Money Moves
AI summary of the linked articleJoel argues that the internet and crypto are both transactional systems, and that falling transaction costs will reshape business models, with stablecoins as the clearest example so far. He notes that Google's ad revenue rose from $70 million in 2001 to $133 billion in 2019, as ad networks extracted value from user attention because payments were hard for users. Stablecoin supply grew from $500 million in January 2019 to $220 billion today, and Tether and Circle generated a combined $24 million in fees in the last 24 hours. Joel also concludes that traditional card networks still lead on capital velocity, which he attributes to entrenched network effects rather than technological superiority. |
1 comment macbudkowski.ethSubmitter Think of internet platforms as massive digital malls. When you spend time on X or any of Meta’s apps, businesses pay the mall owners (in this case, Musk or Zuckerberg) for the chance that you might eventually make a purchase. Really like this metaphor Fast forward to 2020, where the internet was obsessed with a magical thing called Bored Ape NFTs. OpenSea was the new mall. Ethereum was the payment network. Users flocked in throngs. But nobody quite figured out how to collect payments from these individuals without the complexities of on-ramps, on-chain fees, ETH price fluctuating, transaction signatures, private keys and setting up Metamask. The products that grew the market in the years that followed, all had one thing in common: they lowered the barrier to entry. Solana made it possible to skip manual transaction approvals multiple times. Privy let users hold wallets without worrying about private keys. Pump.fun let people spin up meme coins in minutes. You get the gist. Markets reward simplicity. Nowhere is that clearer than in the rise of stablecoins. +1 The average person on the web does not care about the extent of decentralisation as much as they care about what a product can do. They don’t care about L2 purity tests as much as they care about transaction costs. And when seen through those lenses, stablecoins are simply a better form of dollars. The innovation was not simply in issuing dollars on-chain. But rather in abstracting the fee complexity away from the user, like we saw with ad platforms in previous generations. The real genius in stablecoins is in finding a reason to park a tremendous amount of dollars into T-Bills and surviving on the yield that comes from them. Interesting point, that the real innovation was the business model. But what would happen when the rates go down? |