While Bitcoin was simply unleashed upon the world by Satoshi Nakamoto in early 2009, other cryptocurrency projects have had the benefit of raising funds through crowdfunding campaigns before the projects have even launched. Additionally, some projects use part of the block reward to pay for things like development and marketing.
It is thought that these added budgets for promotional activities could help altcoins compete against bitcoin’s network effects, but there is a fatal flaw with this line of thinking.
Bitcash and Dash Projects in Venezuela
On a recent episode of The Coin Pod, Venezuelan product designer Alejandro Machado told host Zack Voell that he is not aware of much bitcoin evangelism in the South American country. However, Machado noted that the Dash and Bitcoin Cash (Bitcash) communities have been quite active in the region.
“Apparently, I’ve heard, there are some people in the Dash team that have salaries in Dash and basically their mission is to go around and convince merchants to set up shop and start accepting Dash,” said Machado.
These sorts of projects by altcoins are not at all uncommon or new. Back in 2014, the Worldcoin community raised funds for building new water wells in Africa and the Dogecoin community paid the Jamaican bobsled team’s travel expenses for the Winter Olympics in Sochi. Even while writing this article, I received a press release regarding a new documentary about Dash’s projects in Zimbabwe.
It’s obvious that these types of initiatives are designed to promote their related altcoins, and the reality is any cryptocurrency is probably better than the Venezuelan bolivar at this point. According to Reuters, the bolivar is down 98% against the US dollar over the past year.
The two specific projects discussed by Machado and Voell during their conversation were Dash Caracas and EatBCH. Voell pointed out that EatBCH specifically has received some criticism as nothing more than propaganda for Bitcash. While both Voell and Machado admitted it’s difficult to criticize a charitable organization that is obviously having an impact, they also touched on the perceived issues with these types of programs.
“If you’re just doing this for a very short-term gain and strengthening your community, [then] you’re not providing lasting value to these people,” said Machado.
All Roads Lead to Bitcoin
While these types of publicity stunts may be useful for promoting specific altcoins over the short term, Machado sees bitcoin as the ultimate beneficiary of these programs.
“It seems like, obviously, they’re trying to make their coin stronger and gain adoption for their coin, but in reality, what they’re also doing is they’re making cryptocurrencies as an asset class [or] as a whole a more legitimate thing in the eyes of Venezuelans,” said Machado of the Bitcash and Dash programs in Venezuela.
Of course, this is not a new phenomenon. How many individuals who were caught up in the Dogecoin phenomenon back in 2014 eventually became interested in bitcoin? How many people who were swept up in the initial coin offering (ICO) hysteria of 2017 learned about bitcoin along the way? Even Venezuelan President Maduro’s petro token probably had the unintended consequence of informing more Venezuelans about bitcoin.
The key issue Bitcash, Dash, and pretty much every other altcoin face is a lack of liquidity. Machado noted that his contacts on the ground in Venezuela have told him Bitcash is not liquid at all in the country.
Related to this point, Machado later added that, while cryptocurrency miners have moved away from mining bitcoin, they still mostly transfer their altcoin mining profits to bitcoin as soon as possible.
“Bitcoin would actually be much more useful there because there’s a lot of exchanges that accept it, LocalBitcoins trades over a million dollars in value some days in Venezuela, and the USD and bitcoin and the bolivar and bitcoin are very liquid pairs,” said Machado.
In Machado’s view, the most liquid cryptocurrency, which has always been bitcoin, creates the best chance for Venezuelans to create a parallel economy outside of the control of Maduro’s regime. Additionally, a marketing campaign for an altcoin is actually a marketing campaign for the entire cryptocurrency and blockchain ecosystem, which means the most liquid cryptocurrency is the one that will benefit most.
https://coinjournal.net/op-ed-why-altcoins-cant-use-marketing-budgets-to-overtake-bitcoin/
