The hybrid future: How stablecoins will complement existing payment systems

Beyond the Noise: The Fintech Investor Series is a LinkedIn Live Series hosted by Bill Cilluffo, partner and head of global early stage investments, where Bill talks to industry experts to break down the most important topics in global fintech.

In this episode, The hybrid future: How stablecoins will complement existing payment systems, Bill dives into a core belief shared during his last discussion with QED's Gbenga Ajayi and Adams Conrad: the future of payments is hybrid. Listen to learn why QED believes the future of payments is a mix of old and new systems, what the trade-offs are across speed, cost, security, reversibility, and more, across stablecoins and other payment rails and why QED believes the winners will be the ones who connect payment systems, not just build new ones.

Transcript

00:00:02 Bill Cilluffo

Hello, folks. Welcome to QED's fintech investor series. We are gonna wait, I don't know, forty-five seconds or a minute to get started just to give people a chance to, to get on the screen. Any of you who are on already, you probably see a barcode in the upper left side of your screen. If you'd like to get on our permanent mailing list for future episodes of this, by all means, scan the barcode and give us your email, and we'll happily kick off.

00:00:37 Gbenga Ajayi

Well, I should get on that mailing list. I don't see you on the mailing list.

00:00:43 Adams Conrad

I bet we both are.

00:00:59 Bill Cilluffo

Alright. We've got our first QR code scanner, so we, we appreciate that. Anyone who's interested in being on our mailing list for future episodes, please scan the QR code. And with that, we will get started. I'm Bill Cilluffo, partner and head of global early-stage investments at QED.

00:01:17 Bill Cilluffo

We are a global fintech specialist investment firm, who've been around for about seventeen years and made investments in something like 26 countries, and have 30-some-odd unicorns in our portfolio. And we're really excited to bring you the fintech investor series. Our goal is to talk to industry experts to break down, you know, the most important topics of the day for you, our audience. This is gonna be basically episode two on a bit of a stablecoin series. And so joining me are my colleagues, Adams and Gbenga, who are two of our biggest stablecoin experts within QED.

00:01:54 Bill Cilluffo

Adams and Gbenga, do you wanna introduce yourself, please?

00:01:59 Gbenga Ajayi

Hi, everyone. I'm Gbenga Ajayi, partner at QED. I lead our Middle East and Africa investments, and I sit in London. Nice to meet everybody.

00:02:09 Adams Conrad

Hi, everybody. It's a pleasure to be talking with you all about stablecoins again. I'm focused on stablecoins and tokenization, crypto efforts more broadly, and I had the pleasure of working closely with Bill, Gbenga, and many others across the team on this, on this exciting topic.

00:02:25 Bill Cilluffo

Great. So last session, which was also very stablecoin-oriented, Adams, Gbenga, and I shared a core belief of QED that the future of payments is hybrid. You know, not that stablecoins are gonna completely reinvent every single aspect. We think it'll reinvent some of them. But we also think that legacy payment systems will continue to have a very important role, whether card networks, wires, domestic, you know, payment systems, that one continues to grow, and several others. And that really the future will be about figuring out, you know, what are the best payment systems for the right uses and, importantly, how do these things, you know, work together, which is probably one of the biggest and most complicated topics.

00:03:08 Bill Cilluffo

And so, you know, to us, one of the biggest opportunities is both continuing to build new and exciting tools, like building out how stablecoins can add value, but then also a great innovation opportunity in how to make all of these systems work together in a seamless way. So let's start there. So, Gbenga, when we talk about this hybrid payments future, what do we actually mean by that? You know, why does QED believe that this is the way that the world will have?

00:03:36 Gbenga Ajayi

Thanks, Bill. Yeah. So I think that's a great place to start.

00:03:39 Gbenga Ajayi

when we talk about hybrid, we mean interoperability. So, you know, exactly to the point you were making, we don't, we don't believe the future is going to be either/or. We think it's gonna be a combination of both. Right? And I think it's the realization that money doesn't need to exist on only one ledger.

00:03:59 Gbenga Ajayi

A great analogy I like to use here is if you think about it, Bill, like the Internet. When the Internet arrived, we didn't stop using the postal service when email arrived. Right? We started sending some things through email, and we stopped to use postal service for those things, and we continue to use the postal service for other things. So I think that's, like, a very kind of good visualization of when we say the future is hybrid, what we think is going to happen.

00:04:23 Gbenga Ajayi

We think it's gonna be a combination of stablecoin as it is, doing what it does best, and we can have existing payment systems and existing fiat rails, as we call them, doing what they do best. If you think of emerging markets, right, for a lot of users, for a lot of consumers, dollarization is already kind of status quo. Right? It's not a question of, you know, crypto or stablecoin versus banks. It's a combination of both.

00:04:48 Gbenga Ajayi

So, you know, we think of a world where today you have, you know, local payment systems in, you know, PIX, UPI, PayShap in South Africa, et cetera, where people can make local payments. We think in the future, people can actually make, you know, global payments without necessarily really thinking whether this is fiat, whether it's a stablecoin, but actually just I'm just making a payment, and then that money can kind of bounce, you know, bounce through the different rails. So that's what we mean by the future being hybrid. Like, we think there's gonna be some things that stablecoin is gonna be much better at, and we're gonna move, you know, in my personal view, quite a lot of money through stablecoin rails. We're also gonna keep moving money through local fiat rails.

00:05:28 Bill Cilluffo

No. That makes a lot of sense, Gbenga. And just a quick interlude to the audience. There is a chat feature. So to the extent that anyone has any questions for us, we probably can't promise to have enough time to answer them all, but we'll be monitoring that.

00:05:41 Bill Cilluffo

So if anyone has any questions, don't hesitate to write them in there, and we'll, we'll try and see if we can answer at least some of those as we go through the discussion.

00:05:51 Bill Cilluffo

Adams, when you look across payment rails today, you know, stablecoin, card networks, wires, these local systems, how do you think about the trade-offs? Like, how do you think about what each does well and what each kinda falls short in terms of things like speed, cost, security, reversibility, probably, probably other dimensions?

00:06:10 Adams Conrad

Yeah. Thanks, Bill. On, on one hand, payments is all about nuance. Every use case has different nuances. However, it is a universal truth that everyone wants instant and free money movement.

00:06:24 Adams Conrad

Once you have it, there's no going back. You cannot be faster than instant and cheaper than free. We've seen a few of these.

00:06:32 Bill Cilluffo

You're not gonna start a business paying people to use your rails there, Adams.

00:06:36 Adams Conrad

Right. That's right. And, and, and, Bill, maybe to that point, you've seen a few of these firsthand, and I wonder if you could touch on a few of the examples.

00:06:48 Bill Cilluffo

Yeah. No. Happy to. I mean, you know, we've got a pretty sizable investment business in both Brazil and India. And I think those are the two countries that are probably the biggest success cases for rolling out local real-time instant payment systems, UPI in India and PIX in Brazil.

00:07:06 Bill Cilluffo

And it's pretty clear the implications have been vast. First of all, adoption. You know, I think Brazil rolled out PIX three or four years ago and are already up to 70 or so adoption by Brazilians using these payment methods, which is, you know, certainly by orders of magnitude the fastest-adopted payment system ever invented, which is pretty impressive. You know, UPI in India has been around a lot longer, but it's completely ubiquitous. It's hard to walk around India and see people, you know, paying for things without using UPI at this point.

00:07:41 Bill Cilluffo

And, and, again, so these things have really cut the cost to near-free for everyday purchases. Merchants still pay a little bit of interchange, but, but it's as close to free. And, obviously, they don't have the handling costs that they have to do with cash. What's interesting is that these methods have mostly replaced cash and probably replaced some debit products. Credit cards in both markets continue to be growth businesses, as we've seen with, you know, portfolio companies, Nubank in Brazil and OneCard, for example, in India.

00:08:12 Bill Cilluffo

And I, I just think, again, they do different things. I mean, the interchange model that credit cards have is very useful for paying for reward systems that consumers find valuable. You know, in Brazil, there's a tie between a very popular product called consignado, which is essentially turning purchases into installment plans, and it kind of requires you using your credit card to make that work. So, you know, it's, it, it's not been sort of the end-all be-all for every single payment, but certainly has grown at the expense of cash and, and debit products and, and created a good system. You know, that said, it's, it's not a complete free lunch.

00:08:47 Bill Cilluffo

And I'm sure this is something that Adams and Gbenga will dive into a framework on. You know, fraud when, when PIX was rolled out was a huge problem. And it's largely because these payment systems are instantaneous but irreversible. And so it makes them, you know, pretty popular tool for scammers and, and fraud. And, and even just mistakes become problems because they're, you know, not reversible in a way that wire transfers, as another example, aren't really reversible.

00:09:14 Bill Cilluffo

So I think, you know, we've had to figure out ways of solving some of these problems, and fraud rate's gone way down, but it's probably still higher than, you know, than other tools. The other thing I'd note is while the Brazilian and Indian cases are huge success stories, those are the success stories. There's been many other attempts in many other countries to replicate this that have been far less successful. You know, whether FedNow and RTP in the US, whether SPEI in Mexico, you know, they've had some limited impact, but has had nowhere near the, the impact of UPI and PIX. It, it, it really has required in those two countries a very active and successful kind of private-public partnership to cause these things really to, to take off.

00:09:56 Bill Cilluffo

So, Gbenga, I wonder if you can start talking about more of a broader framework for how we think about these things.

00:10:03 Gbenga Ajayi

Yeah. I mean, look, I just, just to build on your point, I think Adams and I talk about this a lot, and we talk about sort of what's a good stablecoin use case versus what's a good fiat rail use case, and we'll dive into that. But if we kind of take a step back and go to sort of, like, cross-border 1.0, you know, you know, Adams and I have this conversation around, you know, what we call the payments triangle, which is the three things that really matter when it comes to actual cross-border. Thanks, Bill. Exactly. When it comes to, if you think of cross-border money movement and if you think of sort of regular rails as we have it, there are three things that really matter.

00:10:38 Gbenga Ajayi

It's cost, speed, and security, and, you know, maybe kind of security slash kind of convenience. Right? Those are the three things that matter. So if you think of cross-border 1.0, you know, companies like, you know, Remitly, which is a QED portfolio company, you know, Wise and all those other companies. The way that you actually competed, you know, sort of prior to stablecoin was cost.

00:11:01 Gbenga Ajayi

Right? Could you make a payment sort of cheap enough? And the way you made that payment cheap enough was by eliminating all of the middle people. Instead of having five, six players or five, six banks, you actually just had maybe two. You pre-funded.

00:11:16 Gbenga Ajayi

The second one was speed, which is instead of doing payment on a T-plus-seven basis, we went down to T-plus-five, T-plus-three, and then T-plus-one. And then in some cases, actually, we can, you know, almost achieve net instantaneous payments. And so that was the only thing that really mattered. And then the third thing was security. People wanted to kind of, you know, know that the money was secured.

00:11:38 Gbenga Ajayi

You could put your cards on any of this platform. You know, it's not just, you know, going to disappear, and that was, like, a very important part. So this was kind of, like, the triangle that I think kind of cross-border 1.0, a lot of, like, you know, businesses actually competed on. These are the things that consumers really care about, which is, you know, cost, speed, and security. And we'll talk a little bit about convenience later.

00:12:00 Gbenga Ajayi

But Adams is, I like to keep it simple, and I, I thought his payments triangle actually allowed us to be able to see things in a very, very specific way, but Adams likes to complicate things. So he actually has something else to add to make this a much more complicated mathematical shape. Adams?

00:12:16 Adams Conrad

Yeah. Not to turn this into a geometry lesson, but there are a few additional dimensions that we need to talk about when we talk about stablecoins. Stablecoins compete exceptionally well across these three dimensions, but they, they, they do open up new vectors. So this, this brings us to the, the payments trapezoid, if you will, where we're adding in privacy and we're adding in recourse or reversibility. We'll, we'll, we'll touch on some specifics on these two dimensions later.

00:12:47 Adams Conrad

But, but as we start to think about the five dimensions that folks have to trade off on when using stablecoins and thinking about using stablecoins across specific use cases and specific payment use, payment types, we, we really see folks looking to prioritize across all five of these.

00:13:10 Bill Cilluffo

Oh, that makes sense. Hey. There's a question in the chat. I wonder if we can just take a little bit of sidebar because I think it's relevant. You know, I think one of the questions here, what do you see as the necessary role of public and government to the hybrid model?

00:13:24 Bill Cilluffo

You know, I, you know, I, I think it's been clearly, we talked about important rolling out these local payment systems. I mean, I wonder if you guys, you know, as you envision sort of how this hybrid model works, you know, can this be done just based on a few startups or a few incumbents working together? Do you think it requires intervention from, from the public and, and government side?

00:13:47 Gbenga Ajayi

I don't know. Adams, go for it first.

00:13:48 Adams Conrad

I'll start, and then, Gbenga, please jump in. But, absolutely, to, to, to deliver a world-class payment architecture across all the various form factors, it requires public, enterprise, and startup collaboration. All, all three parties need to be able to work together and collaborate. All three parties are bringing something unique and, and then important to the table. Some of the innovation that and, and some of the regulatory innovation and clarity that we've seen pop up in the past year here in the US in particular has just been transformational in allowing enterprises to come online and allowing startups to play a role in facilitating innovation at true scale.

00:14:34 Adams Conrad

Gbenga, anything you would add?

00:14:37 Gbenga Ajayi

Yeah. I will add that, like, I think, I think there's definitely a role for, for regulation of government. I think, you know, Bill, your early examples of the successful use, the successful cases of real-time local payments, you know, PIX in Brazil and UPI in India, required a heavy lift from, you know, government regulators in those places to make that happen. I think we've taken the first step here with the GENIUS Act in the US last year. Essentially, the US has effectively ended the debates, in my view, of whether or not this is legal.

00:15:08 Gbenga Ajayi

I think sort of prior to GENIUS, we were dealing with is this legal. I think now we're kind of like, oh, this is legal. You know, we've codified the fact that there's sort of one-to-one backing of, of, of, of with cash and treasuries, and stablecoins can be reliable and sort of cash, cash equivalent. So I think that's a really big step. But I do think that a lot of, like, regulators across different parts of the world, you know, will need to follow, you know, with their own guardrails, you know, depending on sort of what your, you know, monetary policies are in each of those markets.

00:15:37 Gbenga Ajayi

But I do think there is a need for kind of regulators and government to step in, just like provided the US. I think a lot of the explosion we're seeing now in stablecoin adoption and usage and growth, a lot of it, if you look at, like, the growth, optimistically is happening post-GENIUS. So there definitely is a role, and I think that, I think different countries would go at different speeds, but I think it's inevitable that a lot of people would actually step up to actually back this.

00:16:01 Bill Cilluffo

Yeah. No. No. I appreciate that. So, look, so back to our, our, our trapezoid geometry lesson here. It's clear that no single rail wins across every single dimension.

00:16:12 Bill Cilluffo

Who knows? Maybe someone will have that one someday. But certainly at the moment, you know, not every sort of rail is winning everywhere. So, you know, Gbenga, I guess if we start with you, I wonder if you can talk about, you know, where are stablecoins really winning today? And, conversely, you know, where are there some legacy systems that are, are still, you know, ahead?

00:16:34 Gbenga Ajayi

Yeah. So, you know, I think if you look at that trapezoid or the triangle or combination of two triangles, I think stablecoins win at settlement speed. I think that's very, very obvious. They win on speed. The transactions are instantaneous.

00:16:49 Gbenga Ajayi

They're final. I think Adams would argue that that's not necessarily always good, and I agree, but they're instantaneous. Right? If you're a logistics firm in Mexico City or Lagos or Johannesburg and you're planning supply in China and you're waiting three days for a SWIFT wire to clear, I mean, there's thirty days in a month. Right?

00:17:09 Gbenga Ajayi

That's 10% of your working month going towards actually just waiting for banks to ping themselves on the messaging network and, and confirming that. You know, you're not operating anywhere near the throughput capacity that you can operate. We're still nowhere near as instant. So I think, I think on that stablecoin definitely wins, wins on speed. It also wins on price in general.

00:17:33 Gbenga Ajayi

So, again, depending on where you look at it, but if you look at the totality of how much it costs to move, you know, a $100 worth of, again, pesos or naira, whatever it was, you know, to China or to, you know, you know, you know, South Korea somewhere, you know, stablecoin wins on price because, again, you don't have that many people in the middle. So it wins on, it wins on price, it wins on settlement speed. I think one of the areas where the legacy system wins is safety. You know, the transaction goes wrong, you need an undo button. Right?

00:18:04 Gbenga Ajayi

Like, I think, you know, we're talking about kind of, Bill, you mentioned, you alluded to this talking about if the payment system is instantaneous, then, you know, fraud can happen. Right? So, you know, blockchains are final. I think banks are, banks are flexible. And so I think kind of on this sort of, like, safety, can you rewind it to, you know, can you kind of, you know, tag this transaction fraudulent as you can with your credit card, et cetera?

00:18:28 Gbenga Ajayi

You know, legacy systems actually win there. So if I look at the next five years, I think companies that can provide what I call bank-grade safety on blockchain-grade rails, I think those companies would win. But I think legacy payment systems will continue to win on high-trust domestic, domestic retail micropayments. So, so in my view, your local Starbucks shop is, is, is immune for now. I

00:18:58 Adams Conrad

I think that's alright, Gbenga, and I, and I, and I mostly agree, though as in all payment types, nuance matters. And, and I wonder if we should look specifically at the coffee shop. You can't return your coffee. So, and, and most coffee shops are relatively low margin and have pretty limited access to working capital. So as a result, they're keen to prioritize speed and cost.

00:19:27 Adams Conrad

Gbenga, in, in the, in the payments triangle you highlighted earlier, they, they certainly are trying to optimize those two points. And one, one of our portfolio companies, Blackbird, has positioned themselves to enable stablecoin-based payments for restaurants and coffee shops today. This leads to a material improvement in payment economics, which creates the opportunity to improve the profitability of the restaurant while also delivering the richest rewards in dining. That creates a really interesting win-win-win dynamic for the coffee shop, the coffee drinker, and the payment provider.

00:20:06 Gbenga Ajayi

I think, I mean, I think that's an interesting point, Adams. The rewards part, I think, is interesting. Like, we talk a lot about kind of on-ramp and off-ramp when it comes to stablecoin in this world. You know, on-ramp being people kind of moving regular money into stablecoin, and then on the other end, stablecoin moving back into money and we rely on sort of this on-ramp, off-ramp activity to move money effectively across borders. What you are leading to there is actually something that's quite powerful, which is a lot of people kind of, you on-ramp into stablecoin.

00:20:36 Gbenga Ajayi

Imagine you on-ramp a $100 into stablecoin, and you don't off-ramp any of that $100. So you off-ramp only a portion of it. So that money can just stay in the system, basically, if you will. If people kind of access to stablecoin, then you can kind of keep spending that money. So that money doesn't need to go back and then pay fees every single time.

00:20:54 Gbenga Ajayi

It goes back and it goes back in, whether that's interchange fees, whether that's sort of, like, real-time payment fees. So it's a really interesting point on the rewards side, actually, Adams. So I haven't thought about that, which is you can actually just use stablecoin as a sort of one-stop shop. You build your rewards on it. You on-ramp into the thing, and then you just kind of keep circulating the money.

00:21:15 Bill Cilluffo

I think the, the thing about that, Gbenga, is it, you know, back to the role of government in all this. You know, if you're doing that in your local Starbucks in, you know, New York City or London, you know, great. But if you're doing that in your local coffee shop in, you know, Lagos or in, you know, Buenos Aires, you know, those governments probably start to get pretty cautious about the subtle dollarization of those economies, and sort of, you know, do coffee prices start getting quoted in USD as opposed to local. Like, you could see where this thing could spiral. And, again, there's probably lots of positives of that in many dimensions, probably lots of negatives to that in many dimensions, but another area where, you know, government role would be, would be necessary.

00:22:00 Gbenga Ajayi

I, I think what you're describing is why we start this session with the future is hybrid. Because we've got this, like, very interesting technology and treasury use case. And to your point, Bill, it's gonna meet real-world constraints. So while, you know, the US regulator might be fine for Adams' local coffee shop in New York to just kind of have sort of, you know, USD to USD to USD to whatever it is actually just going, to your point, Bill, the regulator in another market might frown on that because they actually want local. So this is what we mean by the future being hybrid, which is this, anyway, is a powerful technology that has very good knock-on effects, treasury use cases.

00:22:37 Gbenga Ajayi

And some, you know, the combination of different use cases and different regulatory limitations dictate in, in sort of, you know, our view and our QED that we're gonna have a combination of sort of these two things, you know, going on in the future.

00:22:52 Adams Conrad

Bill, building on your point, I wonder if we should kinda step through a few specific use cases and, and scenarios and examples here. When, when we think about privacy, there, there, there's some examples where that's a real feature, and there's some examples where that's a real flaw. We, we can look towards Venmo here in the US that enables P2P transactions, where many users enjoy the community aspect of Venmo. You can, you can publicly share your transactions that you've made, and you can see transactions that your friends have made. Some view that as a real feature and, and something that they enjoy about using Venmo.

00:23:32 Adams Conrad

On the flip side, it's pretty hard to imagine a scenario where Coca-Cola wants their entire treasury function, their entire accounts receivable and accounts payable information publicly listed, publicly shareable, and available in real time. It, it, it, it's, it's impossible to imagine that the large multinational corporates being okay with that for, for pretty obvious reasons. And, and as a result, there's a pretty large opportunity and a, and a pretty big gap for folks to deliver privacy-oriented solutions that still comply with government regulations. Privacy not for purposes of, of doing illicit things, privacy not for money laundering purposes, but privacy for the largest businesses in the world to conduct business without being front-run, without leaking information that's necessary for them to continue to run their business, while protecting and defending their moats.

00:24:36 Bill Cilluffo

Yeah. Yeah. Well, and even consumer. I mean, you know, I realize I'm a, I'm an old dinosaur here, but the, the social effect of Venmo has always felt pretty weird to me, and I kinda freaked out when I first saw it. So I had to turn off the sharing. Just, it felt weird, but anything where some people want it, some don't.

00:24:53 Bill Cilluffo

Some purposes, they want it, some don't. Like, it's just kind of a, you know, there's, there's a lot of different tastes out there.

00:24:58 Adams Conrad

I think that's exactly it and such a good example of why the nuance is even on a person-by-person basis. That, that there, you, you can't universally say all P2P transactions. It really, there, there needs to be opportunities for folks to share and be public when they'd like to share and be public because sometimes the community is the point. And there's also certainly scenarios where privacy is, is a huge feature and for very good reason.

00:25:29 Gbenga Ajayi

I mean, on that point, Adams, it's an area you've, you've, you know, discussed this in the past, is also, like, you know, one of our favorite topics right now, agentic payments. Right? And we talk about the reversibility part of your trapezoid. We talk about, you know, this, this idea that, like, agents will pay for things. I think that's, that's, that's I think right now we wanna agree.

00:25:50 Gbenga Ajayi

How do we pay and what happens and the rules that govern it? People are building all that stuff out now, but, like, we do know, like, agents who take instructions and pay. And we naturally think that the kind of natural language for agents to use to pay for stuff is stablecoin. So I think there's consensus just in general that those two things kind of go together. We'll see.

00:26:10 Gbenga Ajayi

Time will tell. But you've made the point, Adams. Like, that can be an issue in some cases. Right? Do you wanna, do you wanna share that?

00:26:17 Adams Conrad

Yeah. One of, one of the use cases I think we're all probably quite excited about here at QED is agents buying flights for us. However, if my agent finds a Spirit Airlines flight six months from now, well, I definitely want recourse and reversibility on that transaction. Airlines go bankrupt. Airlines don't fly flights, particularly, maybe Spirit Airlines.

00:26:45 Adams Conrad

When that happens, I need to have, there needs to be a mechanism in place. And, and, you know, Visa's done a, Visa, Mastercard, Discover, and AmEx have all done a brilliant job creating the rules of the road of commerce that merchants and buyers abide by and, and follow. And, you know, we, we don't yet have that in, in stablecoins, and, and that, that's a, that's a real flaw when we think about that side of the, that side of the story.

00:27:15 Gbenga Ajayi

Yeah. But, but, Adams, on that point, equally, there are use cases in which the opposite is true. Right? So maybe you don't want your agent to pay for your flight because there might be a cancellation, and you won't be able to get the, get the money back, and so you need a credit card and you want that. But what about when the goods are delivered and enjoyed instantly?

00:27:37 Gbenga Ajayi

You know, you know, an example is, you know, playing games, right, or AWS, right, like, where your, the, the good is consumed instantly. It's digital and instantaneous. Stablecoin might actually be the better way to do that because the consumption and the transaction is final. So, you know, you might not want to pay for your flight with, with sort of stablecoin, but you might wanna pay for your, you know, PlayStation in-game purchase with stablecoin.

00:28:08 Bill Cilluffo

Makes sense. So, Adams, I might, I might code your travel bot to avoid Spirit Airlines at times, but, don't have that problem, but different, different issue. Hey, folks. We, we have time for really diving into one more topic. But before we do that, just wanted to remind people, we have a barcode on the top left of the screen. If you'd like to, to scan the, the QR code, rather, if you'd like to scan, scan that and give us your email address to be on the mailing list for future episodes, we would love to have you.

00:28:39 Bill Cilluffo

So feel free to scan that if you'd like. And, and really one more topic that we'd like to really dive into is kind of, okay, what happens next? You know, where do we feel like things have largely been solved by the world versus what are the major, you know, kind of open challenges that we still see that either people are working on that they haven't figured out yet or we haven't come across anyone even, even working on it yet. I don't know. Adams, do you wanna, wanna take a crack?

00:29:07 Adams Conrad

Yeah. So maybe first and foremost, when we look towards what's been solved, security and reliability is really, really impressive. We've proven that we can move over $35,000,000,000,000 worth of money in a year, and that's over largely distributed-based systems that, that are relatively new, particularly if you look at the grand scheme of payments. That's an incredible accomplishment and I think should give us all a lot of confidence when we look towards building increasingly high-stakes payment flows and financial products on top of blockchain-based payment rails. We've also proven and, and solved the, the US-dollar-denominated payments opportunity as we talked about during our last session.

00:29:54 Adams Conrad

We know that people and businesses really, really want access to this capability, and, and that's, that's largely been solved. Gbenga, what would you add?

00:30:06 Gbenga Ajayi

Yeah. I mean, look. I, I, I think we talked about this. I think regulation is, you know, Bill, it's, it's a bit of both.

00:30:13 Gbenga Ajayi

It's being solved. It's not fully been solved yet, but as we said, I think the fact that the GENIUS Act actually opened up a ton of activity means we, in my view at least, you know, it's given a lot of tailwind to the entire industry that there is some sort of, you know, clarification or regulation around stablecoins, so I think that's been good. So one hand, you could consider some of the kind of regulatory stuff, at least as far as the US is concerned, solved. I do think that a lot of other countries need to actually solve that. And so who knows?

00:30:48 Gbenga Ajayi

We might have an international GENIUS Act-type thing. So that, that's not solved yet, and that needs to be solved. The other thing I will add, Adams, is I think the UX hasn't really been solved on kind of just pure kind of stablecoin sort of, you know, money, money, you know, money movements and payments. Right? Like, yes, if you kind of really, I think the, I think the experience sucks, but the pain, the pain sucks, but the reward is so great that people put up with it, especially in emerging markets because you're paying cheaper prices.

00:31:19 Gbenga Ajayi

And as we said, you know, being able to get payments very quick, it's something that, you know, you'd be happy to take a little bit of pain on. But, like, you have to go and put in addresses manually. You have to really understand what's happening. It's not very intuitive. And some of our portfolio companies have done a really good job in kind of, you know, streamlining onboarding.

00:31:39 Gbenga Ajayi

Right? Like, you know, you know, you know, you know, KAST is an example. Yeah. Adams. Right?

00:31:44 Gbenga Ajayi

You know, Felix Pago as well. I mean, even though they're, you know, remittance company, but they do use stablecoin. Right? So, you know, they've, they've made it much more, you know, accessible, you know, Blackbird. But I still think there's a lot of, there's a lot of room to grow when it comes to making the UX and the experience just intuitive.

00:32:04 Gbenga Ajayi

Right? In a way, like, you don't have to really be a stablecoin head to actually use this.

00:32:09 Bill Cilluffo

Cool. So, look, thanks, guys. This was great diving into these. You know, we'd like to just sort of try and answer one more question. I mean, thanks to all of you who have put questions in, and I wish we had time to answer them all.

00:32:20 Bill Cilluffo

But gonna pick one more, and this is, how does a stablecoin-based credit card product change the economics of a swipe versus legacy rails and potentially expose fintech 1.0 to disruption if they don't pivot away from legacy relationships on old rails? Adams, you, you probably thought about this one deeply.

00:32:40 Gbenga Ajayi

Adams does not think about anything else. I'm gonna show.

00:32:45 Adams Conrad

Well, first and foremost, this is, this is a great question. Perhaps is, is worthy of an entire session, given so much of our investing and operating heritage goes back to Capital One, Nubank, OneCard, and many others. This, this certainly is an area that's top of mind for us. But, but maybe two quick pieces I'll touch on this. First and foremost, we believe we'll continue to live in a world where there are issuing capabilities and acquiring capabilities.

00:33:22 Adams Conrad

Are those banks? Are those non-bank entities? We'll see. But, but, ultimately, we need someone, a, a entity, to take risk on behalf of buyers and, and, and manage that risk. And we need folks, entities and, to, to take risk and manage risk on behalf of sellers.

00:33:42 Adams Conrad

That, that kind of back to the rules of the road type of dynamic. The other piece I'll touch on with a part of that and kind of circles back maybe to a point, Gbenga, that you made earlier. Not only will the world we live in be, be hybrid, but one of the, but it will also continue to be nuanced. And when we look at the economics of a swipe, well, it depends a lot on the type of swipe. Where was that swipe?

00:34:06 Adams Conrad

And both on the merchant side, on the geography, on, and, and, and the payor. All of those dynamics create a really interesting yet pretty complicated three-dimensional matrix that is going to impact the economics of a given swipe and if it makes sense to leverage entirely, entirely legacy systems, hybrid stablecoin, non-stablecoin systems, and or entirely stablecoin-based systems.

00:34:38 Gbenga Ajayi

I mean, that, that's a really good way for me to build. The only thing I will add is a shameless plug for a company of ours that our partner and our colleague in Asia, Sandeep, just did called KAST. Whoever asked that question should go and, should go and download KAST and kind of play around with that. It's a shameless plug, but it's very top of mind.

00:34:59 Bill Cilluffo

No. I appreciate that. Well, look, guys. We went over how long we thought we'd be, but a super meaty topic. And to Adams' point, we probably could keep talking.

00:35:07 Bill Cilluffo

But, but we'll call it from there. We really appreciate all you guys tuning in. Please look out for our next LinkedIn Live. And, anyways, we'll be advertising that soon, and thanks to all of you who scanned the QR code to give us your emails. Have a, have a great afternoon.

00:35:24 Gbenga Ajayi

Thank you.

00:35:25 Adams Conrad

Thank you.