Coinbase Ad Campaign Highlights Potential of Blockchain to Revitalize the Penny

Crypto exchange Coinbase advocates for the digitization of the penny through stablecoins, citing the inefficiency and cost of physical pennies.

In a new ad campaign coinciding with National Lost Penny Day, crypto exchange Coinbase has put forth the idea that moving the United States dollar to a “well-designed blockchain” could breathe new life into the seemingly obsolete penny. The campaign argues that stablecoins can revolutionize the use of pennies, making them more efficient and cost-effective. With $1.2 million worth of pennies lost annually and the cost of manufacturing exceeding their value, Coinbase suggests that digitizing the penny could save people and small businesses from the burden of legacy fiat systems.

The Inefficiency of Physical Pennies:

According to Coinbase’s post on Feb. 12, $1.2 million worth of pennies are lost each year, making their production costs nearly three times their actual value. This inefficiency raises questions about the relevance and practicality of physical pennies in today’s digital age. The campaign argues that by converting pennies into digital form through blockchain technology, their utility can be restored.

The Potential Benefits for Merchants:

Coinbase’s ad campaign also highlights the potential benefits that stablecoins and blockchain technology can offer to merchants. Austin Campbell, the founder of Zero Knowledge Consulting, emphasizes the advantages of “instant settlement, low-cost payments” that stablecoins can provide. For merchants operating on slim margins, even a slight reduction in transaction costs can have a significant impact on their profitability. By embracing stablecoins, merchants could potentially improve their cost structures and enhance their financial operations.

The Plea of the Animated Penny:

In a one-minute ad spot, an animated penny featuring former U.S. President Abraham Lincoln laments the current state of physical pennies. The penny highlights the fact that $1.2 million worth of them disappear annually and that it costs more to produce them than their actual value. The penny expresses a desire to be converted into digital form, envisioning a future where it can be used for transactions globally without fees or friction.

The U.S. Mint’s Continued Production of Pennies:

Despite efforts to discontinue penny production, the U.S. Mint plans to continue manufacturing them in 2024. In 2017, approximately 150 billion pennies worth $1.5 billion were estimated to be in circulation. The ad campaign raises questions about the necessity of producing physical pennies when their digital counterparts could offer a more efficient and cost-effective solution.

Challenges in Moving Finance Online:

While the potential benefits of digitizing the penny through stablecoins are significant, technical and logistical challenges remain. Austin Campbell, a self-proclaimed “stablecoin philosopher,” acknowledges the need to address the interface between traditional banking systems and the 24/7 live blockchain. The compatibility between systems that operate on different time frames and settlement processes poses a complex hurdle that needs to be overcome for widespread adoption.

Conclusion:

Coinbase’s ad campaign serves as a thought-provoking reminder of the potential of blockchain technology to revitalize the penny. By digitizing the penny through stablecoins, the inefficiencies and costs associated with physical pennies could be eliminated. The campaign highlights the benefits for merchants, who could experience improved cost structures and streamlined payment processes. However, challenges in integrating traditional banking systems with blockchain technology must be addressed for this vision to become a reality. As the debate around the future of the penny continues, the potential of stablecoins to transform the use of physical currency remains an intriguing prospect.