Communications in the Age of Crypto - in Conversation with Coinbase

Martyna in conversation with Elliott Suthers, Communications Director, Corporate and Global at Coinbase

While it has its opponents and strong critics, data suggests that cryptocurrencies and cryptocurrency powered financial applications are here to stay.

The rapid growth of interest and massive sums that are being poured into this space suggests that banks and other traditional financial institutions, including fintech, should be looking for ways to embrace this technology.

Decentralise Fiance (DeFi) platforms are expanding into areas like lending, trading and derivatives. The objective is to create a multi-faceted financial system, native to crypto, that recreates and improves upon the legacy financial system.

Some banks, as well as major hedge funds, sovereign wealth funds and nation-states, are already invested in cryptocurrency and blockchain companies. Having said that, finance, historically very slow to adapt, yet again has been lagging behind when it comes to taking a stance and reclaiming the space.

I’ve spoken to key leaders in the communications space that advise brands operating in traditional finance, fintech and crypto space to discuss communication challenges and their takes on recent trends when it comes to brand strategy and communication challenges in the age of crypto.

First, ‘in conversation with’ five-part series, I’ve chatted to Elliott Suthers, head of Corporate and Global Communications at Coinbase. Founded in 2012, Coinbase was built on the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin. Today, Coinbase offers a trusted and easy-to-use platform for accessing web3 and the cryptoeconomy. Elliott leads the crypto giant’s media relations, financial communications, crisis and incident response, global go-to-market strategy and also supports Coinbase Ventures, of the world’s most prolific corporate investment arms.

We’ve seen a real mix in terms of how vocal fintech & FS brands are when it comes to communicating their stance on crypto. Why do you think this might be and how aggressive brands should be when it comes to proactive communication?

Elliott: Over the past few years we’ve seen support for crypto assets become a real differentiator for fintech companies and even more traditional financial services brands like Visa. There’s a simple reason for this: customer demand. Over the course of maybe five years, crypto has gone from being an asset that financial services companies were actively distancing themselves from, to being core to their value proposition. I don’t think there has ever been an asset class that has bridged that divide as quickly as crypto.

However I don’t think it’s quite mainstream yet. Mainstream to me is when you don’t even notice – or care – about it. It’s just there. Nobody talks about “surfing the Internet” or booking things on a phone application anymore. They’re simply part of our daily lives now. When you can pay someone, build something or invest your money using crypto or web3 without even noticing is when we really hit mainstream adoption in my view.

What is your take on Visa’s historic purchase of Cryptopunk NFT last summer? How can fintech and FS companies find their place on the spectrum between being dangerously revolutionary, and too traditional when it comes to positioning themselves in this important emerging space?

Elliott: I think the most important thing for any company – and especially financial services firms – to understand what crypto is and what it isn’t, what it can do and what it can’t do, before they dive in. Crypto is probably one of the most disruptive technology innovations of our generation, but that doesn’t mean that it will revolutionise every part of the value chain. We saw this well-meaning but irrational exuberance back in 2017/18 when people thought that blockchain technology was going to change everything from finance to supply chains. Does anyone remember KodakCoin? No, because it was a misguided attempt to breathe life into a dying brand by awkwardly associating it with a novel new technology.

If there’s one piece of advice that I could offer to financial services companies looking to get into crypto it would be “don’t be KodakCoin.” Really think through whether you’re providing more value to your customers through crypto or web3, as opposed to looking for short-term branding wins.

Picture 5-10 years from now: what happens to the firms that aren’t building a strategy to pivot into the crypto & decentralised finance space?

Elliott: I think it’s important to differentiate crypto and DeFi. One is a technology the other is an application of that technology. But either way, I don’t think that a hard pivot is needed. Much like the Internet augmented existing systems, crypto will allow traditional FIs and Fintechs to provide both new services in the form of DeFi or crypto-native activities like staking or governance. My sense is that once we see a few early movers offering these features, that others will follow pretty quickly. Ultimately, companies that don’t will be left behind, much like companies that didn’t embrace the Internet in the early 2000s.

What lessons can crypto brands learn from fintech & financial services companies?

Elliott: Tech companies love to follow the ethos of “move fast and break things,” but that approach doesn’t work when you’re being entrusted with peoples’ money. Banks understand this, but unfortunately not all crypto companies do. The majority of crypto companies live in this strange grey area between financial services and tech. Even a firm as big as Coinbase has at times questioned whether we’re a tech company or a Fintech. What this invariably leads to is an ecosystem of companies that are both trusted with their customers’ funds, while also trying to move at the pace of the tech space. So the one lesson I hope that crypto space can learn from traditional finance is the need to put trust above speed. Once a company – or ecosystem – loses the trust of its stakeholders, it’s almost impossible to earn back.

One last question, do you think crypto has an environmental problem or communication problem?

Elliott: It’s both. Proof of Work blockchains like Bitcoin or Litecoin use tremendous amounts of energy. There’s no debate about that. But where I think the communications failure lies is around contextualising that energy usage. Using Bitcoin as an example, the simple fact is that the only way mining makes financial sense is if it utilises the cheapest sources of electricity. This generally means buying up excess energy that would generally be wasted, and to use cheaper renewable sources. Take Sichuan, China, for instance. That single province is responsible for more than half of all Bitcoin mining. But what’s often overlooked is the fact that almost 95% of the energy used is excess hydroelectric power. This is electricity that is not only coming from a renewable source, but also energy that would have gone to waste.

Now all that being said, it’s clear that Proof of Work is not going to be the future of crypto. Like most technologies, crypto is evolving and becoming more efficient. And nowhere is this more evident than in the shift the industry is making toward Proof of Stake, a far more resource efficient – but equally if not more performant and secure – way for blockchains to operate. But change takes time. Even in crypto. So until we reach 100% Proof of stake, it’s critical that we continue to educate those that may have misperceptions about the actual environmental impact of crypto technology.

Thanks, Elliott for the insightful conversation and for being the first guest on my ‘in conversation with’ series!

Enjoyed this interview? If so, follow Elliott on LinkedIn and watch this space for the next article in this series.
Next week I will be speaking with Xochitl De Groot Ivory, Partnership Marketing Manager at Ava Labs, a web3 organisation building the Avalanche blockchain
Want to learn more about Crypto PR? Check Martyna’s half-day workshop on How to PR crypto.