The fierce battle over the Bitcoin brand
For Beginner to Advanced Readers
The frenetic buzz around Bitcoin has reached a fever-pitch. It’s rapid increase in value has spawned news coverage across the globe. Whether or not you understand what it is and how it works, odds are that by now you’ve at least heard of it.
However, there is another side to Bitcoin that hasn’t been discussed quite as much as its value. There is a fierce battle going on between rival groups over the “Bitcoin” brand, and a horrifying day of reckoning may be in our near future.
Background
Bitcoin was conceptualized in 2008 by Satoshi Nakamoto, an anonymous person or group who is shrouded in mystery to this day. The following year, Satoshi released the Bitcoin code to the world and declared it to be “open source”.
So, what does “open source” mean? Unlike closed coding systems developed by most commercial software developers, when code is “open source” it is publicly available to anyone who wants to see it, study it, distribute it or use it commercially. Satoshi intended for Bitcoin to be a public service that would be collaborated upon, improved and scaled over time by the developer community. If you wanted to, you could right now grab the code for Bitcoin and start looking at it yourself. In fact, if you’re a developer (or were able to hire one), you can even take the code, change it, and release your own version of Bitcoin without consequence.
Since Bitcoin is open source, from the beginning, anyone has been able to use it in any manner that they choose. The same goes for the Bitcoin name and logo. All of the current representations of Bitcoin that you currently see exist in the public domain, much of it under Creative Commons licensing.
Differing Opinions
Now, let’s stop to think for a moment. If Bitcoin is open source and anyone can use the code to create their own version, then how do we know that we’re actually using the “real” Bitcoin at any given time?
Since its early days, Bitcoin has been primarily developed by a core group of developers known as “Bitcoin Core”. From 2009 to 2016, this team of elite coders were the undisputed stewards of the Bitcoin code, and thereby its brand.
However, by the time 2017 rolled around, Bitcoin’s value had grown exponentially. As the Bitcoin community grew, debates began to erupt over certain aspects of the technology. Topics of debate included how to speed up and lower the cost of Bitcoin transactions, and how to implement technology to ensure that hostile parties could not manipulate the network.
Competing teams of developers formed, including former members of the Bitcoin Core team, to work on potential solutions to the challenges at hand. These teams began to come up with what they considered to be improvements to the Bitcoin code.
As solutions were developed, these new teams felt confident enough in their version of Bitcoin that they wanted to release it to the public. Since Bitcoin’s code is open source, and its transaction history is also public, these competing teams were able to create new versions of Bitcoin with transaction histories that mirror the Core version. These new versions are otherwise known as hard forks in the Bitcoin code.
What does this mean? Imagine you’re reading a 300-page book and you’re on page 100. The author of the book knows that you’re on page 100 but wants to update the part of the story that you haven’t read yet. She sends you a new book with the same pages 1–100 but completely different pages 101–300. Now you have two books — the original, and the updated version. They are identical up to page 100, but completely different after that.
When a new version of Bitcoin is created and released, all of the prior “pages of the book” stay the same, but the future is new. Since you owned Bitcoin in those prior “pages”, this means that you now also have the equivalent amount of the new version of Bitcoin as well as you move forward into the new “future”.
The Brand
Bitcoin, and all decentralized cryptocurrencies, are really comprised of just a few lines of open source code with varying features and benefits. This is why the name and brand of a cryptocurrency are extremely important when it comes to how people can identify it on exchanges and elsewhere. In fact, some cryptocurrency brands, like Dogecoin, have gathered cult followings that have little do with the code, and everything to do with the brand itself.
So, when a competing team of developers thinks they have come up with a better solution and release a new version of Bitcoin, what do they call it?
This is where the roots of the fierce marketing battle are planted. The name “Bitcoin”, being open source and public domain, can be used by anyone. There is nothing legally stopping someone from developing an updated version of Bitcoin, releasing it to the world, and calling it “Bitcoin”.
So, the developers of the new version of Bitcoin have to make a decision — do they call it “Bitcoin” or do they call it something completely different? How should they brand this thing?
Before Bitcoin became a worldwide phenomenon, it may have made more sense to come up with a new name and try to establish a fresh identity. However, with Bitcoin now representing well over 50% of the global cryptocurrency market cap and nearly 100% of the global press coverage, it makes sense to take advantage of the rub that you can only get from having the Bitcoin name.
Enter the Competition
2017 has seen a massive rise in the value of Bitcoin. However, it also has witnessed the debut of Bitcoin Cash, Bitcoin Gold, and later this month, Bitcoin 2X. Each one of these “Bitcoins” was a hard fork from the original Bitcoin, each designed to solve a specific problem that the developers didn’t think that Core was addressing, and each branded itself by modifying the Bitcoin name slightly to make it its own.
(Aside from the hard forks, there have also been dozens of completely different cryptocurrencies, not based on the original Bitcoin, that have used the same name, including Bitcoin Unlimited, Bitcoin Dark, Bitcoin Red and more.)
All of the hard forks thus far have used the name Bitcoin and added a descriptor, i.e. Cash, Gold, 2X. But, what’s really stopping someone from taking the Bitcoin name for themselves?
The only thing that’s stopping them is the awareness that they would get immediately trampled and drowned out in the marketplace. Upon their release, none of the new “Bitcoins” thus far have enjoyed the level of support and critical mass that the original one has. Exchanges would ignore a duplicate name simply due to logistical reasons and would likely just rename a duplicate, less popular Bitcoin to something of their own choosing.
But, what if the original Bitcoin Core development team were to divide straight down the middle in a debate that could not be rectified? What if each side had its own steadfast following and neither side wanted to relinquish the Bitcoin name? What if the support were 50/50 in this debate?
In this scenario, a hard fork would occur, and we would have 2 cryptocurrencies names Bitcoin. How would you know which was which? At this point, something somewhat unprecedented would have to occur. Exchanges, wallet apps, and other points of entry for individuals would have to choose between two equally popular versions of the same coin. Which Bitcoin is the real Bitcoin? How would they determine which one to go with? Would it be based on the beliefs of each individual company, or would it be based on a vote that they put to their users? Would some exchanges and wallets call one version Bitcoin, while others would call the other version Bitcoin?
What would a scenario like this do to the Bitcoin trading market? With one exchange calling one side Bitcoin, and another exchange calling the other side Bitcoin, how is an individual supposed to navigate this marketplace?
Many will say that this is a situation that is far-fetched and unlikely. However, nobody can deny that with the currently developing crypto environment, and with the political divisiveness that our planet seems to gravitate towards of late, it is very possible.
It is at this point that the incredible power of marketing and branding in the cryptocurrency space becomes apparent. The Bitcoin brand has become one of the most powerful brands in the world, and it is owned by no one. What will this battle look like as the value of Bitcoin rises above $10,000 USD and beyond and the community grows bigger and broader?
Bitcoin sprang into being because it is open source. But, will it’s open source nature ultimately lead to its demise? Will competing versions of the same coin ultimately dilute Bitcoin’s value? Or, will the free market be able to solve this potential branding nightmare while keeping Bitcoin alive and well?
The marriage of money and marketing is at hand. Only time will tell how this story ends.
Thanks for reading. You can find me on Twitter @ChrisBlec.
