is attractive as a currency that exists outside of traditional markets and can serve as a safe haven in times of economic turmoil or government inaction. But recent events have put that narrative to the test, to put it mildly. The coronavirus crisis has sent both Bitcoin and the stock market crashing. If Bitcoin can’t be a reliable safe haven, then what is the point of blockchain’s most visible poster child?

The lack of a clear storyline might not have mattered during the great crypto boom of 2017. At the time, the market was so frothy that any company could raise money just by saying the word "blockchain"—even though almost no one understood what it was. But as the market cools, some people may be shying away from a technology they find obscure. I recently heard of a multimillion-dollar deal that fell through because one party backed out after hearing the word "Bitcoin."

These observations are not just anecdotal. In a survey of professional investors around the world, Citigate Dewe Rogers examined the level of understanding of blockchain technology among executives at well-known large companies. More than 50% of respondents said they had a poor or very poor understanding of blockchain, and no one described their understanding of blockchain as "very good."

Is blockchain technology really that complicated? Yes, if you want to grasp it technically. But the average person doesn't need to do that. They just need to grasp the general concepts. Bitcoin is a great place to start. Throughout this article, I'll often use Bitcoin as an example because it's by far the most well-known use case for blockchain.

I usually explain Bitcoin and blockchain like this. Bitcoin is a digital currency, and Bitcoin transactions are recorded on the blockchain, a digital ledger that is not stored in a single location. The Bitcoin blockchain is updated by people around the world and can be viewed by anyone. Each block (the carrier of data) is linked to the previous block, which means that tampering with the data on one block will affect the entire chain. Blockchain technology allows huge amounts of money to move around the world without interference from governments or central banks.

If my summary wasn't clear enough, there are plenty of other articles, books, and explainer videos. But the general public just can't seem to digest this information. The question is: why? I think there are a few reasons.

First: There are no storytellers in the blockchain industry

The blockchain industry has a narrative dilemma because there is no one designated person to tell its story. “The milk industry spends $46 million a year telling the story of milk. The pistachio industry spends $55 million a year telling the story of pistachios,” Tomicah Tilleman, chairman of the board of the Global Blockchain Business Council, told me.

“The blockchain industry has never been able to coordinate a unified story across the industry, and has been trying to shoehorn arguably the most complex mass-market technology ever created onto the majority of people with zero investment,” Thielman added. “You get what you pay for in terms of mass understanding of new technology.”

It can be argued that tech products are even more dependent on marketing. The tech industry tends to invest more revenue into marketing than other industries, and this makes sense—tech products are often new and complex. They require some explanation. Marketing educates people about the purpose of these products and tells stories to show how these products fit into people's lives.

For example, think about the ads for the original iPhone. Today, Apple can do anything in its ads to appeal to consumers’ emotions, because almost everyone knows what an iPhone is and what it does. But the ads for the original iPhone were just quick product demonstrations that showed you exactly what the phone could do. People needed that explanation because it was a brand new product.

If the iPhone was a major leap forward since the flip phone, then we can certainly say that Bitcoin is a pretty big leap forward since the dollar bill. While it’s not impossible to find an explanation of what Bitcoin is, you have to be interested in it first. In contrast, Apple’s marketing finds you first — iPhone ads are everywhere; even if you have no interest in the iPhone, or even if you have no idea what an iPhone is, you’ve probably seen some iPhone ads.

There is no coordinated marketing campaign to educate people about Bitcoin. This is a big problem, considering that Bitcoin’s value as a currency depends largely on the number of people who actually use it. The decentralization that makes blockchain so revolutionary may also be partly to blame for the inefficiency of information transmission.

Second: We don’t know what story to tell

Even if the industry miraculously agrees on a story, what would it be? Let’s take Bitcoin again, whose story is certainly far from simple. When we talk about Bitcoin, what exactly are we talking about? Is it Bitcoin the currency itself, or the Bitcoin network? If it is Bitcoin the currency, what is its purpose? A long-term investment or a get-rich-quick scheme? Is it a safe-haven asset independent of traditional financial markets? If so, why have both Bitcoin and the stock market plummeted recently? Or should Bitcoin be regarded as a real currency that can be used to buy real products? At the same time, obvious contradictions abound.

In countries like the United States, Bitcoin may seem like a highly volatile investment that could make uninformed investors lose their life savings. But in countries like Venezuela, Bitcoin is a relatively stable source of support amid political crisis and severe inflation. The fact that Bitcoin can be all of these things at once doesn’t make for a coherent story. To make matters worse, Bitcoin’s creator, Satoshi Nakamoto, has completely disappeared.

Some people believe that Bitcoin is a private form of money that is good for performing secret transactions. The first problem with this narrative is that it’s not even true. Bitcoin transactions are far easier to trace than people generally believe. But even so, who is taking advantage of Bitcoin’s (relative) privacy? Criminals who want to hide their tracks — or political dissidents who want to protect themselves from those in power? Another problem is that people don’t necessarily buy into privacy. Neeraj Agrawal, head of communications at Coin Center, put it this way:

“The biggest problem in this story seems pretty simple: privacy isn’t a top concern for most people. And for those who do, the price they pay in convenience is too high,” Agrawal told me.

Yet, Bitcoin’s story, for all its challenges, is perhaps the clearest of any other blockchain-based token. Ethereum, the second-most-known blockchain, has been more difficult to explain to the public.

Amanda Cassatt, secretary of Marketingdao, an organization that helps develop the Ethereum brand, told me that Ethereum’s technical people aren’t necessarily good at communicating. “They love talking to other technical people, and they create terms that resonate with those technical people,” Cassatt said. “These concepts are a little harder for non-computer scientists to understand.”

Third: The industry fails to help itself

Some of these problems are indeed difficult to solve. But at the same time, the crypto industry is not helping itself. Instead of trying to communicate a greater vision, many people are consumed by petty infighting over which token is best.

Furthermore, even as most of the world still has no idea what Bitcoin is, startups are spending their days writing meaningless white papers promoting products that even industry insiders can’t understand. Blockchain conferences are filled with jargon and empty terms like “ecosystem,” which SEC Commissioner Hester Peirce aptly called “a word people use when they don’t know what they mean.”

Anthony Pompliano, founder of Morgan Creek Digital Capital, said the use of jargon itself may be a deeper problem. In a conversation on his podcast, he told me, "When you get into crypto, my best test for founders is: Tell me in two sentences or less, what do you do? If you can't do that, or if you use any technical jargon or whatever, I'm not interested. Sometimes it's because you can't explain what you do, and sometimes it's because you don't do anything."

Finally, is the blockchain industry facing a narrative dilemma—or is it that there is no story to tell?

Blockchain technology has yet to touch most people’s lives, and even the best marketing campaigns can’t make up for that. Marco Santori, chief legal officer at digital asset platform Blockchain, explains:

“There aren’t a lot of end products that are ready for consumers right now,” Santori told me. “The industry is changing very quickly, and I think we’re going to see a very different environment very soon. But right now, there aren’t a lot of products that are ready to sell,” Santori said.

We only need to look at the data for decentralized applications (DApps), which are essentially apps or software developed on a blockchain. According to data from State of the DApps as of mid-March, of the more than 2,200 DApps tracked by the site, only one had more than 10,000 users in the past 24 hours, and only five DApps had a weekly transaction volume of more than $10 million.

At the end of 2019, the Wall Street Journal reported that about 9 million bitcoins, or more than 50% of outstanding bitcoins, had not been moved in at least six months. In 2019, bitcoin adoption among merchants began to rise, but it still pales in comparison to credit cards.

Major businesses are adopting blockchain technology — retail giant Walmart is a sizable example — but the stories don’t seem too compelling. Some crypto purists will say these use cases aren’t really blockchain because they’re not truly decentralized. Others will question whether some of these companies even need to use blockchain.

Nathaniel Popper, a technology writer for The New York Times, told me, “It’s hard to tell whether everyone is actually using blockchain technology to achieve something that can’t be done with existing systems—people can reasonably claim to be using blockchain because of the innovative nature of the technology,” Popper said.

If more people were already using blockchain in a meaningful way, they might not need to understand it. Almost no one can explain the technology behind the Internet. And they don’t have to, because the Internet is an integral part of our daily lives.

The lack of real-world use cases for blockchain helps explain why some people have a negative impression of cryptocurrencies. In a recent New York Times article, Pope reported that even as the price of Bitcoin fell, the amount of cryptocurrency spent on so-called darknet markets increased by 60% in the last three months of 2019, reaching a new high of $601 million. Until more people experience the positive impact of blockchain technology, the "negative" blockchain story will occupy the attention of policymakers and the public.

So, what can we do?

Cryptocurrency does not have — and should not have — a centralized marketing company. So it’s up to the industry to tell its own story. Below we’ll give a few suggestions on how to improve it.

Make products that people really want

Some of the most important work may need to be done by entrepreneurs and developers. In order for blockchain technology to really take off, it needs to be applied to products that people will actually use. If a startup can't accurately describe its product and the problem it is trying to solve, does the world really need its product? Or even does this product really need blockchain? Startups and investors should constantly ask these two questions. An overabundance of obscure products will not help the industry.

Ditch the jargon

If you have a product that adds value, you need to put some thought into telling a story. Some startups confuse storytelling with “marketing” — or spend huge amounts of money on self-promotion. Storytelling, by contrast, is about explaining what your product is and why the world needs it. Some great ideas may never get funded because investors have no idea what the founders are trying to say. Additionally, it’s surprising how many developers of consumer-facing products don’t think it’s necessary to explain their products to actual consumers. Don’t fill a blank sheet of paper with technical jargon and empty prose. Stop using cliches like “ecosystem.” Many technical people aren’t natural storytellers, and that’s okay. If you can’t tell a story, find someone who can.

Coordinate and integrate information within a reasonable range

There is no getting around the fact that the blockchain industry is decentralized. There are so many blockchain-based tokens that we can’t expect all of them to unite around a common story. But different players can do a better job of coordinating the messaging from their respective communities. This will also reduce the infighting and one-sided sentiment that poisons the industry. It’s good to call out scam projects and bad actors and call them out, but it’s not good to publicly disparage a token or key figure in the crypto industry just because you don’t like it. These divisions will only deepen public confusion or drive people to ignore the industry altogether.

Regardless of what project you’re working on, it’s in everyone’s interest to properly align your stories. It’s hard to get people to start using blockchain if they don’t understand what it is or why it should exist.

This article originally appeared as a podcast on Laura Shin’s podcast Unconfirmed. An audio version is available on the official website.

LongHash, understand blockchain with data.

Link to this article: https://www.8btc.com/media/583350
Please indicate the source of the article when reprinting