Tulips or Tokens? Navigating the Cryptocurrency (Media) Bubble
….Individuals grew suddenly rich. …Every one imagined that the passion for tulips would last forever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them.
This memorable passage comes from Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay’s tome credited with popularizing the Dutch tulip mania of the 17th century and portraying the craze as a classic example of an economic bubble.
The analogy has been deployed unsparingly against “cryptocurrencies,” including the first and most valuable digital asset, Bitcoin. The media’s tulip mania also hit a fever pitch recently when JP Morgan CEO Jamie Dimon accused Bitcoin of being a fraud “worse than tulip bulbs.” He added that he would fire anyone that trades it.
With digital asset valuations near record highs, this sort of attention won’t be going away any time soon. The following is a non-exhaustive, but hopefully helpful, guide to consuming and engaging with media on the cryptocurrency craze.
Know Your Terms
Distinctions matter, and classifying a “blockchain” technology as a cryptocurrency isn’t just factually incorrect, but overly simplifies the breadth of companies entering the space.
Those offering an opinion on cryptocurrencies shouldn’t simply say “they’re a fraud” or “they will replace traditional currencies.” Simplistic or dismissive claims undermine credibility in the eyes of the media and news consumers, particularly those who might be potential clients or investors.
To illustrate the point: An initial coin offering (“ICO”) is not the same thing as Bitcoin, nor is Bitcoin the same thing as Ether. In an ICO, a company, let’s call it Acme Cloud Services, promises to develop a new product or service on the blockchain and receives funding from investors who give the company Ether or Bitcoin.
In exchange, those investors are given “coins”—let’s call them AcmeCoins—which investors can use to pay for the product or service once it is up-and-running. If the offering proves popular, the investors’ coins will be worth more due to high demand for the finished product.
Know Your Media Strategy
Newcomers to the space need to clearly define their “media proposition.” Investors who have decided to pursue opportunities related to ICOs and cryptocurrencies should be realistic about how to approach media relations. Business Insider recently reported that at least fifty hedge funds have launched with a focus on the space—and that excludes all sorts of other classes of investors. Our experience shows that savvy business people value media relations as a component to entering the space. In other words: you’ve got competition.
Convincing the media that you’re worthy of special attention requires a deliberate, well-executed communications plan. What is your background, and how have you established credibility? How does your investment plan stand out, and how will you communicate with different stakeholders and investors? Without answering these tough questions up-front, media relations may stumble, or worse, result in negative coverage!
Know Your Narrative
Just as the analogy to tulips was inevitable given the run-up in cryptocurrency valuations, the comparisons to the last dot-com bubble has become more frequent. The smartest analysis I’ve heard, from crypto evangelists and skeptics alike, is that most dot-com companies failed—but from the ashes rose giants such as Amazon, Google, and Adobe. We should expect the same from ICOs.
Deciding now is the time to enter the space is fine. However, I would caution that any media relations campaign requires nimble thinking and a long-term strategic plan. With those in hand, you’ll be prepared to stand out in a crowded media environment, regardless of whether cryptocurrencies head the way of tulips or wealth-accumulating tokens.
By Ryan Dicovitsky, Director