Mt. Gox finally died and may be taking Bitcoin with it. Cause of death? English. Here’s how:
“Online trading,” “Buy/Sell”, “Bid/Ask”, “Deposit”, “Withdrawal”, “Market Cap”
What do these words make you think of? If you’re like most people in the developed world, you think of trading stocks. If you’ve never traded stocks before, you might think of a bank or an auction house.
Now, what images do you associate with these words? Skyscrapers in Midtown or Lower Manhattan? Well-dressed, wealthy men in suits? Leonardo diCaprio sinking a 170 foot yacht?
The word “exchange” is associated in the minds of most people with storied institutions like the New York Stock Exchange, NASDAQ and HKEx. Securities markets, while not without their problems, have helped to generate trillions in wealth over their hundreds of years of history and played a large role in the development of the prosperous societies in which they exist.
Bitcoin entrepreneurs are an ambitious lot, so it’s natural that they would want to adopt language associated with wealth and prosperity for their cryptocurrency businesses. But that language comes with a certain set of assumptions, assumptions that subconsciously influence people’s behavior.
The problem with Bitcoin exchanges is that they’re really more like street-side money changers than heavily regulated stock exchanges. So why not just call them Bitcoin Money Changers? Money changers aren’t sexy like exchanges…they look like this:
Not exactly what entrepreneurs forward-thinking enough to see the potential of cryptocurrency to change the world aspire to.
And herein lies the problem. No sane person would even consider leaving their money in the hands of a money changer for more than the time it takes to make the transaction. The money changer doesn’t trust you and you don’t trust him. That’s why he has iron bars on the front of his shop and 3 inch bullet proof glass and why you don’t let your eyes off your cash.
Call your business a money changer and customers take their money and run. Call yourself an exchange and even smart people that know better leave their money with you for way longer than is needed to make the trade.
And if you don’t want your Bitcoin to disappear, treat your favorite Bitcoin exchange as what it is, a money changer…not like it’s a stock exchange.
Unfortunately, when greed comes in to play, even otherwise rational people make poor decisions. “But it’s not like it’s a tiny hole in the wall shop with rusty bars run by a guy that hasn’t showered or shaved in 3 days…it’s an exchange!”
And that’s how English got Bitcoin Goxed.