Why is Netflix founder Reed Hastings so rich? It’s a clown question, right? Everyone knows why he’s worth billions, and it’s because he founded a company that is worth over $300 billion. Except that what you’ve read so far is insufficient.
In truth, it glosses over the true source of Hastings’ wealth: no one thought Netflix was going to survive. And on this assumption, the experts didn’t buy Hastings out when they could have. Lest readers forget, a younger Netflix twice offered itself to Blockbuster for under $100 million. Get it?
If not, the true driver of Hastings’ wealth is a reminder of just how little the present predicts the future of business.
It’s something stablecoin proponents would do well to internalize. Of the view that these digital monies that derive their market value from one-to-one dollar relationships are the future of global payments, they think, talk and write as though the battle over payments is already over with, and stablecoins have won.
See their criticism of banks. Stablecoin proponents routinely make the claim that the digital money exists as an existential threat to the traditional money center banks, and confident of the previous supposition, they claim the big banks are playing Washington to squash the stablecoin warehouses that would allegedly replace banks in an otherwise free market. As the title of this piece indicates, the conceit of stablecoin cheerleaders is obnoxious. See Netflix, among countless other business stories like it, to understand why.
The future of commerce is never a sure thing. More important, what tends to shape the future of commerce is rarely a known quantity. Which is why stablecoin advocates would be wise to contain their glee about what’s ahead.
If we ignore that the biggest banks have already entered the stablecoin space themselves, or they intend to, let’s not forget that stablecoins are hardly novel. As opposed to a new approach to money that replaces the fiat money of old, stablecoins are yet again but a digital version of the dollar.
Which is why it’s difficult to take seriously the popular view that dollar derivatives are a threat to traditional banking as we know it. There’s nothing new here, and certainly nothing that banks couldn’t expertly improve upon if need be.
To which stablecoin advocates will reply that the Genius Act prohibiting interest payments on stablecoin holdings was a “below the belt punch” that banks used to crush digital currency competition. Sorry, but that’s hard to take seriously too.
For one, see above. Implicit in the notion that limits on stablecoin interest payments (a prohibition that Coinbase and others easily got around as is) crushed a substantive threat to traditional banks is the idea that the future of payments is certain, and that members of the pundit class know what it is. That’s just not serious.
Furthermore, the prohibition of interest payments on stablecoins ignores why the big banks desire it. It has little to do with fear of competition, and a lot to do with non-banks presuming to operate as banks minus the myriad rules and regulations that traditional banks endure.
“Is the Albanian Army going to take over the world? I don’t think so.” That was former Time Warner CEO Jeff Bewkes in 2010, when asked if Netflix was a threat to the giants of Hollywood, including Time Warner. Readers know the rest of the story.
It seems stablecoin proponents don’t. If they did, they wouldn’t be making such grandiose statements about the future of banking and money that they couldn’t possibly know.
