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