Original title: Is the traditional payment model on the verge of collapse, and will we soon witness the emergence of a trillion-dollar stablecoin financial company?
Stablecoins are not designed to improve existing payment networks, but to completely disrupt traditional payment networks. Stablecoins enable companies to completely bypass traditional payment channels; in other words, these traditional channels may be fully replaced at some point in the future.
When payment networks rely on stablecoins, all transactions become mere digital changes in the ledger, and many startups have already begun restructuring the ways money flows.
Recently, many people have been discussing how stablecoins could become a network platform for Banking as a Service (BaaS), linking current payment channels from issuing banks to merchant acceptance and everything in between. While I agree with these viewpoints, when I think about how institutions and protocols will create and accumulate value in the new model, merely viewing stablecoins as a platform linking current payment channels actually diminishes their true potential. Stablecoin payments represent a gradual improvement and the potential to reimagine payment channels from the ground up.
To understand the future direction, we need to look back at history, where history reveals the clear path of evolution.
The evolution of modern payment channels
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Simon Taylor: "If everything relies on stablecoins, all transactions will be just entries in the ledger. Merchants, gateways, payment service providers, and banks previously needed to match different ledger entries. With stablecoins, anyone working with stablecoins simultaneously becomes a gateway, a payment service provider, and an acquiring bank, and all transactions become just entries in the ledger."
This sounds like science fiction. Aren't there many issues related to fraud, compliance, usability of stablecoins, liquidity/cost, etc.? Will there be incremental steps between today and this potential future? Technologies like real-time payments (RTPs) also have drawbacks, and the programmability and interoperability of cross-border transfers are problems that RTPs cannot solve.
However, the future is gradually approaching, and some companies are preparing for it. Major exporters like Circle, Paxos, and withusd are expanding their products, and blockchain platforms focused on payments like Codex, Sphere, and PlasmaFDN are also getting closer to end consumers and businesses. Future payment networks will significantly reduce intermediaries and increase independence, transparency, interoperability, and provide more value to customers.
Cross-border payments
Cross-border payments between businesses are one of the areas where stablecoin applications are growing significantly.
Matt Brown wrote an article about cross-border payments last year, which revealed:
In many cases, multiple banks are involved in cross-border transactions, all using SWIFT to transmit information. While SWIFT itself is not problematic, communication between banks creates additional time costs and often involves other clearing parties. In fact, the clearing process usually takes 7-14 days, undoubtedly leading to significant risks and costs, and the process is extremely opaque. For example, it is not uncommon for JPMorgan to 'lose' millions of dollars for extended periods when transferring money from a U.S. parent company to foreign subsidiaries. Furthermore, the foreign exchange risks among multiple transaction parties increase the average transaction costs by 6.6%. Additionally, when company funds are transferred across borders, they can hardly generate interest.
Therefore, it is not surprising that Stripe recently announced the launch of stablecoin-backed financial accounts. This allows companies to access USD-backed financial accounts supported by stablecoins, issue/redeem stablecoins directly through Bridge, and transfer funds to other wallet addresses via the Stripe dashboard. Using the Bridge API for cash deposits and withdrawals, issuing payment cards backed by stablecoin balances (region-dependent, currently using Lead Bank), exchanging other currencies, and ultimately direct transfers to interest-generating products for managing funds. Although many functions currently rely on traditional systems as temporary solutions, sending, receiving, issuing, and exchanging stablecoins and tokenized assets do not depend on traditional systems. The cash deposit and withdrawal solution is similar to current alternative payment methods (APMs), like companies such as Wise and Airwallex that essentially create their banking networks, store funds in different countries, and settle net at the end of the day. Airwallex co-founder Jack Chang rightly pointed this out last week, but he did not consider how the world would change if cash deposits and withdrawals were no longer needed.
If you simply buy tokenized assets using stablecoins without converting to fiat currency, you are essentially bypassing the traditional correspondent banking model entirely. This will significantly reduce users' reliance on external entities that hold and physically send assets, allowing customers to gain more value and lowering payment costs for everyone. Startups like Squads Protocol, Rain Cards, and Stablesea are enabling the ability to buy and sell tokenized assets directly through stablecoins, and eventually, all companies operating in this space will expand across the entire network.
But if you want to exchange stablecoins for fiat currency, Conduit Pay can collaborate directly with the largest foreign exchange banks in local markets, achieving seamless, low-cost, and semi-instant cross-border transactions on the chain. Wallets become accounts, assets become products, and the blockchain becomes the network, significantly improving the user experience, with lower costs even if cash deposits and withdrawals are not needed. All of this can be achieved through better technology and can provide simpler settlement, greater independence, higher transparency, faster speeds, stronger interoperability, and even lower costs.
So what does all this mean?
This means that the original payment world on-chain and based on stablecoins (digital ledger entries) is coming. It will not only connect current payment patterns but will gradually replace them. This is why we will soon see the emergence of the first trillion-dollar stablecoin-based fintech company.
I know this article will raise many reasonable criticisms, such as not considering some issues. But please understand that I and many entrepreneurs in this field are aware of these problems and are working to solve them. Innovation is like that; building incrementally on legacy systems will never lead to a completely new system because vested interests will always hinder such developments.
Closed loop + trusted intermediary → Open loop + trusted intermediary → Open loop + partial personal autonomy → A truly open digital native system where everyone can compete
