Kayla Phillips from Truffle Ventures just released a massive report detailing the market for crypto payments.
She outlines emerging players, the unmistakable interest to enterprise, and educated insights about where this niche is headed.
For an unfiltered look at the report, visit here (24 pages). If you don’t have the time, that’s what this is for. Let’s break down the key takeaways…
A Killer Use Case
The future of global financial infrastructure is emerging right now.
Within 5 years the collective market cap of stablecoins is projected to 22x.
80% of global finance enterprise leaders are working to integrate crypto.
Blockchain opens us to exponential improvements in financial technology. These improvements are so big, it’s like upgrading from a vintage steam engine train to a maglev (magnetic levitation) high-speed train — delivering a smooth ride at 250 mph.
Why are crypto payments an improvement?
- Crypto payments settle instantly
- Crypto payments cut out the middleman (credit card fees average 2.24% per transaction)
- Easy cross-border payments
What are the growing pains for crypto payments?
Imagine that you want to get on that futuristic high-speed train mentioned earlier. How complicated should the instructions be? How many steps are required to become a passenger?
That list should be as short and simple as possible.
When it comes to accessing the powerful tech of crypto, getting onboard is still not as smooth and seamless as it should be.
Whoever wins UX (user experience) will be a winner in crypto payments.
Watch for features like:
- Seedless accounts
- Social recovery
- On-chain identities
- Spend limits
- Gasless onboarding and transactions
- Recurring and scheduled payments
Expect Shifts in the Stablecoin Landscape
USD pegged stables have 99% market share. It's a stat that should be mildly frightening for two reasons:
- The US hasn’t played their cards for stablecoin regulation yet. Legislation is being debated, but ultimately builders and consumers don’t have a clear picture of US friendliness toward 1:1 derivatives of the USD.
- As Coinbase CEO Brian Armstrong pointed out recently, pegging to USD means that that “stablecoin” is susceptible to all of the risk and volatility of USD. He suggested that the number one product he would build right now is a flatcoin capable of preserving purchasing power independent of USD devaluation.
At this point, the report specifically highlights Silk as an innovative flatcoin model.
Rather than pegging to USD, Silk’s peg is a basket of currencies and commodities including: BTC, Gold, JPY, CAD, EURO, and USD.
Silk is also a) private and b) decentralized. One finger is all you need to count the number of private, decentralized stablecoins that are pegged to a basket…
Consumer Payments and Debit Cards
The current bar for crypto payments is a pre-paid debit card. A few years ago, users dreamed of this day but now there are great options.
Silk’s partnership with FINA will allow users to spend Silk.
Innovative infra like Gnosis Pay allows users to “save” funds on Gnosis L1 and then move funds to spend onto Gnosis Pay L2 which can connect to their card. This looks even more like a traditional debit card.
Anything missing from the report?
In the flurry of excitement around this space, one theme that continues to fly under the radar is privacy.
The report mentions privacy concerns related to FedNow (the US government’s instant payments program).
These are legitimate concerns. But, on the whole, crypto has fallen into a double standard around data confidentiality.
Do we want our data held by a central entity who has unilateral visibility into our finances? Of course not.
But do we care if that same financial data is universally visible on a decentralized blockchain explorer? It feels like many don’t.
Yet the dangers of decentralized surveillance and centralized surveillance are equal.
We won’t make it very far with crypto payments, payroll solutions, and stablecoins if privacy isn’t in the mix.
Crypto isn’t here merely to be a decentralized alternative to money. The original vision, the beating heart of crypto is much more.
We are upgrading truth to be trustless.
We are upgrading finance to be unstoppable and free.
And we are upgrading money to be denationalized, decentralized, and privacy-preserving.
If we compromise the vision, we compromise the future.
Whatever solutions emerge with crypto payments, we don’t want to lose that aim.
It’s what Shade Protocol and products like Silk are here for. And we applaud fellow builders who share this uncompromising vision for what crypto can be at its best.
Special thanks to Kayla Phillips and Truffle Ventures for spotlighting Silk in this report. Again, if you’d like to dig deeper and read for yourself, the link is here.
Information provided in this post is for general informational purposes only and does not constitute formal investment advice. Please read the full disclaimer at shadeprotocol.io/disclaimer before relying on any information herein.