Bitcoin is the world’s first online currency, created by an anonymous programmer and used in peer-to-peer (P2P) transactions in which the participating parties choose to recognize its value. Gold is perhaps the world’s oldest currency, and it has always been a medium of exchange because people agree to value it. So they’re both social media, and they’ve both crashed lately. There’s lots to learn from these concurrent crises.
Brands are social too, only not the way you might think. Social is the platform for value, not value itself. Like transactions in bitcoin or gold, value is what comes out of social interactions. Those outcomes can go up or down depending on where and how they’re applied. Therefore, brands are currency that have no inherent worth, no independent existence from what people do with them. The only thing marketers can do, like gold miners and bitcoin hackers, is choose what to put into circulation.
So your brand is only as good as your last transaction. We marketers talk a lot about brand equity, but the social basis for value suggests that brands are constantly moving targets. People assign a new price every time they transact, either sharing information with one another, or giving their money in exchange for a product or service. Bitcoin were worth lots more a few weeks ago, but nobody now is paying that price because of it. Yesterday’s price is today’s MSRP just waiting to get violated. The market is constantly updating our brands. Less branding, and more P2P’ing.
Reality is inescapable. Gold prices move slower and the commodity has endured forever because, in part, it’s a tangible thing. When people price it, they’re not only pricing one another’s expectations of value, but assigning it to something that can be objectively weighed, handled, and used to make things. Turns out that this reality may well ground it, literally, in a way things wholly virtual as bitcoins are not. When we talk about brands as ideas — and not the collection of real behaviors by real people — we may be shortchanging our valuation prospects.
After all, markets are irrational. The social basis for brand value is a scary proposition, because there’s no guarantee it’ll be accurate or fair. The hope is that markets level inaccuracies over time, but that allows for lots of bubbles and crashes along the way. People can buy gold or use bitcoins for the wrong reasons at the wrong times, and then pay for (or profit from) their choices later on. It’s their fault. But if we let consumers buy our brands for wrong or unsupportable reasons, their future disappointment will be our fault, not theirs. Therefore, we have a vested interest in constantly improving the quality of social interactions, not the quantity or hilarity of them.
Someone is always trying to game the system. I’m not sure what there is to learn from this observation, but I find it fascinating that the Winklevoss twins have been hoarding bitcoin in a way reminiscent of past efforts to corner markets (the Hunt brothers tried to corner silver in the 1970s, for instance). There are huge differences, too — since there’s no “natural” limit on how many bitcoins can be created, nor any associated costs to their use or storage, it’s kinda like buying real estate in Second Life, and I have no idea what they’re really up to, anyway — but maybe it’s a reminder that there are always forces trying to control the conversation, or at least influence it in a direction that may not be beneficial to your interests.
What’s old is new again. We’re living in a Social Age, but we always have. The differences are in the technology we use to deliver conversations and transactions, and the theology we invent to explain it. Thinking about brands as currencies for which social interaction determines value should affect the what, how and when of marketing content creation. Like gold and bitcoin, we’re not building or accruing anything, but rather sharing and sustaining what people choose to do with our brands. We can’t control it, but we can certainly help make the market more efficient.
And how about those prices for tulip bulbs?