Considering the horrible 2018 that Bitcoin and other cryptocurrencies have had, PR pros might rightfully wonder if the digital currencies are still worth the time and investment. After all, Bitcoin's value has plummeted—the currency was booming at $19,352 on December 17th, 2017, but had a value of just $3,360 almost a year later, on December 12th, 2018. Add to this the fact that several cryptocurrency startups have been forced to close over the last year, and the digital gold rush seems to have ended.
Such news doesn't mean that cryptocurrencies are not still without their brand value, though. The transparency that a brand gains when trading with cryptocurrencies—and more importantly, implementing a ledger of crypto transactions known as blockchain—can be artfully used to assuage consumer distrust or questions about the honesty of your brand's dealings. That is, if you know how to talk about crypto, of course.
Here are 10 terms that can make communicators sound smart when discussing how using a cryptocurrency might help their businesses.
Blockchain
Understanding what blockchain is remains crucial to understanding how cryptocurrencies are traded and kept track of. Blockchain is essentially a digital ledger that records cryptocurrency transactions in chronological order and makes them publicly available.
That last part, about them being publicly available to view, is key for communicators, especially if your organization has a transparency problem related to its finances. Because blockchain cannot be altered, the ledger also serves as an authoritative voice of what went transactions went down should the legitimacy of your dealings ever be called into question. Just look at Ticketmaster, which partnered with a blockchain company that focuses on live events in order to bounce back from the many controversies around shady transactions that have dogged the brand for the past few years.
Design Goals
What are your organization's reasons for getting into blockchain? In the popular Blockchain 3 Layer Model, setting goals for the property that you want your smart contract, or the terms of a transaction that are written into lines of code, to have. It should be tailored to promote your business's specific needs from blockchain, and should be clearly communicated to those thinking of transacting with the business.
Digital Signature
While this one is pretty self-explanatory, it's still important. A digital signature lets you know who is transacting on your ledger. This is a way that your users can establish trust between themselves and your service.
Disintermediation
This term simply refers to the removal of middlemen from a transaction, which is a large draw for many potential blockchain customers you might take on. More specifically in Blockchain, the term refers to a removal of financial intermediaries from transactions like credit card companies or banks. Educating your customers on why disintermediation is a core principal of trading via blockchain can be a big boon for your business, or a big grey area. Communicate this concept carefully, particularly if you work in a regulated industry.
Hardfork
A fork is what happens when two paths emerge in a blockchain's potential protocol. But when a change to your blockchain's protocol makes previously invalid transactions, or blocks valid, it's called a hardfork. A hardfork usually requires customers to update their blockchain client. Those who are newer to blockchain might not understand why this is necessary, or what the hardfork's changes mean for the way that they can transact on your ledger in the future. Therefore, understanding the reasons behind a hardfork, and communicating them in a simple and clear manner to your investors, is essential.
Immutability
Immutability, which refers to a block that cannot be modified after it is created, is a key concept toward establishing trust on blockchain. Simply put, it means that blocks are chained together so that you can’t go back and change the contents of a block without having to change every subsequent block. Depending on the consensus protocol that your business has set (which should be clearly communicated and easily available to all), you can’t change blocks without everyone else agreeing to it.
Initial Coin Offering (ICO)
An Initial Coin Offering (ICO) refers to an event in which a new cryptocurrency sells advance tokens in exchange for upfront capital. Developers use ICOs to raise capital for their platform, and they can make for a good press release, too, acting as a news peg to announce that the cryptocurrency exists in the first place.
Master Node
While nodes refer to computers that are connected to a blockchain network, the master node is the computer storing a full copy of the blockchain in real-time. Like a server, it's always running. Understanding the function of a master node, and communicating about it, is essential toward building consumer trust around your blockchain—a secure and stable master node protects a transaction's privacy, allows transactions to happen instantly, and permits for governance, voting, budgeting and treasury systems to run around your cryptocurrency.
Private Key/Proof of Authority
Private keys are sort of like passwords for your blockchain—a string of data that grants you access to that blockchain's specific wallet. They are generated by Proof of Authority, a consensus mechanism that grants users the right to use their private keys in order make specific transactions for a specific wallet.
Pump and Dump
A notoriously shady form of securities fraud on the stock market, pumping and dumping occurs when traders artificially bolster the price of a stock through a deceptive public campaign or other nefarious doings after the stock is purchased cheaply. With newer and lesser known cryptocurrencies, this process is still alive and well. It's something that any communicator should look out for from within its own ranks, and seek partners to combat if their business is ever to be viewed as a legitimate user of blockchain.