Value as Cost of Switching

In 2008, Myspace was all the rage. It had taken over the Internet, and if you weren’t on Myspace then you weren’t at all. Headlines projected a bright future for Myspace, and if you did any work in the digital space at all and you didn’t include a plan on how to connect with people on Myspace you weren’t doing your job right. If it sounds familiar, that’s what everyone’s saying about Facebook today. Apparently everything we thought we knew turned out to be wrong. I was recently at Disruptive Change in Stockholm, where one of the discussions over lunch was on the subject of cost of switching. I made the argument that value with a digital product is extremely low compared to traditional asset thinking since switching is only a mouse click away. Now this could be seen as a slightly theoretical argument, after all, so what if Microsoft’s Skype deal wasn’t worth all that money. The LinkedIn IPO brought in a lot of suckers and something else will replace Facebook in the future - right? Enter Bitcoin. The latest and greatest threat to world order - a P2P currency that cannot be controlled and is currently doubling in value every few weeks. No matter how many stores accept Bitcoin today or in the future, switching to a service like it is only a mouse click away. What’s the value of Bitcoins then?