Having a good plan is always the key in business, but often lack of having the right direction, or market forces, can disrupt the success of your plan. Two intertwined examples of this are Dell Computers and Motorola. Both companies were sky-rocketing darlings of the early 2000s. Dell leveraged the adoption of the internet and home computing to sell cheap home personal computers directly to consumers. Motorola at the same time period had the top selling mobile phone, the RazR (Newman, 2010).
Both companies eventually fell from stardom for similar reason, the adoption of the smartphone. Motorola failed because they focused on what was driving innovation of past mobile phones, which was to make smaller and sleeker versions. The general lack of touch screens made the existing web-browsers and email available on cell phones clunky and unused. Dell had a similar problem of focusing on the past. Powerful and inexpensive laptops were relatively new, and starting to take over the desktop space, and Dell saw their growth as exponential as they took over the desktop market. For both companies, the dynamic of a cell phone paired with a laptop as the conventional technology suite was the plan.
For my dissertation topic, Central Bank Digital Currency (CBDC) what would derail the adoption of the technology, I see as three main issues: 1) corporate lobbying, 2) social distrust of digital assets, and 3) misunderstanding of the technology
For the past few years, corporate lobbying (mostly from Banks) has been heavy in terms of pushing back on CBDC. Early in 2022 legislation was pushed by Congressman Tom Emmer of MN to actually ban CBDC. As most industries in the US, the moats large companies have over their sectors are defended at all costs through back-channel lobbying of US lawmakers.
The more prevenient issues of digital assets as a whole have recently started to come to fruition. The fall of FTX and Binance, although issues of fraud and due diligence, have shown a poor light on the asset class. Similar to how the fall of Countrywide and Lehman in 2008 ended the sub-prime mortgage market, a similar fallout of digital assets will likely happen due to current issues of digital assets. Similar to how sub-prime quickly resurfaced under different names, digital assets will also recover but likely be less in the open as they have been.
Lastly, and probably most impactful is that what a CBDC is largely misunderstood. Mainly that CBDC already exists under the name “Bank Reserves”, which many don’t understand as digital assets. As articulated in the book The Deficit Myth, Kelton (2020) describes the underlying functions of the federal reserve, and how they leverage commercial banks as their decentralized agents of the Fed to create money. The US Dollars that are actually printed by the reserve, are digital assets they provide to banks. Now, while these CBDCs don’t leverage cryptography in any way, they are still real time distributed US dollars. As many things that end in a whimper rather than a bang, CBDCs are sadly on the same path I believe. That the conversation will just eventually end, as consumers no longer care and move on with their lives.
References:
Kelton, S. (2020). The deficit myth. John Murray.
Newman, R. (2010). 10 Great Companies That Lost Their Edge. US News Magazine money.usnews.com/money/blogs/flowchart/2010/08/19/10-great-companies-that-lost-their-edge
Meyer, T. (2022). Emmer Introduces Legislation to Prevent Unilateral Fed Control of a U.S. Digital Currency. US House of Representatives. emmer.house.gov/2022/1/emmer-introduces-legislation-to-prevent-unilateral-fed-control-of-a-u-s-digital-currency
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