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Bitcoins Are All The Rage, But Can It Last?

This past week, the media and investors alike have become enraptured with decentralized virtual currencies, and the star of the show is Bitcoin, the world’s first virtual currency. In 2009, Bitcoin presented data mining as an alternative mechanism for introducing currency into circulation, awarding miners with bitcoins for solving complex math puzzles. Bitcoin operates by a peer-to-peer structure, with computers working together to process transactions, and the currency is capped at a fixed supply of 21 million Bitcoins.

bitcoin

Proponents of Bitcoin advocate its potential to spark a legendary wave of financial innovation and improve international payments. With its low exchange fees, Bitcoin provides an opportunity for developing countries, with little access to financial services, to easily send and receive digital payments. Last Thursday, the LA Times reported that the University of Nicosia in Cyprus will accept Bitcoins as tuition payment and offer a master’s degree in digital currency, with hopes that the government will make Cyprus a Bitcoin hub. A plethora of other virtual currencies have emerged, such as litecoin, alphacoin, fastcoin, peercoin, bbqcoin, and fireflycoin, sharing the same underlying principles as Bitcoin with different algorithms. Bitcoin is the most widely accepted currency, with an implied value of $6 billion.

Virtual currencies have also ignited distrust and fear due to associations with money laundering, drug trafficking, and other illicit activities, sparking Senate hearings about potential regulation. Bitcoin was the digital currency utilized in Silk Road, an online market that funneled illegal drugs and services. Concerning virtual currencies, Ben Bernanke wrote that the Federal Reserve “does not necessarily have the authority to directly supervise or regulate these innovations or the entities that provide them to the market.” However, the Federal Election Commission denied Bitcoins as legitimate funding for political action committees last Thursday. Although each Bitcoin contains a digital record of where it has been since creation, PACs have to publicly identify their donors, and Bitcoins do not provide private names.

bitcoin price graph

A graph of Bitcoin’s price since November 2012.

With irrational exuberance, investors optimistically bid up Bitcoin’s price to a high of $900The recent speculative activity has amplified uncertainty around the currency’s actual value. This made me think of a discussion I had this Wednesday in my ‘Mapping Victorian England’ literature class, in which we examined Haggard’s King Solomon’s Mines, an adventure novel about Englishmen journeying through Africa in search of diamonds. A witch named Gagool mocks the Englishmen, “there are the bright stones that ye love, take as many as ye will; take them, run them through your fingers, eat them, drink them!” In class, we discussed that diamonds have no intrinsic value; instead, a diamond’s value is derived from society’s determination of worth. Just as diamond miners cannot eat or drink a diamond, the data miners cannot directly consume a virtual coin – but this does not make them worthless. The value of a Bitcoin is determined by the products and services that it can purchase. Bitcoin has been ridiculed as a worthless currency, but there is clear demand, with agents willing to accept Bitcoins as payment, and so they have real economic and societal value. Although the recent price rally was driven by speculation, the markets are attempting to price Bitcoins, and only time will reveal what this price will be.

Do you think Bitcoin and other virtual currencies will revolutionize the financial system? Should the government pass regulation, or should virtual currencies remain decentralized and open?

-Kara

Twitter’s New Role in Business

Despite Warren Buffett’s record of shunning new technology, the Chairman and CEO of Berkshire Hathaway joined the social media trend and created a Twitter account, @WarrenBuffett.  Within 10 minutes, Buffett had 10,000 followers, and 3 hours later he already exceeded 140,000 followers. However, Warren Buffett remains wary of new technology and social media. Michael J. De La Merced of The New York Times reports that at Berkshire Hathaway shareholders conference, Buffett disagreed with the recent US Securities & Exchange Commission decision to allow companies and executives to release material information on social media sites, such as Twitter and Facebook. Not only is this a threat to Berkshire Hathaway’s press release service, Business Wire, but false information can mislead traders and investors.

buffett tweets

In the past, most firms on Wall Street shut off all access to social networks on their systems. In April, the SEC decided to allow public companies to disclose corporate information through social media. According to Bloomberg, it is the first financial information platform to incorporate Twitter into their system, allowing traders and analysts to monitor and analyze real-time tweets. Twitter updates by a select group of news services, financial writers, economists, and bloggers are streamed live to Bloomberg terminals, which are used by more than 300,000 employees on Wall Street. The Twitter news flow can be adjusted to light, medium, or heavy, and can also be filtered by company, industry, or market.

There are risks associated with relying upon social media for credible information. The New York Times reports that on April 23, a false tweet from the official Associated Press Twitter reported that an explosion at the White House injured Obama. Following the tweet, the Dow dropped 150 points and the S&P 500 lost $136 billion. The market quickly recovered when traders realized the Tweet was a hoax, and it was later discovered that the tweet was issued by a group of Syrian hackers. This has raised concerns about the combination of social media and electronic trading. Twitter accounts can be hacked, and the spread of false information can have serious consequences for high frequency traders who trade rapidly based on news and information.

Do you agree with the SEC’s decision to allow companies and executives tweet corporate information? What do you think the role of social media should be in finance and business?

– Kara

5 Tips for Getting the Most Out of Graduate School

Senior year of college the question that most students dread to be asked is “so, what are you doing next year?” This question is asked by well-meaning teachers, friends of parents, strangers on the bus, and worst of all: peers who already have a job. For me, the thought of leaving the comfortable “Hopkins bubble” was terrifying. As an Economics major, I recognized the uninspiring (although becoming less so) job scene and decided that I needed another year of growing up before entering the working world. I applied to graduate school and decided to get my masters degree in International Management at Trinity College in Dublin, Ireland, hoping for a few more years of college. At first, I was disheartened by the differences, I even missed MSE. After a JHU_logo_smfew months I started to appreciate the dissimilarities and find my place. Hopefully these tips will help you during the transition time by accurately preparing you for the graduate school experience.

5 Tips for Getting the Most Out of Graduate School

1) Recognize that it is not college.
2) Network.
3) Find a routine.
4) Stay connected.
5) Capitalize on what you know.

1) The sooner you stop comparing everything to college, the sooner you can enjoy the graduate school experience. Although you take classes, have classmates, and take part in social activities, graduate school has a different feel than college. People don’t go out every night with their friends (at least the ones who remain in the program), and sometimes you have to go to the library alone to study. Teachers expect a lot more outside reading and discovery to support class activities. It’s a different pace than college and fun and exciting in a different way, but trying to live the college lifestyle will just leave you disappointed.

TCD-Logo-Square
2) In graduate school, everyone comes with different life experiences and backgrounds. In my experience, other students and lecturers are your greatest resource. You might find that lecturers or guest lecturers will give out business cards at the end of a class. They are not doing this to be polite or because they have extra business cards, they are trying to network with you. Follow up! I got my first job out of college by emailing a guest lecturer (the CEO of a local bank) with my ideas, and now I am a strategy specialist at his bank. One of my classmates knows the brand ambassador for Jameson and will be traveling next year speaking to bar tenders about the brand. If you’re brave enough, make the first move and give your contact details to people you find interesting, the worst that can happen is they won’t contact you.
3) Although sleeping until 1 pm everyday might sound like a dream come true, it is easy to do the bare minimum in graduate school and miss out on some great experiences. When I arrived in Dublin, I had no friends and no job. I had class from 2pm until 8pm everyday and slept much of the rest of the time. After a few weeks I realized that as much as I missed college, I also missed all of the things I did in college. To supplement my school schedule, I joined some clubs, found a gym, signed up for extracurricular activities like sailing and self-defense, and took advantage of the seminars at my University. Living alone and out of a dorm in graduate school, it is easy to become introverted. I have found that establishing a schedule of fun activities has allowed me to naturally make friends with whom I share interests as well as giving me more confidence in school.

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4) Just because you have moved on from Hopkins, doesn’t mean that you need to remove yourself completely. Chances are you are one of or have at least a few of the following type of friends: (1) The engineer who is always working on secret government projects yet somehow is allowed to use Facebook at work. (2) The friend who moved to a foreign country to teach something and periodically posts pictures of them holding children on Facebook. (3) The friend who went to some kind of graduate school at Hopkins and makes you jealous by “checking in” at PBR downtown. (4) The friend who moved to DC and is going to law school, becoming a politician, or both and writes political Facebook messages. What do all of these friends have in common? They all have access to social media. Facebook has allowed our generation to stay in touch with all of our friends, no matter where they are, and that’s awesome. Use it! Moving on doesn’t have to mean forgetting.

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5) The most important thing I have learned in graduate school is to capitalize on what you know and don’t sell yourself short. The things you learned in Hopkins can become your secret weapon. The Integrated Marketing Communications course taught me how to use social media to generate brand awareness, so this year I created a social media strategy at work. The Blogging, Editing and Copywriting course taught me about SEO, SEM, Google adwords and other tools that I use everyday at work and in school. Graduate school focuses on sharing knowledge and expanding your skill set. People will be impressed with anything you know, and you’d be amazed how handy it can be to know the history of personal hygiene from a class in Museums Studies, when you are trying to write a history of branding for toothpaste. Other language skills are also very useful in impressing employers.

If you get nothing more from this blog entry remember this: It’s scary to leave Hopkins behind and go into the world, but graduate school is a great experience if you are willing to commit to it.

–Alexandra Clionsky ’12

Cuban Entrepreneurship

Over winter break, I spent three weeks in Cuba for a Johns Hopkins Intersession course called “Cuba and the US: Worlds Apart.” Before the trip, I envisioned the country as strictly socialist, with all Cubans employed by the government, but my assumptions proved to be completely inaccurate. In Havana, I was immediately bombarded by a multitude of entrepreneurs on every street corner – selling souvenirs and books, providing taxi services and food. Entrepreneurship and hard work are highly valued in Cuba, with many Cubans working multiple jobs and inventing creative ways to make a living.

Havana!

Havana!

Recently, Raul Castro took significant steps to open the Cuban economy, and Cuban entrepreneurs can now attain licenses to operate legal, private businesses. With government jobs and rations providing barely enough to scrape by, Cubans are attracted to entrepreneurship, especially in Havana, where restaurants, shops, and artists clamor for customers.

Due to the embargo, Americans cannot invest in budding Cuban entrepreneurs, but other foreign nations are reaping the benefits of investing in Cuban enterprise. One of my favorite spots in Cuba is the Museo de Chocolate, a popular chocolate shop sponsored by the Belgian government. The Havana Planetarium, a destination so popular that reservations are required, is supported by Japan and Denmark. The United States is missing out on establishing successful and profitable joint ventures with Cuba.

Hot chocolate at Museo del Chocolate!

Hot chocolate at Museo del Chocolate!

My favorite restaurant in Cuba was Le Chansonnier, which is the second location of a Parisian restaurant. This small private restaurant is a thriving, with its sophisticated atmosphere and excellent French food. While eating a delicious chocolate torte for dessert, I imagined the embargo being lifted and what that would entail for Cuban entrepreneurship. Not only would more Americans be able to enjoy the food and culture of Cuba, but American and Cuban entrepreneurs could join together and start more exciting and profitable businesses. If there were open channels of capital flows and communication between the two countries, the opportunities for investment and improvement in Cuba would be endless. As a financial powerhouse, the United States would be perfectly poised to step in as an angel investor for Cuban entrepreneurs, but the embargo is impeding American involvement in the growing trend toward Cuban entrepreneurship and private enterprise.

Havana Vieja

Havana Vieja

A pervasive spirit of entrepreneurship, hard work, and creativity binds Cubans and Americans together, and these common characteristics have the potential to jumpstart infinite possibilities of new businesses and projects. Due to the current embargo, the two countries may currently be ‘worlds apart,’ but the shared spirit of entrepreneurship could bridge this gap and bring the United States and Cuba closer together. What are your thoughts on this policy and the potential business opportunities?

– Kara

Apology Accepted?

A few weeks ago, I stumbled upon a post on Reddit regarding a man whose father had unsubscribed from car manufacturer Mini Cooper USA’s website after a server error caused him to receive hundreds of Mini messages. In response to his unsubscribing from the site, Mini sent him a care package of flowers, chocolate, duct tape and SPAM. I thought nothing of the post at first, merely chuckling to myself and moving onto the next bit of undeniably original Reddit content, but I then realized that this was Mini’s new marketing strategy.

That’s the best apology he could’ve asked for.

Business Insider reports that Mini Cooper sent a lengthy, apologetic letter along with the care package that has one simple request: forgiveness. “We’d love to reconnect. If you’d like to link-up with us again, just visit miniusa.com/sorry.” You can visit the site Mini Cooper constructed to atone for its actions, though the link may be removed once Mini has finished apologizing to its accidentally e-ambushed subscribers.

What does this mean for marketers? Mini’s play is not unique. A few years ago, Domino’s Pizza admitted to being a “worst offender” with its lackluster cheesy bread and even released a commercial promising its customers a better product. There is an emerging trend of companies taking responsibility for their actions and apologizing to their customers.

Why apologize? As Dell learned in 2005, reputation management has become increasingly important as the number of Internet users has ballooned. Blogger Jeff Jarvis was unsatisfied with his Dell service and wrote about it online, coining the phrase “Dell Hell.” A SourceWire article notes that Dell has endured lasting damage as a result of its tarnished online reputation. Sites such as Yelp!, Zagat, and private blogging enterprises that review companies and products are breeding grounds for online reputation management (ORM) nightmares if their users are unsatisfied. Therefore, it is critical that companies such as Domino’s and Mini acknowledge their flaws in order to better appease their customers.

As I learned in Professor Keith Quesenberry’s Blogging and Digital Copywriting class last spring, marketing has become a two-way street between consumers and marketers. If consumers are unsatisfied, they have all the ammunition they need to deal out real damage to a company’s reputation. Consumers have the power to ruin a company, and we can look at companies such as Mini Cooper and Domino’s as examples of corporations that have taken this lesson to heart and done what they can to repair their marred images.

Business for the Worldy

Companies that look into international markets in order to expand their revenue model can accomplish this through a variety of means. However they must all inevitably interact with business men and women of another culture.

We, as U.S. business people, must read a plethora of literature regarding other cultures in order to maintain good relations with foreign partners. However even with all the knowledge available to us, we could potentially make one fatal mistake which could derail the entire operation. This might be one of the many reasons why 60% of joint ventures fail within 5 years.

As more business is being conducted in China, Forbes and other reliable sources are beginning to create pamphlets and short excerpts on the culture of the Chinese business men. They are not only interesting, but imperative to any up and coming international venture. These kinds of pamphlets exist for many different cultures. As you look around, however, be sure to keep a few main thoughts in mind. When researching another culture, try to learn:

1. How to greet/addresss someone (The Wai seems to be very common in Southeast Asia, especially Thailand)

2. Their hierarchal structure (whether it be social or business related)

3. Their Social conventions (for example, Chinese business men generally expect to be taken out to expensive dinners after a days work, and Thai people generally do not like to be complimented on their shoes)

My advice to all of you looking to either negotiate or go into business with someone from another culture, or even if you are meeting your foreign in-laws for the first time, stay calm, remember your readings, and above all, remain confident. You are all gathered together to move forward amicably.

Your worldy friend,

Sinan Ozdemir

Can Big Things Come in Micro Packages?

Recently, the European Investment Bank (EIB) sealed the deal on an initiative to generate micro finance opportunities in Tunisia. The program, worth approximately 4 million Euros, is aimed at helping young entrepreneurs grow their business endeavors by providing them with small loans. The loans associated with Tunisia’s micro finance are, thanks to the help of the EIB, being channeled to the growing business opportunities that are both in need of the most micro finance support and that can do the most good for the greatest amount of people.

“On the other hand, in countries such as Tunisia, it is increasingly concerned to ensure that micro finance reaches all regions, and particularly the poorer regions of the country which are economically disadvantaged,” writes Peter Taberner of New Europe Online.  Micro financing is an opportunity to bring impoverished people into a better economic state, so many micro financing opportunities are aimed at the poorest parts of the world.

This map shows the percentage of people below the poverty line.
These are the people meant to be assisted by micro finance opportunities.

In the past, micro financing has been successful in countries such a Mexico, as evidenced by a 2008 New York Times article describing the success that the micro finance institution Compartamos has experienced, though the article points out the debate that micro finance success can create. According to the article, micro finance can give the lending institutions more gain than the institutions borrowing the money themselves, therefore missing the true purpose of the micro financing system. Nicholas Kristof of the New York Times is also skeptical of micro finance’s true success (particularly in Africa), meaning that the key to micro finance success seems to lie with the particular government that handles the operation.

In the case of Taberner’s article on the events in Tunisia, the EIB seems confident that its partnership with the Government of Luxembourg Directorate for Development and Cooperation will spur economic activity in the poor section of the world.

What are your thoughts on micro finance? Does it provide economic growth, or is it a way for financial institutions to enjoy greater profits while taking interest payments from borrowers?
– Dave

Softbank bets on Sprint, but can it rival Verizon and AT&T?

Recently, the Wall Street Journal reported that the Japanese wireless carrier Softbank will acquire 70% of Sprint for $20.1 billion. Fans of the famous Japanese entrepreneur and CEO of Softbank, Masayoshi Son, celebrate his past success in turning around Japanese companies. Softbank raised Vodafone up from its number 3 spot in the Japanese telecommunications market, and it plans on doing the same for Sprint, which is currently the number 3 wireless provider in the US. The deal may allow Sprint to challenge the current duopoly of Verizon and AT&T in the US by using the cash infusion to develop a 4G network to better compete with these two giants. Sprint also announced that it offered to buy a stake in Clearwire, a struggling broadband company whose wireless spectrum could be used by Sprint to support its network.

Masayoshi Son, Founder and CEO of Softbank

The telecom industry could be headed for more consolidations like this deal, as synergies between Softbank and Sprint may be able to increase their profitability and allow them to negotiate better terms from Apple and other equipment vendors. Also, Sprint offers unlimited data plans to iPhone subscribers, and the deal could amplify this competitive advantage. If the duopoly of Verizon and AT&T is challenged successfully, customers will benefit by enjoying lower prices and more choices of available products and plans.

Yet some remain skeptical that the Softbank-Sprint merger will be effective, as Seeking Alpha reported that Verizon and AT&T hold 80% of the US market share, and many analysts remain convinced that the two giants will stay at the top of the US telecom industry.  According to Reuters, Verizon had 108 million users and AT&T had 103 million users in 2011, while Softbank and Sprint combined only have 96 million users. With Sprint’s weak competitive position and brand value, Sprint and Softbank’s turnaround efforts may not have a great impact. The US telecom market is largely saturated, and it may be difficult for Sprint to steal customers, especially from Verizon and AT&T.

Do you think the Softbank-Sprint deal will change the telecommunications industry in the US? Will Sprint be better able to compete with Verizon and AT&T, or will Sprint remain dwarfed by these two telecom giants? Don’t be afraid to leave your predictions or thoughts in a comment!

– Kara

Facebook Reaches 1 Billion Users. Make Your Own! (No Programming Necessary)

In February 2004, months before his 20th birthday, Mark Zuckerberg launched Facebook from a computer in his Harvard dormitory. The social network now has 1 billion users, demonstrating the enormous reach the Internet allows sites such as Facebook to have over the world.

Photo thanks to Flickr user niallkennedy

Now, Zuckerberg is an expert computer programmer, but he’s definitely not the only person out there who can make a successful social network. In fact, you can be on your way to creating your own social network with three easy steps.

1. Find your niche. When Zuckerberg started Facebook, he created it as a student directory for Harvard University. What community do you think needs to be given a home online?

2. Find your software. As mentioned earlier, Zuckerberg knew computer programming backwards and forwards; fortunately, you don’t need to! A helpful Squidoo article about creating social networks includes a list of social networking software that require no programming experience whatsoever to use. Many of these programs have paid and free versions, though the paid versions usually have more customizable and advanced features.

3. Market your creation. A social network is useless unless people are active on it. Spread the word to your friends, run ads on Google, and use other devices at your disposal to get the word out. A comprehensive eHow article explains how to advertise a social network for free, and here are some highlights:

  • Use pre-existing social networks such as Twitter and Facebook.
  • Create a blog for your network to provide fresh content to users.
  • Invite major players in other social networks to be the first users of your new site.

Of course, this is a very simple way of looking at the social networking process. The major take-away, though, is that you can make your own Facebook (just don’t use the words “book” or “face” in the name … that’s a breeding ground for a lawsuit) without any programming experience.

The Effects of Mobile Technology Marketing in Africa

What are the full opportunities with increasing mobile technology use in emerging markets?

Over the past 10 years, the amount of individuals using cell phones has dramatically increased, even in one of the worlds poorest continents: Africa.  The continent has the fastest growing rate of mobile phone usage in the world, lead by Kenya.

Because many African countries are among the poorest in the world, leading to diminished health and education, several entrepreneurs have created an innovation inspired by the increased use of mobile technology.  As a way of getting their message out there, various organizations have utilized SMS (short messaging service) messaging, or text messaging, as a means of distributing information.

One of these companies, FrontlineSMS: Medic, uses the tagline “text messages save lives,” priding themselves on bridging the gap in access to healthcare on a global scale.  And as studies have shown, SMS technology has indeed lead to increases in the general health for many populations.

Mobile technology is opening an entirely new untapped market for marketing and advertising.  While it is clear that many non-governmental organizations in the health-related field have taken advantage of this technology, the possibilities appear to be endless for other corporations and businesses.  Only time will show us what mobile technology can bring for the marketing world… what do you think the possibilities could be?

– Clint