Will Crypto Payments Be THE Killer Use Case? | European Blockchain Convention

Transcript

[Music] right hello and uh welcome to this panel we are very glad that you joined us here today I'm also delighted to be here for the second time at the uh European blockchain convention here in Barcelona and I look forward to discuss with our experts here uh on the panel the question sort of will crypto payments be the killer use case and I'm delighted to have here with me uh P um from notaba uh yonas from the digital Euro Association Christian from the from MasterCard and Joy from um remind

Meed unlimited of course uh and uh before we sort of dive into the subject I think I'll leave the room first for a quick introduction from everyone P the floor is yours thanks yeah I'm uh P Brar CEO co-founder of notab Ben we help companies implement the travel rule um which is a requirement that Banks and traditional Payment Systems already have to do and it's now become a requirement most parts of the world but most importantly right now uh in the EU as part of MAA and the TFR uh and we helped a lot of companies in Europe um implementing this getting ready for the

deadline uh this year so we're directly involved with the payment flow perfect yeah Yas my name I'm co-founder and chairman of the digital Euro Association which is basically a think tank um at the we are intersection between stable coins tokenized deposit cbdcs so it's all around the future of money where we support uh central banks and also private sector companies to um yeah to basically all contribute to you know a better Financial system let's say and secondly I'm also running a company which is called kakata where we are basically working at the intersection between identity um and privacy and provide a solution that works is aligned with European regulation that is coming to the identity space my name is Christian I'm working

with MasterCard a digital payment company I guess many people will know and I'm looking after fintech goto market and crypto um so my role is essentially to partner with companies that are around at these kind of events um to see how we can drive safe secure payments going forward thank you uh my name is Joie oo and uh I am the MD of unlimit and my marketing team will will be very happy that they spend millions and millions on marketing going to come up here and you know not know who we are uh but I um am privileged to lead a team essentially that is creating Payment Solutions that aims to bridge the gap

between the traditional um and decentralized financi cial worlds um essentially we are looking to create solutions that are not only Innovative but um efficient scalable um and compliant uh in terms of embedding our banking as a service apis into our client application um I've spent over you know two decades in the financial services and Finch space um and that's collaborating with clients to launch financial apps and services that essentially I guess redefines how consumers engage with their money um now whether that is again helping a startup or a company launch an app or a service whether that's working with Innovative

companies to increase the velocity of capital for smmes um the whole point of what we do is to solve real problems for real people um and fundamentally the mission at unlimit is very simple and very straightforward and that is to create a payment system um a banking system that essentially is going to embrace um the I guess the centralized and the decentralized world and we aim to do that um in a manner that is again Innovative is scalable um and more importantly is compliant I'm very excited to be here I think this panel is going to be exciting um engaging and exhilarating so thank you thank you um

when we're talking about payments I think the first question we do need to ask ourselves sort of what are we actually talking about because payments um there's sort of various definitions of what can be a payment and it also um makes a difference uh in terms of when we're talking about what's the acceptance and what's really the use case so if we're talking about e-commerce payments so really paying for merchants and their services I think sort of crypto payments and and that includes probably stable coins and sort of crypto there's probably still a sort of fairly low adoption and we're talking only about 1% or less of of the total e-commerce transaction but if we are talking about sort of corporate payments um um I think we are seeing uh a very

different picture and if we are talking about simply transactions and when uh sort of crypto payments or stable coins or in the future also um cbdcs uh so Central Bank digital currencies will be used uh for transactions I think again we we are talking uh about a very different volume so um starting perhaps with my first question is really where do you see sort of in in your view the main use cases and where are we in you in in uh your view in in the stage of sort of adoptions of payments in the crypto space p yeah it's I mean payment is is I think you alluded to there payment is a very

um you know it there are many different kind of things that could come under the payment sphere and I believe probably most of the transactions that happen on public blockchains today would not be considered payments like if you if you compare them against what's happening in you know over over MasterCard Network for example because most of the payments are first party transactions are settling institutional trades those kinds of things and that's why we're seeing very large transaction volumes but there is a seed happening when it comes to to e-commerce when it comes to cor like more corporate kind of payments um as well that that's happening but for

those use cases we we need to do better as an industry uh of course we we're focused on getting companies compliant which is Step number one for to be used in business use cases but step number two is also keep these transactions safe and number three take transactions and actually help companies use them within their business and to do that you can't just have a blockchain hash showing a bunch of of utxo transactions that's not going to help you tie a payment to your internal records so you need to actually have a another layer which is what MasterCard for example provides to their

merchants and and issuing banks in in more traditional payments and we are building up uh for crypto trans transactions as well okay uh yonas do you want to carry on I think what's also important to elaborate on is not just what payment you know is today and how the volume is but what it could be right and in particular I would like to point out um point out the use cases that are about to emerge so if we talk about you know programmable payments about industrial use cases where blockchain is just the payment rail because it has great advantages you know be it resilience be it automation be it any other so I think that's something that um should really be at at at the core

which is also something where I think progress is you know slower than expected or hoped a few years back but I think that's really something um where um where projects and products should focus on and where it where we now have with stable coins for example great solutions that are fully compliant um I mean if set up in a correct way in Europe so that we can leverage them for you for these use case so I think this industry component is super important can be um yeah come somehow a game changer for Europe in the payment space where Europe is not always playing a very you know large role and of course the topic of crossborder payments is super important where also today stable coins are more and more used I wouldn't say heavily used because volumes are way

higher in traditional Finance but I think that's a second group of use cases where blockchainbased payments in whatever form can um provide substantial value Okay Christian do you want to to cover that question yeah absolutely so I would think first and foremost in in Western Europe um you know we can't say there's market failure right if you look at what we've seen growing organically over the last 50 years you know what now sort of culminated in apple baby and Google pay being accepted everywhere uh works but it's really organically grown and if you look underneath the hood the the difference between real-time authorizations and settlement it it

feels like in a world that is ever more interconnected digital and real time it feels a bit archaic so at the same time I want to say you know while things work really really well and and we and many other people contribute to making this happen I think now that we revisit the very concept of money through a digital year through stable coins through tokenized bank deposits the opportunities to just I don't want to say start on a fresh piece of paper uh but the opportunity to do it right now and sort of rewire uh the financial services system it it's immense right and there's a lot of things that we can transpose from the traf system especially when it comes to

things that pisb to uh kyc AML um compliance consumer protection all the boring things that are super essential hygiene factors I think these things we need to bring over and we need to leverage the programmability all the exciting things and I think that's that's where we like to sit at the sort of intersection between the old and the new and leveraging the opportunities and then as per per previous mention I think we need to be very clear what we speak about do we speak about a 5e coffee transaction here that is happening you know 150 times at the very same coffee shop per hour ideally sort of exaggerating or are we talking about you

why are transferring me 100,000 from I don't know Colombia to my business in Ethiopia right and there will be different use cases there will be different solutions but I think the opportunities are immense and joy do you all alsoo want to tackle that no I think everything that's been said so far is pretty much you know my my viewpoint um I do believe that one of the key factors especially in terms of adoption and payments is to do with the ability to onramp um efficiently and and smoothly and quickly and I like to think a bit um if I give you a an analogy um you go to the airport um and in your hand you have the

ticket and that ticket is your access to digital assets you know to stable coins um and you need to onramp that and to get onto that you have to get onto the plane but unring has been um pretty bad I would say you go to the airport you're stuck in the queue you have to go through customs through security you have to wait in the grotty dirty Lounge um if you're lucky um it's just a very awful experience to get onto the plane and that plane is obviously where you can on rapid and get your crypto now imagine a scenario where in your hand you know you have the ticket to onramp and you get to the airport and it's like a first class experience you get Whi through security um you get a three course SM you get the

finest champagne you get caviar and then you get onto the plane and then you don't have to go obviously rights and sit with the peasants you go left um this is exactly what we're trying to build from a um a bass perspective the ability to onramp quickly efficiently smoothly um and yes obviously AML is also a key factor of this um and you want to find a solution that provides everything that the panel has discussed so far and in again in a smooth compliant seamless way this is what I think is also key to bringing the adoption of crypto payments okay um thank you um Christian and and yonas I think both of you mentioned you know in terms of payments

adoption we need to make a distinction between West and Europe where sort of the payment infrastructure is very welldeveloped and the market seems to be functioning um but what um you know and the question then poses itself um why do you need crypto payments uh and and and sort of what advantages do they bring so sort of maybe the first question also to you to what do you see sort of are potentially the the advantages of crypto payments and again I'm still sort of taking the very Broad View that includes sort of crypto asset payments um stable coins transactions but also uh potentially cbdcs if they develop going forward yeah so I would uh a little I

would actually exclude cbdcs for now retail cbdcs because really they do not necessarily have to do a lot with blockchain so if we talking about retail to the euro so the retail one that's important there will not be a blockchain core component so I personally would rather or what I'm what I'm now referring to is rather the you know the rest so stable coins cryptos maybe also tokenize Commercial Bank money that we might see um and for me it's a lot really with this decentralization provides tremendous benefits in terms of efficiency right so it can be depends on the design but it can be cheaper it can be more inclusive if designed that way so a lot of ifs um of course it can be automated via Smart contracts so I think the programmability is really an

important aspect and also the resilience the security is something that just adds adds to this Dimension and I think that in some parts our payment system of course evolved over lots of you know decades 100 years and for me it's some some kind of just another you know upgrade in terms of payment rails where some payments will will happen I don't hope that we get rid of all the rest so I don't hope we get rid of cash and anything I love cash due to the Privacy to be honest um but that's I think how how I see this fitting into the payment Spectrum yeah and what what we see is very simplistically I mean some people just have digital assets uh they they hold them as part of their portfolio and they want to have a way to to spend them

right but you see that very few Merchants want to fiddle around with wallet addresses or hold the or take the price volatility risk of of Bitcoin so basically what we do we BRD this Gap app um by offering the entirety of the MasterCard Network for payment cards but the merchant is paid in Fiat and the uh transaction is actually swapped in real time on the platform of the digital asset uh provider uh so nobody in the value chain other than the licensed entity touches crypto and that is something that there's value in this and um we have 600 million people using crypto globally and uh we see that there's different business model how

people want want to do this right and then the up and coming Generations will use these things more and more and for us it's about offering choice we are not normative in the sense we say you need to use your Bitcoin for payment but if you choose to do so as a consumer we want to offer you the opportunity to do so um that is one thing and that holds true across the globe but then the other thing as you mentioned yakob is yeah if you don't have access to FX at Fair rates if you don't have access to um Capital markets that allow you to escape as hyperinflationary uh Financial system usdc euroc whatever you know stable coin works for you is a very viable

alternative and it actually you know helps to empower people to be you know commercially more successful in life and again we do believe that as long as it's safe secure and compliant we want to make that happen because the sort of mindful Innovation makes sense and then we get to the point that that you has touched upon if uh Regulators around the world and it's Nuance between retail cbdc and wholesale cbdc if they say okay all the benefits that blockchain or not C can bring to digital currencies I think for us as a as a payment Network you know we would be ill advised not to have a view course I think we can

contribute a lot we've been doing this at scale for some right if I if I could jump in as well um I was sitting over there and I listened to one of the panelists and he said something that to me was like that makes perfect sense and he said that essentially digital assets is a separation of money from government and I thought about it and I thought yeah that makes to me perfect Perfect Sense um in Western Europe we're spoiled you know we have a very developed you know and you could argue otherwise but we have a very developed you know Regulators banking system um my mother um is originally from Nigeria now again if you think about it separation from

money and government um if you're in Nigeria you want your money to be separated from years of government mismanagement years of government uh corruption years of government BS I mean the naira that's the the currency in Nigeria um is a steaming pile of escar it's it's not worth the paper it's wrting for so when we think about digital assets when we think about um stable coins this you know especially for Nigerians is is is a godsend and again it's seamless it's frictionless um it's taking away you know essentially ineptitudes of government away from money and I think that is key and that is why I'm so passionate and excited by this space um and things um that's going to happen in years to

come so so do you think that uh just as a followup do you think sort of crypto payments it will be more used outside of Europe so in all its forms particularly when we're talking about um stable coins uh um or other crypto assets cbdc is probably less but um will it be more used outside of Europe and sort of in the rest of the world or or do you think there's also still use cases for in in Europe short short answer I think I think the answer is yes um I'm not going to comment on cbdcs I'm not a a big well I hate it but you know that's me being you know the um subjective I'm not a big fan of cbc's But to answer your questions know quickly and succinctly I believe so

yeah yeah if I can just add to that I I 100% agree in the short term because essentially stable coins are competing you know against non-consumption like from a payment point of view so they perform a really valuable function in countries where people don't have access to decent Payment Systems uh I found a one of the first companies that was doing Bitcoin in subsaharan Africa in Kenya and came up against some of the centralized systems down there as well uh but the use case was very clear is that people were willing to put up with very bad ux and all of these kind of things to to be able to deal with non you know non- Kenyon Shilling kind of

payments however I think in the longer term the you know as we often see you know we move from the you know from this you know disruptive early stage where there's like no reason to use stable coins for regular payments but over the next few years we're actually going to see it so I actually would say that probably in 5 years time probably a significant amount of payments in Europe and the Us and other other you know large large developed economies are going to be stable coin payments but most people who are using

those systems have no idea that these are stable coin payments uh because the technology is getting there the benefits are there we have realtime real-time payment systems that function globally without use of correspondent Banks and all of these kind of things so there's real value in there so it's coming so right now the the I think the question isn't where's the use case right now and we need to focus on that use case because that use case is part of us getting there now we need to focus on making it safer being able to reconcile things into the real world um and get get it into the into the real world economy if you allow to

build on that and I would totally agree and I think by Financial Services industry standards we're moving quite swiftly no pun intended but um if if say you know digital assets blockchain started 16 years ago with Bitcoin now we're in a phase where everything is properly regulated in MAA if you look at development Cycles in cards for example back in the days you know we still have some extrip cards around the world right um and so I I totally agree with you and I think crypto up until now was very much from a user experience perspective in the MP3 cycle before the iput was there it was working you could download

things you drag and drop manually and and things like that and despite these deficiencies we already have that adoption but now that that the technology is there regulation is there and all that drama is basically push pushed to the background I think uh there's really a window for this to scale G one thing that that we learned with MasterCard people don't like to pay and they don't really care how it's working it should be easy easy safe simple and secure and whether that is a or stable coins or batch or real time people don't really care but I think as an industry we should care and we can make great things happen on that perhaps sort of um looking also um at the other

angle what are still some of the challenges I think um Pella and also y mentioned sort of AML sort of compliance I mean we we discussed sort of a bit regulation and and sort of potential challenges there are there any other challenges that we think exist for the adoptions sort of of crypto payments I mean consumer trust or anything else in your view um I don't know P if you want to kick off yeah I there's a lot of of of issues with the technology today like the core underlying blockchains are fantastic it's like the best settlement system we've ever had you know ever and it's it's really powerful and it's really incredible the ux though is

terrible and it's because you know we we're essentially um if you look if you compare it to to the internet we are in a pr-dns prsl kind of world where we all interacting over unencrypted messages between IP addresses right it's it's a very very bad ux and the industry in the name of what I I'm increasingly calling decentralization theater decentralization by the way is a very good and very important thing but people are refusing to fix some core issues with crypto payments such as for example the use of

blockchain addresses as as one of the you know main identifiers in there and it's really stopping the adoption more than anything because this is a blockchain address I don't know who I'm sending money to uh I I've been involved with crypto since 2010 I understand how it works I'm scared every time I send money you know to a blockchain address how do I send funds to my kids using wise right because it works I can send to them I know they're going to get it and I understand how stable coins worked you know I get it but it's still scary and the as an industry I feel like we have a collective stock conson syndrome around

this ux we're so protective about this terrible terrible ux and we expect that we're going to get you know the next billion I keep people talk about the next billion users get them to over overcome this they'll do it if they really really need to like if you're stuck with naira for example and you want to do transfers you will go through the Hoops but we're not going to get everyday users here in in Europe for example to to do this so I would definitely agree with that so that's one one hurdle um secondly I think it's also it needs to be easy to access and to distribute so I think that's very important you know what the stuff that you guys are doing in MasterCard and also that more and more

Banks really offer the opportunity to get crypto I know that this is not often well perceived from you know kind of crypto Maxis but I think it's important to get this next one you know the one billion at at some point then I think education is just key so I also checked checked today Google interest in Bitcoin it's actually at an all-time low so it came up increased after Bitcoin ETFs now it's again like we care but not everybody cares so you know I think I think it's also to us to educate people um at least uh to make this to create good companies good Solutions and then the last uh the last aspect and I really want to want to mention that is the topic of budgets because we see you know in the US there is a lot money going

into the topics in Asia as well in Europe um you know it's always so so hard when you raise money um it's so hard to get funded from public sources and also you know R&D budgets within corporates are not very you know uh thick these days so to be to be honest I think in the end it's also just a matter of money and I hope that we will get this fixed in Europe because otherwise a lot and I don't hope that will move to us and Asia and some other prospering um yeah kind of zones of the world I if I may very quickly I agree consumer trust and consumer security um it's very hard I believe um to go to

the average person who isn't familiar with digital assets and get them to transact in digital assets um we take it for granted here because we know and we are knowledgeable um but again for the average person it's not it's not that's not the case and if you look at traditional um payment systems yes they're slow you know sometimes costly um but the fact is they're ineffective for the majority of the world and when you look at I would say the Innovation um in in digital assets I we can talk about financial Innovation but for me personally the truth is in my opinion of course you know regulators

and the banks you know they like to keep it like this because digital assets represents the thing that they fear the most and that is control um so the point I'm trying to land that is when we talk about education I mean I've been hearing education of the people for 10 years now education education we need to educate people um why can't we educated why do we have to keep banging on about educate educate educate it's not that hard to grasp really so there must be a more fundamental reasons why adoption hasn't picked up and again I think that's purely because it suits what essentially you cannot have a centralized um mechanism for something that

fundamentally is decentralized and I believe until you fix that conundrum you aren't going to see that next billion of users um adopt adopting digital assets I don't want sound a conspiracy nuts uh but that's just my opinion okay question Joy not only jumped the Q he sto my thought um no but on a serious note um I I wanted to say consumer protection too and coming from a bit of a bit different angle uh because I think the idea on paper everybody can be their own bank it's liberating it's exciting and whatnot but some 4,000 years back you know Bank started or 3,000 years and I think by and large and I don't want to downplay banking crisis they have worked quite well and in Europe again Europe uh

we're looking at uh Deposit Insurance up to 100,000 EUR uh zero liability charge back rights but if I send money to to a wrong wallet address or if I do something it's pretty much back to pel's point irreversibly gone right I can't get it back and while I believe in the opportunity that crypto holds and self- custody uh especially with respect to maybe the the undelivered promise of open banking to to touch up on this very briefly I believe in this I think it needs to be warted down however a bit uh when it comes to that layer of security that consumers know and appreciate from the treat fight system and we we see

that right you now with Ledger you can restore and there there's more and more of these initiatives but that is something when you ask yakob what what prevents adoption that is still something consumer protection I would say we we need to get better there yeah sorry let me jump in if I may yeah Kristen do you think you know you can have it both ways because again the whole fundamental thesis and Ethos of digital ass essentially is that decentralized nature of it now when you start getting um Regulators you know essentially regulating the hell out of it doesn't it take that away and I understand your point you know everybody can be their own bank they can have their own wallet um but fundamentally you know these are adult people making

adult decisions so if you are going to have your own um non-custodial wallet and you going to make a payment and that payment is going to get sent to the wrong person that is on you essentially so can can you have it both ways do you think um I don't know if I knew I would be super rich right um but but I think to a certain extent we need to overcome this tradeoff and I think it's always a temporary trade-off between usability and security and decentralization and control and I think all these charting things and every you know you split it in three I think there there's a way to do it I think it's more a temporary thing and again I I think control for the consumer um should should be

centerpiece um but there's people like to have someone they can call up if something goes wrong and and you know I think that idea it it will be hard and it's very much ingrain it's not a technical thing people will say there's smart contract around that but it's very hard to get it out of people's heads yeah no and I think I I saw also a lot of nodding in the group uh in in the audience when we're talking about you know the user experience and sort of uh am I really getting my payments through so so is that sort of really the main thing that the industry needs to tackle sort of when it comes to crypto payment or is there still anything else that we would need to address maybe and and I think it's a struggle when it comes to

payments you compete with the iOS or Android device that people have in their pocket they just you know put their fingerprint on it they do it buam and it works and typically you know it's hard you need to do better and better means quicker faster convenient whatever because otherwise people say you know payment I don't really care I wanted that coffee I want that song on uh you know I want to watch that movie um so I think you really need to do better yeah it and I think we can do better first of all you know public blockchains are the ultimate open loop payment system right where there and by

open loop meaning anyone can connect into it send to to anyone within that and they should continue to be that so for example to your point before on there being you know self-hosted wallets all of that we need all of that just like the internet allows you to do whatever you want on it the underlying blockchains need to be 100% permissionless there needs to be constant support for Innovation for self-hosted Technologies decentralized protoc calls all of these different kind of things that has to happen but we do need to also then you know build tools build companies build processes that can get like the next not just building the

next you know five billion people on there and that's when we talk about better you know I think we can build much better UAG if we actually set our mind to it we can do that uh we talk a lot with Regulators so we speak a lot with fat finsen and a lot of The Regulators globally also and we tell them about this Vision that from a compliance point of view public blockchains are so much better there's actually full transparency the whole way what's happening and if you give companies the tools and the transparency in there we can do a lot better so right now many people in crypto think that they're the

ones that are always under attack by Regulators but but fat just started a program you know trying to up the quality of travel rule through Swift through Visa or MasterCard to you know they're updating the rules because like as I like to joke with them we've shown in the crypto industry we are an order magnitude better we're we're we're a high definition we're interactive all of these different kind of things where the travel rule information you get through the traditional systems are is kind of like am quality like it's like sending a fact is really really bad so on the compliance and risk part we are already better and over the next few years we're

going to get an order magnitude better than what happens through traditional systems but we still need the adoption of the user side of course and I I fully agree and I I know uh regulation is always a polarizing term and while I'm not to commment on your know travel Rule and the intricacies but I think the sheer fact that the regulator again 16 years after the technology came about says I take this serious enough to make it safe for everyone to use and I Define the playing field and tell people how it should be done and maybe it's not you know the rules will not be 100% whatever on the first go but I think this is something that means you're now PE part

of that grownup conversation and you have the ability to deploy this at scale leverage all the technology advantage and this is how I would want to look at it you now have a right to play you know in the mainstream uh Joy any comments from that and and maybe sort of um you know there was a bit of a discrep or not discrepancy but debate I guess between sort of decentralized approach and sort of a slightly more centralized approach and I think when we're talking about payments I guess it's it's sometimes a bit more um centralized and and you need sort of some think some form of you know regulation there but do you think that can be still I I so I think so um again

I I love Christian um when you talk about you need to have grown-ups at the table I think it would be you know a tad immature to think it can be completely decentralized um and there can be no rules and regulations surrounding it um and yes decentralizing decentralization doesn't exist um in in a vacuum it can operate on a Continuum um but I think ultimately where you want to get to is a place where we've built the rules and the systems in place um where true decentralization can come about I mean fundamentally Payment Systems from 20 30 40 50 years ago um are for me outdated um it's a new generation right now um they don't you know work like our parents they don't live like our parents

so why would they want to utilize the same payment systems that our parents use right um so as you mentioned we need to do better and I think we can do better and I think the right people are in the room in order for us to do better thank you and I think that was almost your final statement and perhaps also to give the three other uh uh panelists here uh the opportunity to sort of do a final statement in terms of where do you see sort of um crypto payments going going forward well I'm really excited because right now we here talking about crypto payments and what we're talking about with crypto payments I see in a few years is just payments and it's that's it I think it's also very important to reflect that um kind of everybody's approaching this topic from a different

angle right so for the one you know Bitcoin is the solution for kind of everything for the others it's just a store of value for the other one they don't care they just want to buy the coffee so I think we need different solution for that this is why self custody is super important but also why custodial Solutions are super important depending on you know who you are and I think that's important to to reflect and to build products that basically you know can address both Target groups because that's the people out there that use the stuff in the end chran um I just think it's it's a very exciting time uh for our industry as we digitize money in its very essence it will change payment I couldn't tell you how where you know will crypto be payments be like five or 15 or whatever percent in five years

time um but um we're excited to be part of that Journey okay thank you very much to uh all the panelists perhaps um some Applause from the audience and thank you very much for listening to us thank you