There has been no shortage of savings in payments and commerce over the past decade.
We had the internet economy transformed into the digital economy resulting from the billions of online interactions that take place every day between devices, consumers and businesses. We have the connected economy shaped by PYMNTS, where the innovations in technology, connected devices, software, payments and cellular technology enable people and businesses to connect and do business securely, securely on any device and in any digital or physical location and in real time. Unfortunately, we have had the pandemic-fueled economy which, hopefully, will continue to evolve into a post-pandemic economy.
But are we ready for a new economy? Jeremy allaire, CEO of the crypto exchange circleKaren Webster said in a recent conversation that we are at a turning point in what he calls the crypto-economy. He sees it at an early stage and well on its way to ubiquity.
“You could see how powerful the Internet was and that it was likely to get a lot bigger,” said Allaire. “It only took a few breakthroughs in technology and social acceptance before the real economy and the internet economy were, so to speak, ‘thrown together’.”
As he put it, there is a new economic system built from the ground up on public blockchain infrastructures. And as in any other economy, there are different forms of portable trading, trading and exchange units for goods and services, in this case from Bitcoin to various stable coins to smart contracts.
“There are key elements of infrastructure that need to shine like this around the world,” he said, in order for cryptos to reach their “broadband moment”.
We are getting closer to the wider use of crypto for transactions, he said, referring to recent announcements like Visa’s to introduce USDC as a settlement technology on its core network. In another example, PayPal announced that it would accept Bitcoin for merchant payments. As neobanks and leading digital wallets – the world’s Venmo users – cling to cryptos, that economy will grow rapidly, he said, with or without an intermediary.
Vote with dollars and attitudes
Governments, especially central banks, are wrestling with what all of this could mean (some of these “high priests” of the economy, he said, even propose with outright fear and hostility to cryptocurrencies).
“For the past hundred years or so we have lived in a world where some of these key elements of the economic system are heavily governed by the government,” Allaire said.
As Allaire noted, it was inconceivable that a person in one part of the world would be able to use a device and broadcast it live to anyone else in the world.
“Governments around the world would have said in 1996, ‘Over my body. We control the ether. We control and issue licenses. This is my country, these are my rules, ‘”he said,“ but in the end people voted with their dollar and with their attitudes … The state institution is a vessel for society. And so it will adapt to what society considers a better form of organization. “
In addition to the technological infrastructure, the regulatory infrastructure is also improving. “All over the world, political structures are taking shape that recognize this as legitimate, fundamental infrastructure – and how people should deal with the highest risks.”
Today, as then, individuals and corporations are voting on their dollars and attitudes, and the crypto economy is taking shape at speed, said Allaire, which currently exists as a $ 1.5 trillion phenomenon (measured by market cap). Circle’s own USDC stablecoin, he said, has made half a trillion dollars in payment volumes on the blockchain in the past 12 months.
“That’s about half of PayPal’s total annual payment volume,” he noted.
To achieve this ubiquity that we’ve seen with the internet, the crypto-economy needs the same improvements in infrastructure that spawned the mobile device that connected to broadband and enabled the business model innovations that surprised us all.
“We’re looking at infrastructure changes that are unfolding ahead of us – right now – for the crypto economy,” he said.
Welcome to Blockchain 3.0, which is just taking shape and said by Allaire that it is “expanding the pipes” much like broadband did for the Internet.
“Suddenly you can create apps that hundreds of millions of people can interact with. You can shift the value in milliseconds for a fraction of a penny. And so now are the possible breakthroughs that people believed possible, ”he said.
The technical and regulatory tailwind is driving innovations such as stablecoins and non-fungible tokens, which point to monetization methods that were just soaring.
“You are witnessing the birth of interest rate markets where people can borrow and lend through a machine on the Internet,” he told Webster. “And that’s really dramatic … it gives potentially far more people access to financial services than before.”
On that approach itself, while conventional wisdom is that the crypto ecosystem doesn’t need middlemen, Allaire claimed that “intermediaries are going to be really important because most people don’t want to have their own data centers. Most people don’t want to worry about archiving and backups and the cryptographic keys that come with them [digital] Money.”
Today, the intermediaries and custodian firms that bridge the existing banking system and the crypto world are regulated financial institutions that must adhere to consumer protection and anti-fraud mandates. Along the way, he said, global prosperity can be enhanced through programmable e-commerce, smart contracts, and the fruits of intellectual property development that are to come.
By the end of the decade, he predicted, “We will live in a world where much of the internet economy transacts in a new global digital currency where financial services are provided by autonomous software machines that run on the internet,” he said Webster. “We will see that a greater percentage of business relationships are executed in code and enforced by machines running on this infrastructure.”