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There has been no dearth of savings in the payments and commerce sector to discuss over the past decade.
We have had the internet economy transformed into a digital economy resulting from the billions of online interactions that occur every day between devices, consumers and businesses. We have the connected economy, invented by PYMNTS, in which technological innovations, connected devices, software, payments and cellular technology enable people and businesses to connect and do business through any device. , and in any digital or physical location securely, securely and in real time. Sadly, we have had the economy driven by the pandemic, which will hopefully continue to evolve into the post-pandemic economy.
But are we ready for a new economy? Jeremy Allaire, CEO of Crypto Exchange Circle, told Karen Webster in a recent conversation that was heading towards a tipping point with what he calls the crypto economy. He sees it in its infancy and on its way to ubiquity.
You could see how powerful the internet was and how much bigger it was likely to get, Allaire said. You just needed technological breakthroughs and societal acceptance before the real economy and the internet economy were sort of crushed.
As he said: there is a new economic system that is being built from the ground up on top of public blockchain infrastructure. And as with any other economy, there are various forms of portable units of exchange, commerce, exchange of goods and services, in this case ranging from bitcoin and various stablecoins to smart contracts.
There are key pieces of infrastructure that need to be put in place that kind of lighting around the world, he said, for cryptos to reach their broadband moment.
We are moving closer to the wider use of cryptos to transact, he said, highlighting recent announcements such as Visa to adopt USDC as a settlement technology on its core network. PayPal, in another example, said it would accept bitcoin for payments from merchants. Like neobanks and major digital wallets, Venmo users around the world are hanging on to cryptos, this economy will change rapidly, he said, with or without intermediaries.
Vote with dollars and attitudes
Governments, especially central banks, are grappling with what all of this could mean (some of these high priests in the economy, he said, even go after cryptocurrencies with fear and total hostility).
For the last hundred years or so, we’ve lived in a world where there has been a significant amount of government management dealings with some of these key parts of the economic system, Allaire said.
As Allaire noted, it was inconceivable that an individual in one part of the world could use a device and broadcast, live, to anyone else in the world.
Governments around the world in 1996 would have said, on my corpse. We control the airwaves. We control and license This is my country, these are my rules, he said, but in the end people voted with their dollars and they voted with their attitudes The government institution is a vessel for society . And so it will adapt to what society considers a better form of organization.
Along with technological infrastructure, he added, regulatory infrastructure is also improving. Political structures are taking shape all over the world that recognize that this is a legitimate and fundamental infrastructure and how people should deal with the riskiest problems.
Today, as then, individuals and businesses are voting with their dollars and attitudes, and the crypto economy is taking shape rapidly, said Allaire, currently existing as a 1,500 phenomenon. billion dollars (as measured by market capitalization). Circles owns the USDC stablecoin, he said, has made a half-trillion dollar payment volume on the blockchain over the past 12 months.
That’s about half of PayPal’s total annual payment volume, he noted.
To achieve this ubiquity that we have seen with the Internet, the crypto economy is going to need the same infrastructure improvements that enabled the creation of the mobile device connected to broadband and enabled the business model innovations that have enabled us. all surprised.
Were reviewing the infrastructure changes that are taking place before our eyes right now for the crypto economy, he said.
Blockchain 3.0
So welcome to Blockchain 3.0, which is taking shape right now and which, according to Allaire, is expanding the pipes like broadband for the Internet.
All of a sudden, you can create apps that hundreds of millions of people can interact with. You can move the value in milliseconds for a fraction of a penny. And so the breakthroughs that are possible, that people imagined becoming possible, are coming now, he said.
Technological and regulatory tailwinds are behind innovations, such as stablecoins and non-fungible tokens, which point to methods of monetization that were mere flights of fantasy.
You are seeing the emergence of interest rate markets where people can borrow and lend through a machine on the Internet, he told Webster. And it’s really dramatic, it potentially opens up access to financial services to many more people than ever before.
Regarding this access itself: While conventional wisdom holds that the crypto ecosystem doesn’t need middlemen, Allaire argued that middlemen are going to be really important because most people don’t want to manage their money. own data centers. Most people don’t want to worry about archiving, backups, and the cryptographic keys that come with it. [digital] money.
Today, companies that act as intermediaries and as custodians that bridge the legacy banking system with the crypto world are regulated financial institutions that must adhere to consumer protection and fight mandates. against fraud. Along the way, he said, global prosperity can be enhanced through programmable internet commerce, smart contracts, and the fruits of future intellectual property development.
By the end of the decade, he predicted, live well in a world where much of the internet economy trades in a new global digital currency, where financial services are delivered by software machines. standalone ones that run on the Internet, he told Webster. Well, see a larger percentage of the business relationships that exist between companies running in code, enforced by machines running on that infrastructure.
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NEW DATA PYMNTS: AI IN FOCUS: THE BANK’S TECHNOLOGY ROADMAP
About the Study: The AI In Focus: The Bank Technology Roadmap is a research and interview report examining how banks are using artificial intelligence and other advanced IT systems to improve risk management credit and other aspects of their operations. The Playbook is based on a survey of 100 bank executives and is part of a larger series assessing the potential of AIs in finance, healthcare and others.
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