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WSJCoin: The Cryptocurrency That Never Was (#GotBitcoin?)

The Wall Street Journal embarked on a mission to create its own virtual token, but encountered hurdles along the way.

Earlier this year they had a brilliant idea—OK, maybe just an idea.

They cornered a pack of Wall Street Journal editors in a room and pitched an editorial project that could help our readers understand how the crypto industry is reshaping modern finance: they wanted to create The Wall Street Journal’s very own cryptocurrency, and document the endeavor.

After an initial gasp in the room and much skepticism, they got the green light to proceed. Of course, reporters, editors and videographers don’t launch commercial initiatives at the Journal; that’s done by business colleagues.

So ours was a journalistic exploration of how a cryptocurrency could work.

They traveled to Japan, bitcoin’s supposed homeland, and created what ultimately became WSJCoin.

When the idea was hatched, crypto mania was near its peak. The price of bitcoin had sputtered off its record high of nearly $20,000, but many investors were confident that the drop would just be a blip. Cash was pouring into initial coin offerings—a somewhat controversial form of fundraising by companies selling digital tokens. Scores of startups were convinced that new concepts for digital currencies would disrupt traditional industries.

What a difference nearly a year makes.

Bitcoin has lost over half its value so far in 2018, dealing a major blow to the cryptocurrency craze. Companies’ hopes of raising large sums of money by selling their own coins to investors have nearly vanished. Beyond bitcoin, dozens of other cryptocurrencies have also fallen sharply in value, erasing hundreds of billions of dollars in market value.

Our cryptocurrency experiment still proceeded. Despite the market’s plunge, many people in the industry still believed in the potential of digital currencies to disrupt and reshape entire industries. So they set off on a mission to find out what drives this somewhat murky market.

A Vivid Trip

They always saw the crypto world, with its overcomplicated jargon, as a stern and technical universe. Japan offered us a completely different sight. It seemed like an idyllic cryptocurrency paradise filled with colors and fun.

There was an all-female pop band called the Virtual Currency Girls. Band members wore French maid costumes and masks of different cryptocurrencies—reflecting the supposed anonymity of this market—while dancing to tunes about the wonders of blockchain. There were busy cryptocurrency exchanges and reclusive “miners” holed up in secret warehouses processing transactions.

There was even a university professor driving what he calls a “blockchain car,” a small electric vehicle whose power was automatically paid for using cryptocurrencies. It wasn’t a Lamborghini—often the vehicle of choice for bitcoin millionaires as crypto’s ultimate status symbol—but it was pretty cool nonetheless.

Then they found a developer to turn WSJCoin into a reality (though the cryptocurrency was never launched). He had moved from the U.S. to Japan, taken on a Japanese passport and name, and earned so much money in the crypto boom that when they met, he was looking to buy part of an island in Cambodia.

“They could build a great co-working space there,” said Makoto Takemiya, co-founder of Japanese fintech startup Soramitsu, while showing us photos of the place on his phone.

With Mr. Takemiya’s help, they created billions of WSJCoins and pitched the theoretical project to potential investors at prominent tech conferences in Hong Kong. Most people loved it, even though they didn’t have a specific plan for the currency or a business model.

No Shortage of Ideas

They produced a documentary about the project, and as soon as the film went live in early October, some readers and industry experts told them that they should have launched the cryptocurrency for real. “Get people to pay for WSJ products” with the coin, one reader commented. Some possibilities: subscriptions, per-article payments, WSJ merchandise, events. Another noted that the WSJ mobile app could also function as a crypto wallet.

So, was there an actual use case for WSJCoin? A way to differentiate it from the more than 2,000 cryptocurrencies on the market?

At a WSJCoin documentary premiere event in Hong Kong, several industry experts who spoke on a panel after the screening said there could be potential. “It’s not a completely crazy idea,” said Henri Arslanian, fintech and crypto leader for Asia at PricewaterhouseCoopers.

“If you really wanted to make WSJCoin successful, you’d have to figure out how you take what people really value about WSJ—whether it’s your content, your journalistic standards, your platform—and have that back the token itself,” says Jehan Chu, co-founder and managing partner at Kenetic, an institutional-investment and advisory platform for blockchain and cryptocurrencies.

Some people have more-drastic ideas. “You could reverse the equation, and actually pay people to read using your cryptocurrency,” Mr. Takemiya said at the time of WSJCoin’s creation. A media company could then monetize the attention of its readers, by selling data, and readers could buy products using the coins, he said.

A High Bar

Some news organizations are already experimenting with cryptocurrencies. A New York-based startup called Civil Media Co. was hoping to use proceeds from a token sale to make grants to news organizations and develop research about the journalism industry. Token holders would have been able to have a say, by voting, on which publications Civil Media supported. But the initial coin offering was a disappointment and the company has said it is exploring a newer, simpler token sale in the future.

Civil Media’s difficulties reflect a more widespread problem plaguing cryptocurrencies in general and the underlying blockchain technology.

“The technology must show actual utility,” Mr. Chu says. A self-proclaimed “bitcoin evangelist,” even he has concerns. Blockchain “must improve our lives,” he says. “It must do something which is better than what was done before. And to be fair, blockchain hasn’t fundamentally done that yet.”

For the long view, he looks back toward the turn of this century. The bursting of the dot-com bubble nearly 20 years ago was disastrous for tech stocks. But like most things involving new technology, many of those internet startups were well before their time.

“The fact that the bubble popped and the market crashed in tech did not fundamentally change the proposition that every single person’s life is better with this version of the internet than in 2001,” Mr. Chu says.

Two decades from now, the same might hold true for blockchain technology. Perhaps someday there may be a reason to revive WSJCoin.

Maybe it was a brilliant idea after all.

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