Does Cryptocurrency Have a Reputation Problem?

Cryptocurrency has once again found itself at the center of the media spotlight. What does that mean for the reputation of cryptocurrency?

The surge of attention is due to a variety of news stories in the first half of the year:

  • An increase of cryptocurrency market growth by $100 billion USD in just five months
  • The emergence of Ethereum and other major coins that challenge Bitcoin dominance
  • High-profile criminal activity including tens of millions of dollars stolen from Ethereum stolen and billions being money-laundered through the Russian exchange BTC-e
  • The Bitcoin scaling date and August 1st deadline for a hard fork

Cryptocurrency hasn’t seen this level of mainstream media attention since Bitcoin’s “big moment” in May 2014.

According to Google Trends, the topic of cryptocurrency is being searched on Google more frequently now than any other point in history (since Google’s search history is just slightly older than Bitcoin, it seems like a safe assumption).

The additional media attention has brought Bitcoin and cryptocurrency back into the forum of public opinion. This, of course, comes with its own list of pros and cons.

We are still in the early stages of Bitcoin, cryptocurrency, and blockchain. For each of these technologies, gaining additional public support will be critical to scaling up to their potential.

From a high-level, there are really two separate questions that can be considered:

  • Does cryptocurrency still have a negative reputation among the general public?
  • Does the reputation of cryptocurrency have any last impact on its long-term success?

Yes, Cryptocurrency Reputation is a Problem

“In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.” – Howard Marks

When you first told a family member or friend that you purchased cryptocurrency, what was their initial reaction?

In a positive scenario, you were met with optimism and curiosity. For many individuals, however, this conversation quickly turns defensive as others are skeptical about the legitimacy of Bitcoin and other coins.

“I’ve heard Bitcoin is a giant pyramid scheme…”

“Hopefully you don’t need that money back anytime soon…”

“What are you going to use that Bitcoin for, buying drugs on the black market?”

Generally, the negative sentiment surrounding cryptocurrency has little to do with personal experience and everything to do with media stories seen in the news.

bitcoin cryptocurrency

What activities harm the reputation of cryptocurrency?

  • Negative opinions held by politicians, investment advisors, or other public figures with a large audience
  • Association with illegal activities, black markets, and the Dark Web
  • Frequent hackings, both small and large-scale, that cost unsuspecting investors millions
  • Shut-downs of popular, widely-used cryptocurrency exchanges
  • Corrupt behavior involved with “crowdfunding” through ICO’s

Some of these activities are outside the control of the cryptocurrency community (opinions of public figures). Other criticisms, such as involvement with black or gray markets, may be a complex discussion with the general public as the cryptocurrency community often values privacy and the free market.

There are, however, some activities that harm the reputation of cryptocurrency. “There’s no such thing as bad publicity!” This maxim is put to the test each time a hacker (or group of hacker) steals from an innocent investor, each time a blockchain startup raises millions of dollars before disappearing, and each time a high-profile exchange or currency collapses.

The impact of such negative behavior extends outside of its immediate victims. When these stories are shown on TV or published in news outlets, it discourages new investors from joining the cryptocurrency market (and may even prompt current investors to withdraw their money). Bringing in “new money” is critical to funding new development and innovation in this technology-dependent market.

Will these stories damage cryptocurrency reputation enough to prevent the digital currency from going mainstream?

No, Cryptocurrency Reputation is NOT a Problem

“At its core, bitcoin is a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things”
– Peter Diamandis

Many of the factors that negatively influence the reputation of cryptocurrency have nothing to do with the technology itself. While sometimes it’s just a difference of opinion, many of the most damaging accusations are the product of corrupt individuals and organizations that have abused the technology for their own greed.

Surely, if reputation was a problem worth addressing, we would have seen changes to the traditional banking sector.

A 2013 survey found that the reputation of American banks was only slightly higher than the reputation of Congress. Banks had a lower reputation that big pharmaceutical companies, oil companies, and news outlets. If the banking industry can power through its bad rap, why can’t cryptocurrency also overcome its share of controversy?

Much of the struggle of cryptocurrency can be attributed to growing pains (plus the technology’s emphasis on privacy and decentralization). We’re still in the early days of cryptocurrency: the newly-named richest man in the world, Amazon CEO Jeff Bezos, could essentially trade his entire net worth for every publicly-sold cryptocurrency coin in existence.

Still, in spite of the “anything goes” Wild Wild West attitude that’s prevalent in the world of digital currency, that’s not to say there aren’t also positive PR stories coming out of the industry.

bitcoin cryptocurrency

What activities build the reputation of cryptocurrency?

  • Increased adoption and practical applications for individuals (such as Apple App store accepting the Dash Wallet)
  • Involvement and capital investment from established household-name corporations (see the Enterprise Ethereum Alliance)
  • Development of new blockchain startups that legitimize the cryptographic technology

Another activity that builds the reputation of cryptocurrency: increasing awareness and educating your interested friends and family about the basics of cryptocurrency. Respond to those who have questions, share informative articles on social media, and take the time to help those who are just getting started.

Does Reputation Matter?

At the end of the day, only time will tell how the public perception of cryptocurrency impacts its long-term performance.

“Does the reputation of cryptocurrency matter?” The answer to this question is a complex one as multiple factors all come into play. The future of cryptocurrency as a whole is much like the market at any given time – full of ups and downs, even on a good day.

What do you think:

  • Does cryptocurrency still have a negative reputation among the general public?
  • Does the reputation of cryptocurrency have any lasting impact on its long-term success?

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