Introducing Smart Currency. A new narrative for ETH (continued).
I’m continuing to argue for a better narrative for ETH. In this post, I’ll introduce the trio of 1) Smart Currency, 2) Smart Blockchain and 3) Smart Contracts. This triangle forms a better framework for telling the Ethereum story. Picking up where I left off in The four letter word that’s worth $100Bn:
Ethereum is not JUST a crypto-currency.
ETH needs better positioning. There’s more to it than just adding “JUST.” That’s the starting point. ETH needs to be given its proper place in the Ethereum ecosystem. ETH could be significantly better positioned as a “smart currency.”
This post details the repositioning of Ether (ETH). It’s a story of the potential rise of Ether. If ETH is better understood as a cryptocurrency, it’s worth 1X to 5X ETH’s current valuation. The first step here is to better explain ETH’s role in the Ethereum ecosystem with more importance. I reposition ETH as Smart Currency, further up in the Ethereum messaging hierarchy. Smart Currency becomes the lead to telling the Smart Contract story. Not the other way around — as it is today.
Note: Ethereum Wallet is described as “Smart money, smart wallet” on the ethereum.org website (screenshot left). Ether’s narrative is already headed in the “Smart Currency” direction. New positioning follows in Q&A form with explanation inline. Its target is the man or woman in the street. Particularly Wall St.
Q: So, Ethereum is a blockchain?
A: Yes, Ethereum is a Smart Blockchain.
Ethereum’s headline positioning is currently “Blockchain App Platform” (screenshot left). Replace this with “Smart Blockchain” because we say “Smart Phone”, not “Phone App Platform.”
In the modern lexicon, ‘Smart’ is the adjective used to describe the super-class of technology that is extensible by software or apps. We ‘get’ ‘Smart’. We get that Smart tech will become smarter and more valuable as more software and apps are published. We get that legacy technology cannot become smarter or more valuable (beyond network effects.) In our gut, we get that smart technology will ultimately replace legacy — non-programmable — technology. ‘Smart’ differentiates ETH and Ethereum from BTC and Bitcoin in the same way that it separated iPhone and iOS from flip-phones and cellular networks. Steve Jobs was smart with ‘Smart’.
Note that I’ve dropped the “next generation blockchain” description commonly used to describe Ethereum. A ‘next generation’ product is instantly outdated and makes no valuable claim for its users outside of ‘newness’ (which is obviously impermanent).
A smart blockchain is not just a cryptocurrency.
Q: What is a Smart Blockchain?
A: A Smart Blockchain is not just a cryptocurrency — it is also programmable. It doesn’t just keep a record of assets and accounts. A Smart Blockchain can also run software code that coordinates complex transactions between the accounts and assets on the network.
Q: So, is it, or isn’t it, a cryptocurrency?
A: Yes, Ether is a cryptocurrency. It’s a Smart Currency. Ether trades as ETH on most major exchanges.
Q: Hold on; Ether? I thought you said ‘Ethereum’? So what is a ‘Smart Currency’?
A: Think of Ethereum as a triangle. It’s 3 things: (1) Ethereum is a Smart Blockchain (the top of the triangle) that combines (2) a Smart Currency, Ether, with software code in (3) Smart Contracts. ETH and Smart Contracts are the two ‘legs’ of our triangle. Ether is a Smart Currency. It stores value like other cryptocurrencies do but it can also be put to work in software code to coordinate transactions beyond simply moving cash from a to b.
Q: Like what?
A: Here’s an example. Sometimes we must pay people who we don’t know for services or stuff that they promise to deliver in the future. It’s awkward. Do you pay upfront and trust, or withhold payment and expect trust? E-commerce works this way — you pay upfront and hope your shipment arrives.
An escrow process can solve this dilemma by holding upfront payments until a promise is kept. It’s a great solution, except, today, escrow requires a third party. As a result, escrow services are expensive and limited to high value applications.
On Ethereum, a Smart Contract can automate escrow business rules. No intermediary is required. A Smart Contract enforces the escrow protocol and Ether is only moved between accounts when the promise is kept. In the case of an e-commerce delivery, this payment could be triggered by a 3rd party courier’s delivery or your signature for it. This would be a huge improvement on the eBay shopping experience.
Escrow is a trivial example. Smart Contracts can be coded for much more complex workflows like automating a property transfer or a vehicle purchase. Ether is Smart Currency — it can guarantee orchestration of complex trades that follow programmable logic — stored in Smart Contract code on the Ethereum blockchain.
The use case examples that are given to explain ETH should be focused on end user (i.e. consumer) applications like this. Currently, too much airtime is given to industry vertical solutions. If we’re going to change retail demand for ETH, we need to explain its retail applications better. Consumer spending drives the growth of the world’s biggest economies and brands. For Ethereum to realise its value, it has to tell a better consumer story. We’ll get into this in much more detail in the next post.
The current state of the Ethereum narrative
ETH needs Ethereum to pivot to the triangle story (i.e. Smart Blockchain = Smart Currency + Smart Contracts). Why? Consider the problems with the current Ethereum narrative:
This is how the Ethereum story is told today. It’s a hierarchical and linear narrative with Smart Contracts as the hero. It’s a swiss-army-knife-type story in which our hero can follow any of the many straight paths to their logical conclusion from blockchain → smart contracts → the technology stack (cryptocurrency, dapps, network and/or smart contracts and tools) → to industry vertical applications → and lastly, we’re left to imagine a better world — thanks to the vast scope of all that our hero, Smart Contracts, can do.
This message is not wrong. The Ethereum story is simply too complex, too nuanced and it is too good, quite frankly, for this linear narrative. The Bitcoin story, on the other hand, is well suited to this simple format. Legacy crypto does only one thing. Bitcoin can tell its full story in this simple way because there’s nothing more to it. A Smart Currency offers its users additional functionality and fungibility and so, needs a more creative storyline.
The challenges with current Ether narrative are:
- You have to understand Smart Contracts in order to understand Ether. This message has worked a charm with Ethereum’s software developer audience but it has failed to land on Wall St. Organising Ether under Smart Contracts is a mistake, only obvious in hindsight, that has been costly to the ETH/BTC ratio.
- Too many logical steps. Think of it as a mental conversion funnel. You lose a consumer audience after the first jump into the stack after explaining Smart Contracts. You’re lucky if a professional makes it through to understanding the vertical applications — there’s just too much pre-amble.
- New and weird words. You have to get quite far into the story before you recognise familiar terminology.
- ETH has a stronger technology positioning in the Ethereum story than it has a financial or currency positioning. It’s positioned in the Ethereum stack, pretty much along-side ZK-snarks. ETH is being explained as “cryptocurrency that we built with Smart Contracts”. This story often tangents to how you could roll your own crypto on Ethereum. All of which is not untrue but unnecessarily buries ETH’s headline financial story.
The Ethereum Triangle narrative; Blockchain, Currency, Contracts
Here’s the whiteboard view of the Ethereum story, re-told in the triangle, as described above. Ethereum is a trinity; Smart Blockchain, Smart Currency and Smart Contracts. People get stories told in trinities because of the rule of 3 — explained on Wikipedia:
The rule of three is a writing principle that suggests that events or characters introduced in threes are more humorous, satisfying, or effective in execution of the story and engaging the reader. The reader or audience of this form of text is also thereby more likely to remember the information conveyed.
In this version of the story, Ether is now at least as important as Smart Contracts. The triangle is a better narrative for Ether:
- You don’t have to understand Smart Contracts to understand ETH. Smart Currency can be simply understood as cryptocurrency (on steriods). That is good enough, for now, at least, for it to be understood by Wall St. This ia about cementing Ether as a currency in investors’ minds and competing for the crown in crypto’s primary use case (i.e. currency.)
- The stack is simplified. It’s now split up among each of the 3 corners of the triangle. We have just one main point to land and then, 3 potential sub-plots; namely the Network, Currency and Programmable stories. We start the Ethereum story one logical hop away from any corner of Ethereum’s complex offering.
- Familiar language. We get ‘smart’. We get ‘currency’. We even kind of get ‘blockchain’ and ‘cryptocurrency’ at this stage. In the triangle version of the story, there are more familiar concepts than there are new things — and so, the introduction of the new thing i.e. programmable Smart Contracts is eased by more familiar starting points.
- ETH now has a financial currency positioning that stands apart from the Ethereum technology stack. Its story can now take an adventure on Wall Street without an interpreter that speaks Silicon Valley lingo.
- Vertical applications are missing from the triangle version of the story. If industry leaders know their game, they’ll figure out the application for Smart Contracts in their industry. The inconvenient truth is that the industry audience of this message will often be the very intermediaries that Smart Contracts obviate. Time is currently wasted here trying to explain how incumbents can remain relevant.
In closing, 3 important notes on the Smart Currency sub-plot:
- The ETH Smart Currency story doesn’t include alt-coins and other crypto-assets. Those parts of the stack are left to be explained in the Smart Contract story (as necessary.)
- The smarts in Smart Currency is best positioned as automation. Blockchains join cloud services and AI as the platform for society’s transition from the information age to the automation age. The value of ETH= the value of cryptocurrency + the productive value of the automation it can buy us in the future.
- At the risk of repeating myself, the Smart Currency story needs to be re-framed in the context of a better life for the man in the street. There’s a much bigger story there. The smart blockchain will re-invent the consumer journey. Ethereum’s core value proposition can be framed as an evolution from from today’s information-fuelled funnel to Ethereum’s automation-fuelled diamond. I’ll do that in the next post.
