The key to getting consumers and merchants to use the digital currency will be incentives
Facebook Inc. FB +0.04% has big plans to remake the financial system with its cryptocurrency-based payments network. First, it has to get people to use it.
The social-media giant’s plan for Libra—the digital currency it is launching with a few dozen partners including Visa Inc., Mastercard Inc., PayPal Holdings Inc. and Uber Technologies Inc. —is the most ambitious yet to get consumers comfortable with the technology that underpins bitcoin. Facebook’s ultimate goal is for consumers to use Libra to pay their bills, buy things and send money to family members abroad, among other everyday financial transactions.
Facebook has a built-in advantage because of its massive reach; around one-third of the world’s people visit the site monthly. But persuading them to change their habits and adopt a brand-new technology could be a tough slog. Privacy concerns also could hinder adoption of the new currency, though Facebook has said it won’t mingle Libra users’ social and financial data.
Bitcoin is a case in point. Its pseudonymous creator, Satoshi Nakamoto, pitched the original cryptocurrency to the world a decade ago as a way for people to exchange value directly, without the intervention of banks or other middlemen. Yet it has failed to catch on as a payments platform.
Facebook’s toughest sell will be in the developed countries where established payment options such as cash and credit cards remain king, and in places like China, where mobile-payments networks dominate the market. Consumers in countries with limited access to banking services may be quicker to adopt the new currency.
The key will be incentives. Fiat currencies work for a simple reason: Governments decree that their citizens must use and accept them. Digital currencies such as bitcoin and Libra without ready-made communities have to give consumers a reason to use them.
0:00 / 0:00WSJCoin: To Understand Cryptocurrencies, We Created OneIn an original WSJ documentary, markets reporter Steven Russolillo ventures to Japan and Hong Kong to explore the universe of cryptocurrencies. His mission: create WSJCoin, a virtual token for the newspaper industry. Image: Crystal Tai. Video: Clément BürgeThe founding members of the Libra Association, the Geneva-based not-for-profit that will govern the currency, will be tasked with designing and spreading user and merchant incentives, which could include discounts.
Libra’s appeal, at least in the beginning, likely will depend on how many merchants and service providers sign up to accept it, said Dante Disparte, head of policy and communications for the Libra Association. It also needs to work like the established financial networks that consumers are accustomed to using, he said.
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Libra aims “to make the transfer of currency more efficient than the alternatives,” Mr. Disparte said.
Bitcoin’s development wouldn’t have been possible without incentives. The miners that provide the computing power to maintain and secure the network upon which it exists get a shot at winning a competition for newly created bitcoin.
“That was Satoshi’s brilliance,” said Dan Held, a bitcoin investor and entrepreneur. “It wasn’t even the code. It’s that the code aligned incentives among participants.”
Still, bitcoin has struggled to grow beyond its core base of users and aficionados because of technical limitations.
Libra won’t carry the force of law, and it will have little investment value. It is being designed as what is known as a stablecoin, pegged to the value of a basket of fiat currencies that will shield it from the big swings typical of bitcoin and its descendants.
Thus stability and cost—Libra user fees are expected to be minimal—are likely to be its biggest draws, said Eswar Prasad, an economics professor at Cornell University.
But trust could be a stumbling block, he said. The question of Libra’s stability will be tied to Facebook’s reputation, at least in its early years.
Facebook still has a “reasonable amount of trust among its users,” despite concerns about its privacy practices, Mr. Prasad said. But it is competing with the central banks that issue hard currency, he said, and that could be a difficult fight to win.
“For all of Facebook’s wealth and domination of the social-media space, it is difficult to see its currency becoming a durable and significant store of value,” Mr. Prasad said.
If a Prince Murders a Journalist, That’s Not a Hiccup
Frankly, it’s a disgrace that Trump administration officials and American business tycoons enabled and applauded M.B.S. as he
- imprisoned business executives,
- kidnapped Lebanon’s prime minister,
- rashly created a crisis with Qatar, and
- went to war in Yemen to create what the United Nations calls the world’s worst humanitarian crisis there.
Some eight million Yemenis on the edge of starvation there don’t share this bizarre view that M.B.S. is a magnificent reformer.
.. Trump has expressed “great confidence” in M.B.S. and said that he and King Salman “know exactly what they are doing.” Jared Kushner wooed M.B.S. and built a close relationship with him — communicating privately without involving State Department experts — in ways that certainly assisted M.B.S. in his bid to consolidate power for himself.
The bipartisan cheers from Washington, Silicon Valley and Wall Street fed his recklessness. If he could be feted after kidnapping a Lebanese prime minister and slaughtering Yemeni children, why expect a fuss for murdering a mere journalist?
.. M.B.S. knows how to push Americans’ buttons, speaking about reform and playing us like a fiddle. His willingness to sound accepting of Israel may also be one reason Trump and so many Americans were willing to embrace M.B.S. even as he was out of control at home.
In the end, M.B.S. played Kushner, Trump and his other American acolytes for suckers. The White House boasted about $110 billion in arms sales, but nothing close to that came through. Saudi Arabia backed away from Trump’s Middle East peace deal. Financiers salivated over an initial public offering for Aramco, the state-owned oil company, but that keeps getting delayed.
.. The crackdown on corruption is an example of M.B.S.’s manipulation and hypocrisy. It sounded great, but M.B.S. himself has purchased a $300 million castle in France, and a $500 million yacht — and he didn’t buy them by scrimping on his government salary.
.. In fairness, he did allow women to drive. But he also imprisoned the women’s rights activists who had been campaigning for the right to drive.
Saudi Arabia even orchestrated the detention abroad of a women’s rights activist, Loujain al-Hathloul, and her return in handcuffs. She turned 29 in a Saudi jail cell in July, and her marriage has ended. She, and not the prince who imprisons her, is the heroic reformer.
.. The crown prince showed his sensitivity and unpredictability in August when Canada’s foreign ministry tweeted concern about the jailing of Saudi women’s rights activists. Saudi Arabia went nuts, canceling flights, telling 8,300 Saudi students to leave Canada, expelling the Canadian ambassador and withdrawing investments. All for a tweet.
.. Western companies should back out of M.B.S.’s Future Investment Initiative conference later this month. That includes you,
- Mastercard,
- McKinsey,
- Credit Suisse,
- Siemens,
- HSBC,
- BCG,
- EY,
- Bain and
- Deloitte,
all listed on the conference website as partners of the event.
.. We need an international investigation, perhaps overseen by the United Nations, of what happened to Jamal. In the United States, we also must investigate whether Saudis bought influence with spending that benefited the Trump family, such as $270,000 spent as of early 2017 by a lobbying firm for Saudi Arabia at the Trump hotel in Washington. The Washington Post reported that Saudi bookings at Trump Chicago increased 169 percent from the first half of 2016 to the first half of this year, and that the general manager of a Trump hotel in New York told investors that revenues rose partly because of “a last-minute visit to New York by the Crown Prince of Saudi Arabia.”
.. If Saudi Arabia cannot show that Jamal is safe and sound, NATO countries should jointly expel Saudi ambassadors and suspend weapons sales. The United States should start an investigation under the Magnitsky Act and stand ready to impose sanctions on officials up to M.B.S.
America can also make clear to the Saudi royal family that it should find a new crown prince. A mad prince who murders a journalist, kidnaps a prime minister and starves millions of children should never be celebrated at state dinners, but instead belongs in a prison cell.
Hyderabad Public: This One School In Hyderabad Has Produced The CEOs Of Microsoft, Adobe, Mastercard And Wipro
Hyderabad Public School, situated in Begumpet, has produced the CEOs of Microsoft, Adobe, Mastercard, and even homegrown Wipro. Microsoft CEO Satya Nadella studied there, before leaving for Manipal and finally for the US. As did Adobe CEO Shantanu Narayen, who attended the school before doing his engineering at Osmania University. Mastercard CEO Ajay Banga was at Hyderabad Public school before moving on to Delhi University and IIM Ahmedabad, and Wipro CEO TK Kurien is an alumnus too. And if you thought this list was impressive enough, there’s more — Prem Watsa, CEO of Fairfax Holdings, who’s been called the Canadian Warren Buffet, is also from Hyderabad Public School.
.. It isn’t a mere coincidence that Hyderabad Public School, often called HPS, boasts such a formidable list of alumni. It was founded all the way back in 1923 and was modeled after Eton, and was meant to be a means for the the children of the Jagirdars of the seventh Nizam of Hyderabad to attain a world-class education.
.. . When the Jagirdari system was abolished after independence, admission to the school was open to all castes and creeds, and India’s first President, S Radhakrishnan, became the Chairman of the trust. The school was boys-only till 1984, when it admitted its first girl student. Today, the school is spread over 152 acres, and enrolls 3,200 students from PP1 to Class 12.
Which makes it no surprise that the school has produced famous alumni people in several diverse fields, not just business. Cricket commentator Harsha Bhogle studied here, as did MTV VJ Nikhil Chinappa. The school has also provided some cinema stars — it is the alma mater of Telugu actor Nagarjuna and Vivek Oberoi. And given its heritage, it’s also a favorite of the political class –former Andhra Chief Minister Kiran Kumar Reddy, Hyderabad MP Asaduddin Owaisi, and Parliamentarians Ajay Kumar, Pallam Raju, Bapi Raju Kanumuri all studied here. And to add a dash of glamour, former Miss India Diana Hayden is also an alumna.
It’s a fairly incredible bunch of personalities to have come from the same school, but perhaps HPS’s most striking achievement is producing 4 simultaneous CEOs of major corporations. India has been making a name for itself in producing top CEOs, but to have four of them from the same school in Hyderabad is remarkable.
Is the Business World All About Greed?
Laurence Fink, the chief executive of the investment firm BlackRock and one of the biggest investors in the world, shook the business world last week with an implicit threat to punish small-minded companies that “only deliver financial performance” without “a positive contribution to society.”
What’s driving the rethink isn’t a tingling of the tycoon conscience but brutal self-interest. Millennials want to work for ethical companies, patronize brands that make them feel good and invest in socially responsible companies.
Some of this is shallow and some is deep, but it’s authentic: Doing good is no longer a matter of writing a few checks at the end of the year, as it was for my generation; for many young people, it’s an ethos that governs where they work, shop and invest.
C.E.O.s tell me that this forces their hand. If companies protect groping scumbags, that hurts recruitment and they lose in the war for talent. Increasingly, a company that ignores social value loses shareholder value.
.. I believe the best industries for doing good are law (pro bono work) and certain pharmaceuticals (drug donation programs). That’s because they are held accountable by metrics: Big law firms are ranked by American Lawyer for their pro bono work (Jenner & Block is top of the list), and pharma donations are rated by the Access to Medicines Index (GSK is No. 1).
.. Other companies hailed as model global citizens include Unilever, Starbucks, Whole Foods, Mastercard, Danone and Chobani.