What Does the Attention Economy Mean in the World of Cryptocurrency?
With the amount of information increasing at an exponential rate there’s only so much we can pay attention to, and this has led to the age of the attention economy. The theory is that human attention is now a scarce commodity and a resource for others to collect.
Cryptocurrencies are increasingly taking part in this phenomenon as the number of altcoins has grown to where investor attention is now a scarce commodity for most new projects.
Where Bitcoin held over 95% of the total market cap in 2013, and was still over 85% of total market cap as recently as early 2017, these days it has dropped to just over 50% of the total market cap. And the primary reason is the thousands of altcoins that now exist as competition.
Competition for investing dollars and competition for every investor’s attention.
Hype and FOMO
Bitcoin was the only cryptocurrency for 2 years until they released Namecoin, a decentralized DNS system to make internet censorship difficult, in April 2011. Soon after, in October of the same year we got Litecoin. By the beginning of 2017 the number of altcoins, those coins that are not bitcoin, had grown to 717. It still wasn’t too difficult to follow the market though. Bitcoin had a market cap over $13 billion, and the closest competition was Ethereum with a market cap of $868 million. Roughly 25% of the altcoins at that time had no market cap.
By the end of 2017 the number of altcoins nearly doubled to 1373, but the biggest change for investors was the hype that entered the space as initial coin offerings (ICOs), reached a fevered pitch. Where 2016 had seen $100 million in ICOs, 2017 saw $6.6 billion raised in ICOs. With all that money came a deluge of hype and a huge fear of missing out (FOMO).
This hype and FOMO brought cryptocurrencies into the attention economy as it now became nearly impossible to follow all the new projects and ICOs. The hype served to “mine” the limited investor attention, and FOMO was a natural extension as investors worried about what their limited attention spans were missing.
In 2018 we have already seen nearly $22 billion raised in ICOs – leading to increased attention of regulators, some of which are starting to crack down on ICOs.
Regulators Step In
Late in 2017 the Securities and Exchange Commission created a Cyber Unit to investigate and prosecute fraudulent and scam ICOs. This increased the attention placed on ICOs and made the investor attention commodity more valuable. It also increased the quality of new projects.
Regulators in late 2018 are increasing their pressure on ICOs, looking to ensure they adhere to Federal securities laws. Investors get benefits from the protection increased regulator scrutiny brings to the space, but maybe not so much from the magnification of hype from the largest projects.
Focus on Great Stories
As 2018 ends and 2019 begins, investors will need to decide where to focus their attention. The hype will only get worse, but the best projects will move beyond hype to create compelling stories for their project and their brand.
This is the next stage of evolution in the attention economy. As teams come to realize that hype is no longer enough to attract the limited amount of attention investors have for cryptocurrency projects they will look for new ways to draw attention. And they’ll quickly see the best way is through stories.
Great stories will be the game changer for cryptocurrencies in 2019 and beyond.
Investors should pay attention to the stories behind projects. These stories may easily become the new “hype” that sends ICOs and existing blockchain projects “to the moon.”
As the cryptocurrency industry grew and matured, inevitably it became part of the attention economy. Now that it has, and the marketplace is crammed with new and existing blockchain projects all vying for attention, a new method for drawing the limited attention of investors is sure to emerge.
The best projects going forward are the ones that have a great product, a great story and get attention in the space. These will be the leaders in the cryptocurrency economy. You’ve seen it happen before in tech with the likes of Apple and Google – both of which were not the first technology companies or the first search engines. Now you’ll get to see the intersection of product and story create a new paradigm for grabbing investor’s attention in the new cryptocurrency economy.
Cahill Puil is an author, founder of Byte Media Group and Digital Vision, and host & producer of The Know Your ICO Show. Through Digital Vision he works with blockchain and technology companies to tell great stories that get visibility through PR.