Stripe, Adyen, and checkout have already consolidated the payment infra. What is your rebuttal to that? What makes you think they can compete in terms of auth rates, fraud prevention, and TCO? Especially given the amount of unstructured payment data these platforms now have?
I don't have any rebutal, but those consolidations are still less efficient & more costly than stablecoins. They still rely on banks which close on the week end and need third party services for anti fraud services etc...
They have a wonderful service. But they will have an even better one once they leverage stablecoins & smart contracts.
Got it, I agree with you other than fraud. Adyen provides fraud prevention in its stack and then as a 3P to other companies! This is increasing the data most as we speak imo…
I don’t really think relying on ChatGPT answer is the right way to frame the TC of a stable coin integration… because there are inherently going to be additional costs… and a company like circle presumably would charge a fee. So how are you reconciling that with your claim of lower total cost? What about rising gas cost?
Do you think that circle can take meaningful share of payment processing before stripe and such fully integrate this (strip pretty much has this down pat but they are sometimes a little distracted imo (helping companies make their own etc… prefer just staying in the background)).
Appreciate any rebuttals or points you think I’m wrong on!
It's a bit early to draw conclusions as we don't have real & wide use case, but the main difference to my opinion in term of costs is that blockchains will take a fixed fee, not a fee based on volume which is often what happens with the traditional system. And rising fees on Solana would pass from $0.001 to $0.1, which is really low even for micro expenses like an expresso.
That being said, Circle will certainly have fees and will need to build a stack with 3P to create a good payment experience. Many consider that using stablecoins would not necessarily be much cheaper - although I have not seen anyone believe it will be as or more expensive. Either slightly lower or really lower.
So the bottom line would be an as expensive & much better service at worst - faster, open on weekends & international. It might not be good for all situations (buying your coffee once again), but if it takes on the financial/commercial market... That'd be lots of volume. Who cares about Jon buying a sweat shirt online if you can have TSM's sunday's purchase of sillicon?
As for Circle taking shares, this is the real question: I have no clue. I know Circle is the most advanced, trusted and secured stablecoin today. Will it remain true, I have no clue... That's why I shared this investment thesis but am not a shareholder yet: it's important to know about the subject but not necessary to be in.
About the CC issuer, I agree but in this write up I compare the payment chain entirely as this is what really matters to my opinion.
Well said and fair enough. Thanks for the color on blockchains… Can you help me understand what you are comparing it to in terms of cost, are you referring to expense in terms of just the inherent technical cost to transfer the transaction on both sides or are you comparing the blockchain cost to the cost of current system with fees.
Also worth noting that most payments in the world are still in cash! Lots of room for growth for all of these options imo, and as you stated intelligently, it’s not going to be for every payment and that’s okay.
Regardless enjoy the conversation and appreciate the color to the write up (I have seen some awful theses on circle and this is not that).
Far too high a multiple and too many question marks for me but I will be following.
IMO Visa and Mastercard will make their own coins if needed, and the stripes and adyens will adapt to service those trans.. Though if there is some counter positioning for circle maybe they carve out a meaningful share.
I compare both systems end to end - fees for the traditional one & fees + blockchain fee for the stablecoins.
I am not worried for Visa & Mastercard which should adapt. Will they leverage Circle's USDC or build their own stablecoins, dunno but they have to adapt as stablecoins are a threat to their business model without any doubt.
Thanks a lot for the kind words! Try to keep the feet on the grounds, Circle is a great business to follow but a really risky stock at the moment.
I am comparing both entire systems end-to-end. With all the fees for the traditional ones & reduced fees + blockchain fees for stablecoins.
I'm not really worried for Visa & Mastercard tbh, they should adapt. Although stablecoins are a risk for their business model over the very long term, question is will they leverage Circle's or soeone else's or build their infras... Dunno. Will be interesting to see how that plays out.
Thanks a lot for the kind words! I try to keep my feet on the ground, Circle will be a great business to watch but it sure isn't a great stock to buy at the moment.
Stripe, Adyen, and checkout have already consolidated the payment infra. What is your rebuttal to that? What makes you think they can compete in terms of auth rates, fraud prevention, and TCO? Especially given the amount of unstructured payment data these platforms now have?
I don't have any rebutal, but those consolidations are still less efficient & more costly than stablecoins. They still rely on banks which close on the week end and need third party services for anti fraud services etc...
They have a wonderful service. But they will have an even better one once they leverage stablecoins & smart contracts.
Got it, I agree with you other than fraud. Adyen provides fraud prevention in its stack and then as a 3P to other companies! This is increasing the data most as we speak imo…
I don’t really think relying on ChatGPT answer is the right way to frame the TC of a stable coin integration… because there are inherently going to be additional costs… and a company like circle presumably would charge a fee. So how are you reconciling that with your claim of lower total cost? What about rising gas cost?
Do you think that circle can take meaningful share of payment processing before stripe and such fully integrate this (strip pretty much has this down pat but they are sometimes a little distracted imo (helping companies make their own etc… prefer just staying in the background)).
Appreciate any rebuttals or points you think I’m wrong on!
It's a bit early to draw conclusions as we don't have real & wide use case, but the main difference to my opinion in term of costs is that blockchains will take a fixed fee, not a fee based on volume which is often what happens with the traditional system. And rising fees on Solana would pass from $0.001 to $0.1, which is really low even for micro expenses like an expresso.
That being said, Circle will certainly have fees and will need to build a stack with 3P to create a good payment experience. Many consider that using stablecoins would not necessarily be much cheaper - although I have not seen anyone believe it will be as or more expensive. Either slightly lower or really lower.
So the bottom line would be an as expensive & much better service at worst - faster, open on weekends & international. It might not be good for all situations (buying your coffee once again), but if it takes on the financial/commercial market... That'd be lots of volume. Who cares about Jon buying a sweat shirt online if you can have TSM's sunday's purchase of sillicon?
As for Circle taking shares, this is the real question: I have no clue. I know Circle is the most advanced, trusted and secured stablecoin today. Will it remain true, I have no clue... That's why I shared this investment thesis but am not a shareholder yet: it's important to know about the subject but not necessary to be in.
About the CC issuer, I agree but in this write up I compare the payment chain entirely as this is what really matters to my opinion.
Well said and fair enough. Thanks for the color on blockchains… Can you help me understand what you are comparing it to in terms of cost, are you referring to expense in terms of just the inherent technical cost to transfer the transaction on both sides or are you comparing the blockchain cost to the cost of current system with fees.
Also worth noting that most payments in the world are still in cash! Lots of room for growth for all of these options imo, and as you stated intelligently, it’s not going to be for every payment and that’s okay.
Regardless enjoy the conversation and appreciate the color to the write up (I have seen some awful theses on circle and this is not that).
Far too high a multiple and too many question marks for me but I will be following.
IMO Visa and Mastercard will make their own coins if needed, and the stripes and adyens will adapt to service those trans.. Though if there is some counter positioning for circle maybe they carve out a meaningful share.
I compare both systems end to end - fees for the traditional one & fees + blockchain fee for the stablecoins.
I am not worried for Visa & Mastercard which should adapt. Will they leverage Circle's USDC or build their own stablecoins, dunno but they have to adapt as stablecoins are a threat to their business model without any doubt.
Thanks a lot for the kind words! Try to keep the feet on the grounds, Circle is a great business to follow but a really risky stock at the moment.
But worth knowing about it to my opinion!
I am comparing both entire systems end-to-end. With all the fees for the traditional ones & reduced fees + blockchain fees for stablecoins.
I'm not really worried for Visa & Mastercard tbh, they should adapt. Although stablecoins are a risk for their business model over the very long term, question is will they leverage Circle's or soeone else's or build their infras... Dunno. Will be interesting to see how that plays out.
Thanks a lot for the kind words! I try to keep my feet on the ground, Circle will be a great business to watch but it sure isn't a great stock to buy at the moment.
Also most of the 2.5-3% fee is from the CC issuer, not the processor/acquired
Applauding you for another quality writeup. Appreciate so much of your time and effort.
Thanks a lot 🙏 really appreciate the support & words!