Crypotocurrency Narratives 2016: OneCoin

From the very beginning, the most fascinating thing for me about cryptocurrencies has been the diversity of “narratives” that can be supported by and can incorporate cryptocurrency technology.

The Ur currency itself, Bitcoin, has at least a half dozen overlapping and competing “narratives” (“disrupting money”, “reinventing Wall Street”, enabling microcommerce, etc.), all based on the exactly same technology.

In addition, there are dozens if not hundreds of “alt coins”, which employ the same basic technology, but connect with a variety of “narratives”. In many cases, the cryptocurrency is incorporated in longstanding narratives about sovereignty, identity, and power—adding a technological expression to social groups and movements.

These cryptocurrencies are technically very similar to the original Bitcoin (I have referred to them as the descendants of the patriarch, Bitcoin). But their story and cultural context are different, and often radically different than Bitcoin. Above all else, with all these different uses of the same basic technology, we cannot say that cryptocurrencies are technologically determined.

You Shall Not Crucify the Internet on this Cross of Bitcoin

In the last year, amid the din of Bitcoin’s disintegrating “community”, yet another “alt coin” has risen to notice, attached to and incorporated in a tried and true narraitive.

OneCoin comes from rather murky origins in Bulgaria (but mysterious origins are part of the cryptocurrency story, no?), and has adopted the “narrative” of a multilevel marketing scheme. People are recruited to recruit more people, purchasing marketing materials (which appear to be the main product of the organization). I guess that you can mine OneCoin, but the “high profits” come from the sales.

Without joining up it is difficult to understand exactly what is going on, but the sales pitches are pretty much identical to other marketing schemes, with the cryptocurrency adding a flavor of novelty and also probably as a mechanism to implement their “rewards” and “points”. The fact that the crypto technology makes it easy to move funds across borders might make this a really efficient and hard to arrest method for operating a scam.

The OneCoin folks I have met (and yes they have definitely propagated 8,000 KM from Budapest to my town!) are nice, sincere people, who in other days might be equally at home selling magazine subscriptions or other products. They seem enthusiastic and some claim to be making decent money, though I certainly can’t confirm that.

My point isn’t to praise or condemn OneCoin (though I wouldn’t touch it myself with a bargepole). Rather, I wanted to point out how cryptocurrency technology has adapted to and be picked up by an old, reliable business model. All the designs and tropes of multilevel marketing so well worked out over the last century have been modified to incorporate a story about “the next big cryptocurrency”. While there is nothing really new about OneCoin’s business model, they have done a nice job of incorporating cryptocurrency into their pitch. I give them credit for that.

For me, the biggest mystery is whether they are actually using the cryptocurrency technology as anything other than window dressing. If you took away the crypto, would this work the same way? Or is there some special sauce added by the crypto technology?

 

Cryptocurrency Thursday

 

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