Public Perceptions of Bitcoin 2013 to 2018
Since 2013 I have studied how people view Bitcoin, cryptocurrency, and the blockchain. I would describe the overall view as bullish. Multiple negative perceptions have plagued Bitcoin since 2013 including the idea that Bitcoin is for drugs, is a scam, and is a bubble. Although this entire space remains the underdog and in an uphill battle for respect and adoption, positive perceptions are on the rise.
The Past Two Years
The popular view of Bitcoin is changing, mostly because of the new politically correct term called blockchain. One reason Bitcoin is losing some of its odor, is that more and more organizations continue to adopt blockchain technology such as IBM, Walmart, and Nokia. In addition, other prominent groups continue to explore and advocate for blockchain such as the United State Department of Defense, Maersk, and United States Senators and Congressional members. As blockchain adoption increases, so does the credibility of the first application of blockchain: cryptocurrency. Gone from the headlines are “Bitcoin is for drugs” but those beliefs still run deep among most people who have not yet adopted cryptocurrency. Nonetheless, as the use case for cryptocurrency expands, the groups who support it expand thereby reducing the popularity of using disparaging stereotypes focused on the people using it.
The latest mantra that is fading into the past is “Bitcoin is a scam.” The death of that particular slogan is much more closely tied to the rise in value of cryptocurrency itself and the increased attention from both regulators and financial professionals. If regulators are not flat out calling the entire market a scam, which they are not, the blanket scam argument loses power. In addition, as reputable investment firms adopt blockchain to track financial transaction such as the Australian Stock Exchange or start to trade directly or indirectly in cryptocurrency, the scam argument again loses power.
The latest anti-Bitcoin message that is yet to die is that Bitcoin is a bubble. While I am not a financial professional, I find the bubble discussion disingenuous. Yes, Bitcoin has risen very fast many times and that is one characteristic of a how financial experts detected and define “bubbles.” But sharp upward movements do not always qualify as a bubble. There are other key criteria that must also be met. The other part of the definition of a “bubble” is that the price moves much higher than its “intrinsic value.” According to Amy Fontinelle of Ivestopedia “a bubble has formed when an asset’s price has increased to well above its intrinsic or fundamental value.” It is this second part of the bubble definition that the Bitcoin critics ignore. In fact, I believe it is not possible to define the intrinsic value of Bitcoin just as is the case with all forms of money. While everything of value does have intrinsic value, the intrinsic value of currency is difficult to define. That is point of fiat currency where the value is artificially imposed through various controls. Specifically, government backed currency’s value is based mostly on its control. Absent that control, what would a US dollar be worth? If the intrinsic value of Bitcoin cannot be defined, the use of the term “bubble” when referring to Bitcoin is in fact a deeply flawed criticism. Based on the data, I would suggest the intrinsic value of Bitcoin is much higher than its current price, but that is for the market to decide.
Because this particular mantra that Bitcoin is a bubble is based on already bad data, I am not sure if it can ever go away and I am not sure it should. The one good aspect of the bubble label is that it prevents the most risk averse people from buying into what is absolutely a volatile market. Buying and then watching Bitcoin and cryptocurrency takes resilience and if you are not willing to be somewhat of an outcast and endure the thrills and chills of the price movement, this market is not yet right for you. One day we will all have cryptocurrency in our mutual funds and will not even notice. But today, this is mostly a direct buyers market and so consumer sentiment is king.
Perceptions of Bitcoin have grown a lot in the past two years. Less people see it as a tool for criminals, less people think it is a scam, but many people still fear the wild price fluctuations. Perception progress equals adoption and adoption drives up demand. I am bullish on the market because I follow the perceptions of the people. Feel free to reach out to me on Twitter @BitcoinCensus
Josh Cotton, PhD is a Fortune 500 consultant, the Founder of VetStoreUSA, LLC., the Founder of the MilitaryToken™ project, a nonprofit leader, has advised Admirals, Generals, and CEOs, is a published researcher and a social scientist who has been studying the Blockchain community since 2013. Follow him on Twitter @BitcoinCensus