00:00:00
Loney: So Bitcoin is the one
that a lot of people focus on.
00:00:03
It's obviously drawn the most
attention because of the pricing
00:00:06
component. But there are so many
different brands that are out
00:00:09
there right now in this
landscape. So how do you think
00:00:12
all of these brands are doing,
trying to kind of find their
00:00:15
place in what is a very crowded
landscape?
00:00:17
Dave Reibstein: So what it is that we see in
most industries, there's a
00:00:20
proliferation of various different
brands. Some of them survive.
00:00:24
Some of them don't survive. We
see that industry after
00:00:27
industry. And as John was just
saying, we had 10,000. Some of
00:00:31
them won't— won't continue to
exist. But it's not— I don't
00:00:35
think it's going to go down to,
you know, one or two. I think
00:00:38
there still will be several of
them that are out there,
00:00:40
everybody having their own
little angle that's there. And
00:00:44
there's some that are going to
be popping up and trying to be
00:00:47
specialized. Like Dogecoin. I
mean, come on. But it was like,
00:00:51
you know, it sort of caught
people's attention. It happened
00:00:54
to be there. Bitcoin is going to
exist for a long time. Ethereum
00:00:58
is going to be out there. There
are a few others that are going
00:01:01
to be there. And they're going
to dominate the market, but
00:01:04
there's going to be this long
tail of other brands that are
00:01:06
still out there. It's not like
we have to worry about shelf
00:01:09
space, like we do for physical
products.
00:01:12
Welcome to <i>The Ripple Effect</i>,
the podcast that takes you on a
00:01:16
journey through the minds of
Wharton faculty. I'm your host,
00:01:19
Dan Loney, and in each episode,
we'll be diving deep into the
00:01:22
inspiration behind the
groundbreaking research that
00:01:25
Wharton professors have
conducted, and exploring how
00:01:28
their findings resonate with the
world today.
00:01:32
Well, we know that
00:01:32
cryptocurrency is already
starting to have a— an impact
00:01:36
on a large segment of the
population. Not everyone,
00:01:38
though. But that brings in the
attitudes of people towards
00:01:42
cryptocurrency. Some people are
all in. Others, maybe not as
00:01:45
certain right now. And not only
will it have an impact on the
00:01:49
perceptions of the public, but
also on companies considering
00:01:53
using it as a tool, or the crypto
platforms themselves. This is
00:01:57
all part of research that is
being done here at the Wharton
00:02:00
School, and a pleasure to be
joined right now by Wharton
00:02:03
Marketing Professors Dave
Reibstein and John Zhang, who
00:02:06
have taken a deeper dive
into this.
00:02:08
Dave, great to see you again.
00:02:09
Well, good to see you again.
00:02:11
Thanks. John, great to see you.
It's been a while.
00:02:13
John Zhang: Good to
see you, Dan.
00:02:15
- Thank you. As we've
seen cryptocurrency develop, I
00:02:18
think one of the questions that
I have, and maybe a lot of
00:02:21
people have is, has it
developed to the point where it
00:02:24
is maybe the success that a lot
of people think it should be?
00:02:28
Dave?
- So,
00:02:29
it is certainly progressing and
continuing to develop. I don't
00:02:33
think it took off like people
were anticipating. You know,
00:02:37
it's had its ups and downs.
That's part of what's of
00:02:40
interest to us is the roller
coaster that it's been on. But
00:02:44
it hasn't replaced other forms
of currency, for sure, and to a
00:02:49
large degree, it's just an
alternative investment. And more
00:02:52
and more people are accepting it
as a currency that they want to
00:02:57
be investing in. But more and
more retailers are also starting
00:03:00
to accept it as well.
- John?
00:03:02
I really think that there is no
better time for cryptocurrency
00:03:06
than now. The reason is because
you see that with the Trump
00:03:11
selected as the President— and
definitely that there's going to
00:03:16
be a whole lot more
institutional support for the
00:03:18
cryptocurrency. And if you look
at the history, in fact, that
00:03:22
cryptocurrency was only less
than pennies in 2009. Now that it
00:03:28
is over $91,000 and—
- For Bitcoin.
00:03:32
So— yeah, for Bitcoin.
And you have
00:03:33
the total capitalization is
almost like $1.8 trillion. And
00:03:38
in fact, some people are
forecasting that— that's probably
00:03:41
very, very soon, it will hit a
million dollars. And also, some
00:03:45
people even predict a billion
dollars. So I think that there's
00:03:48
a long runway ahead of us for
sure.
00:03:50
So that's— let me play off of
that. Because one of the
00:03:54
conversation points is also
about the fact that right now,
00:03:57
the landscape of cryptocurrency
has so many different types of
00:04:01
cryptocurrency out there, and
whether or not we're going to
00:04:03
see a paring down of some of
these options as we move
00:04:06
forward, so that we get maybe
two or three true core
00:04:11
cryptocurrencies that we will
see relied upon. Obviously
00:04:15
Bitcoin, kind of one of them.
That, I would think, would
00:04:18
potentially impact the pricing
component of cryptocurrencies
00:04:22
moving forward, wouldn't it?
00:04:23
Absolutely. I think that— a
couple years ago, I actually
00:04:26
looked into this. There were over
10,000 different
00:04:30
cryptocurrencies circulating in
the marketplace. And you can
00:04:33
imagine that not every one of
them will survive. And so
00:04:38
obviously that there will be
sort of some kind of a
00:04:41
reorganization in that
particular industry, and
00:04:44
concentration is going to
increase. And I think that
00:04:47
eventually— and people probably
will come together on a couple
00:04:51
of those currencies. I cannot
imagine that every one of those
00:04:55
10,000 cryptocurrencies will
survive.
00:04:58
So Bitcoin is the one that a lot of
people focus on. It's obviously
00:05:03
drawn the most attention because
of the pricing component. But
00:05:06
there are so many different
brands that are out there right
00:05:08
now in this landscape. So how do
you think all of these brands
00:05:11
are doing, trying to kind of
find their place in what is a
00:05:15
very crowded landscape?
00:05:16
So what it is that we see in most
industries, there's a
00:05:19
proliferation of various different
brands. Some of them survive.
00:05:23
Some of them don't survive. We
see that industry after
00:05:26
industry. And as John was just
saying, we had 10,000. Some of
00:05:30
them won't— won't continue to
exist. But it's not— I don't
00:05:33
think it's going to go down to,
you know, one or two. I think
00:05:36
there still will be several of
them that are out there,
00:05:39
everybody having their own
little angle that's there. And
00:05:43
there's some that are going to
be popping up and trying to be
00:05:46
specialized. Like Dogecoin. I
mean, come on. But it was like—
00:05:50
you know, it sort of caught
people's attention. It happened
00:05:53
to be there. Bitcoin is going to
exist for a long time. Ethereum
00:05:57
is going to be out there. There
are a few others that are going
00:06:00
to be there, and they're going
to dominate the market, but
00:06:03
there's going to be this long
tail of other brands that are
00:06:05
still out there. It's not like
we have to worry about shelf
00:06:08
space like we do for physical
products.
00:06:11
So with the pricing component,
it's interesting because— and
00:06:14
part of the work that you're
doing is in and around consumer
00:06:17
attitudes— that with the
pricing, the way that it has
00:06:20
fluctuated, you know, over the
last several years, you would
00:06:24
think that there might be more
skepticism around— around
00:06:28
cryptocurrency than there is.
But there still seems to be very
00:06:31
much a fervor about what it
might be in the years ahead.
00:06:36
I think when you look at that,
the sort of Bitcoin, and there
00:06:39
is absolutely no intrinsic value
to it. Right? So it's basically that it
00:06:44
is a sort of electronic
currency, and there is no
00:06:48
government backing. It's not like
gold, and you have some kind of
00:06:52
intrinsic value. So, which means
that ultimately, the price
00:06:56
really hinges on the collective
beliefs amongst the customers,
00:07:00
the investors. If they believe
that this particular currency is
00:07:03
going to become a store for
value and for the— for, for
00:07:08
the vast economy in this
country, and— or become the unit
00:07:12
of exchange, you can imagine
that value can increase
00:07:15
tremendously, simply because
at this point you still have the
00:07:20
institutions, like some of the
legitimate institutions. They
00:07:23
have not been part of this
particular asset class yet. And
00:07:27
also that you see that some of
the country, like El Salvador
00:07:31
and, begin to actually use the
cryptocurrency for the national
00:07:34
economy. In fact, the—Trump even
proposed that we're going to
00:07:37
have the strategic reserve of
Bitcoin and so on and so forth. As
00:07:40
more countries are doing that,
obviously that— the value will
00:07:43
increase, and there's long, long
runway ahead of it. But most
00:07:47
importantly, if you look at this
particular type of currency, it's
00:07:51
really the collective belief
that matters. So which of this
00:07:54
means that customer attitudes,
sentiments, and all the
00:07:57
macroeconomic factors will
impact on the prices. So I think
00:08:01
this really depends on whether
you are optimistic about
00:08:05
the future or you're pessimistic
about the future. You look at
00:08:08
the fact that it doesn't have
intrinsic value, versus that
00:08:11
whole— so many people are so
enthusiastic about it, in fact,
00:08:15
that Bitcoin has gone through up
and downs up to now, but yet it
00:08:19
has really taken off
recently.
00:08:21
So I think it's interesting
thinking about, we talk about
00:08:25
cryptocurrency. Is it an
alternative currency, or is it
00:08:29
an investment? And I think most
people are viewing it like an
00:08:34
investment. But let's couple
that with what John was just
00:08:36
saying. Most investments that we
make— well, I'm going to own
00:08:40
some of this share of a company.
There's something behind that.
00:08:45
And you know, as John was saying,
there's nothing that— you know,
00:08:48
there's no intrinsic value
that's here. Company sales,
00:08:51
they— you know, and they— they
end up generating cash for us.
00:08:54
Here, it's total speculation
that's there. And that's why
00:08:59
what we're working on, which is
looking at consumers' confidence
00:09:02
in it, is— is part of what's
highly tied to what the
00:09:05
particular prices are, and
people's continued faith in
00:09:09
this. And then bringing on
others that are— you know, as I
00:09:12
say, the retailers and banks and
everything, that are showing
00:09:16
their confidence in it. It
basically is this huge
00:09:19
speculation. Almost like tulips
back— back in the old tulip
00:09:23
market in Holland.
00:09:25
And so this is leading to a
confidence index that you and
00:09:31
your colleagues are putting
together.
00:09:32
That's right. We have been collecting,
month— every month for the last
00:09:36
several months— I think we're
now at 18 months— that we take a
00:09:40
survey of 1000 people across the
country, representative of the
00:09:46
United States, and we ask them a
series of questions. Do you own
00:09:49
crypto? But we also ask them
how confident they are in the
00:09:53
currency. And we have three
questions that we ask them about
00:09:57
that, which is, how confident
are you about it for
00:10:01
yourself? How confident are you
for the economy? Do you want to
00:10:06
invest more in cryptocurrency?
And trying to get some sense of
00:10:10
how they personally feel. We're
trying to relate that to the
00:10:14
price of crypto itself.
00:10:17
And we
would anticipate that as people
00:10:20
are more confident, we're going
to see prices going up, and the
00:10:25
other direction. As prices go
up, people are more confident.
00:10:28
So these sort of go hand in hand
together.
00:10:31
So going back to the pricing
component, then. Having an index
00:10:35
that can be used as a tool to
understand from your
00:10:38
perspective, how do you see
there being a potential impact
00:10:42
on the pricing component moving
forward?
00:10:44
Well, here's the sort of a
basic— the fundamentals. And
00:10:48
there are about 20 million
Bitcoins that are already mined.
00:10:52
And there are additional 1
million that will be mined in
00:10:56
the future. I think the last
coin is expected to be mined
00:11:01
around 2140. So that's a
long time away. And— but in any
00:11:08
case. So given that supply is
mostly fixed, right? You can
00:11:12
imagine the price of the Bitcoin
will depend on the demand. So
00:11:16
that demand, obviously, you're
going to depend on the
00:11:18
confidence of consumers. So
that's why we are looking into—
00:11:21
looking in that direction. And
hopefully what we could do is to
00:11:25
look into the consumer
confidence, see if that could
00:11:28
forecast the price change in
the future for Bitcoins. Like—
00:11:32
the way, like the consumer
confidence by Michigan. - Sure.
00:11:37
- And what— they predict how the
00:11:39
stock market or economy
is going to do.
00:11:41
And we're going to— we are
pursuing that direction of our research.
00:11:45
Thank you you for listening
to <i>The Ripple Effect</i>.
00:11:46
We hope you found this
episode
00:11:48
informative and
engaging. Don't forget to
00:11:50
subscribe and leave us a review
so that we can continue to bring
00:11:54
you the best insight from the
Wharton School.
