William Shakespeare wrote “A rose by any other name would smell as sweet’ but I wonder if that is true of Bitcoin and Crypto Currencies in general? Shakespeare thinks that it doesn’t matter, but I can’t help but wonder if the name has had more to do with its digital money’s meteoric rise than we’d like to admit.
Which brings us to Bitcoin and Crypto Currencies. Does the name make a difference?
We as individuals ‘associate’ the word ‘currency’ or ‘coin’ with a set of values, parameters and functions. We ‘know’ what a currency is and does and our mind uses those ‘known’ associations to help us process information more quickly. But is this helping us or hurting us when we try and evaluate the merits of cryptocurrencies?
Without a doubt, once an association is made, it is difficult to dispel those conceptions from how we perceive something. So the moment we frame something as a currency or a coin – we bring some level of predisposition and assumption to our analysis. We all know what a ‘coin’ is meant to look like – which is probably why my twitter stream is cluttered with pictures of gold colored coins with the letter B made to look a $ sign. That fits what we think of as a ‘coin’ which makes it is easy for us to accept the images and likely reinforces our preconceived associations.
Yet Bitcoin is nothing like that, nothing at all. There is no physical manifestation of Bitcoin that is universally acceptable. It isn’t like you have a $100 bill in your pocket where pretty much everyone in the world knows what it is. It is an artificial construct, yet by framing it as a coin in terms of name and image, I think we might give it more credit than it deserves in its purported role?
Would ‘Bunch of Ones and Zeros Organized’ or BOZO’s for short trade at $19,000 and captivate our imagination?
I don’t know whether calling something currency is merely helpful in getting us to think of it ‘properly’ or whether it has made it easier to miss some of the shortcomings of Bitcoin and other Crypto Currencies?
When people mention how slow Bitcoin is – would so many, so easily dismiss those complaints if somewhere in their lizard brain they hadn’t already imparted attributes of being a currency on it? On a larger scale, have you tried to have a discussion about the differences between cash, electronic banking, card transactions (in terms of volume and consumer protection) with a digital currency devotee and found the discussion superficial? I have, though to be fair, I have also had some very good discussions where the person has made persuasive arguments.
I do think that collectively we need to be more critical of any products ability to fulfill its stated goal. Slapping some lipstick on a pig doesn’t make the pig not a pig, and just calling something a currency doesn’t make it one.
On the other hand, re-labeling junk bonds as high yield bonds helped that market develop into what is now a crucial part of corporate finance and investing.