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WSJCoin: Yes, we created our cryptocurrency

In an original WSJ documentary, market journalist Steven Russolillo ventures into Japan and Hong Kong to explore the cryptocurrency universe. His mission: to create WSJCoin, a virtual token for the newspaper industry. Image: Crystal Tai. Video: Clément Bürge

In 2017, bitcoin was one of the biggest investment delusions in recent memory. This year, the boom has turned into a failure.

To understand what drives the wild cryptocurrency market – technology, hype and innovation, combined with hacking, market manipulation and increased regulation – we decided to experiment one of our digital currencies: WSJCoin, a virtual token for the newspaper industry.

Traveling in Japan, an outbreak of cryptocurrencies, we found that creating a currency is relatively easy: find a blockchain startup, watch the founder type a code on a screen and a cryptocurrency is born. There is no wonder that there are more than 2,000, according to CoinMarketCap.

The complicated thing is the creation of a cryptocurrency that is valuable, useful and has a widespread appeal. So we started a journalistic venture to find someone who would accept WSJCoin payment.

Along our way, we met bizarre characters that represent the craze of Japanese cryptography: a popular all-female J-pop band called "Virtual Currency Girls"; a 21-year-old student who spends most of his time crypting cryptocurrencies; and a university professor who creates a cryptocurrency to be used exclusively on campus and in the nearby university city.

There's a big problem for the industry: the craze has vanished. The cryptocurrencies have lost more than two thirds of their value since last year's peak. Many people who bought cryptocurrencies at the end of last year lost significant parts of their investments.

And if the industry really needs thousands of these digital currencies it has been questioned. The selloff of this year has been more difficult with the larger so-called alternative versions of bitcoin compared to the bitcoin itself.

But hope is born eternally among the truest believers, especially those with faith in the blockchain technology at the base of the crypt.

"There's still the potential for a significant disruption," says Ivan Zasarsky, a Hong Kong-based partner in Deloitte's financial crime unit. "This is only the first centimeter in a kilometer race."

Write to Steven Russolillo at steven.russolillo@wsj.com and Clément Bürge at clement.burge@wsj.com

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