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

OK. Welcome to this panel discussion. We are very happy that you have joined us today. I am also delighted to be here for the second time at the European Blockchain Convention in Barcelona, ​​and I look forward to discussing with our experts the question: will crypto payments become the same crucial use case? I'm pleased to welcome Pelle from Notabene, Jonas from Digital Euro Association, Christian from Mastercard and Joe from...

remind me Joe from...remind me . Unlimited, of course. Before we dive into the topic, I suggest everyone briefly introduce themselves. Pelle, you have the floor.

Thank you, yes. I am Pelle Brangaard, CEO and co-founder of Notabene. We help companies implement the Travel Rule, a requirement implement the Travel Rule, a requirement that banks and traditional payment systems already comply with. It has become mandatory in most parts of the world, but most importantly now most importantly now in the EU under MiCA and TFR. We have helped many companies in Europe implement this and prepare for this year's deadline, so we are directly involved in the payment flows.

Perfectly. I am the co-founder and chair of the Digital Euro Association, a think tank at the intersection of stablecoins, tokenized deposits, and CBDCs. So, this is all about the future of money, where we support central banks and private companies to work together to create a better financial system. Additionally, I run Hakata, where we work at the intersection of identity and privacy, providing solutions that comply with European identity regulation. My name is Christian.

I work at Mastercard, a digital payments company that I think many people know, and I'm responsible for fintech, go-to-market, and crypto. So my role is to partner with companies at events like this to identify how we can develop safe and secure payments in the future. Thank you. My name is Joe V'Oro, I'm the Managing Director of Unlimit. My marketing team will be very "happy" that they spent millions on marketing and I come out here and, you know, they don't know who we are.

I am honored to lead a team that creates payment solutions that aim to bridge the gap between the traditional and decentralized financial worlds. Essentially, we strive to create solutions that are not only innovative, but also efficient, scalable, and compliant with regulatory requirements by implementing our banking APIs into customer applications. I have spent over two decades in financial services and fintech. I've collaborated with clients to launch financial apps and services that fundamentally reimagine how consumers interact with their money. Whether it's helping a startup or company launch an app, or working with innovative companies to accelerate capital flow.

The essence of our work is to work is to solve real problems for real people. Unlimit's fundamental mission is very simple and clear: to create a payment and banking system that can unite the centralized and decentralized worlds. We strive to do this in a way that is innovative, scalable, and most importantly, compliant with regulatory requirements. I am very happy to be here. I think this discussion will be interesting, meaningful, and fascinating.

So thank you fascinating. So thank you . Thank you. When we talk about payments, the first question to ask is: what exactly are we talking about? After all, there are many definitions of what can be a payment, and this also matters this also matters when we evaluate adoption and real-world usage scenarios.

If we are talking about e-commerce, that is, payment for goods and services, then the level of adoption of cryptocurrencies, including stablecoins, still remains quite low— quite low— about 1% or less of the total transaction volume. However, if we are talking about corporate payments corporate payments , I think we are seeing a completely different picture. If we are talking about transactions where crypto payments, stablecoins or in the future central bank digital currencies (CBDCs) will be used for settlements. I think we are again talking about completely different volumes. So, I'll probably start with my first question: in your opinion, what are the main use cases and at what stage of payment adoption in the cryptosphere are we currently ?

Yes, I mean, payments are something you seem to have mentioned. Payments, you know, are a pretty broad area, and I think most of the transactions most of the transactions that happen on public blockchains today public blockchains today can hardly be called payments. If we compare them, for example, to what happens in the Mastercard network, most of our transactions are direct payments or settlements under institutional agreements, and that is why we see such large transaction volumes. But certain developments are still taking place in the field of e-commerce e-commerce , as well as in corporate payments. However, for these use cases, we as an industry need to do better.

Of course, we are focused on ensuring that companies comply with regulatory requirements, which is the first step for business use. But the second step is ensuring the security of these transactions. And number three is to take transactions and really help companies use them in their operations. To do this, it is not enough to simply have a blockchain hash showing a bunch of UTXO transactions. This will not help you link the payment to your internal accounts.

So you need an additional layer that, for example, Mastercard provides to its merchants and merchants and issuing banks in traditional payments traditional payments , and we are now creating the same for crypto transactions. Of course. Jonas, do you want to continue? I think it's important to clarify not only what payments are today and what the volumes are, but also what they can become, and I would like to emphasize the new use cases that are about to use cases that are about to emerge. If we're talking about programmable payments programmable payments , about industrial use cases where blockchain serves only as a payment channel due to its advantages—resilience advantages—resilience , automation, or something else—then I think that should be the main thing, and that's where progress is slower than we expected a few years ago.

But I think that's really what projects and products should focus on, and where we have now, for example, with stablecoins, great solutions that are fully compliant—I mean, if they're set up properly in Europe so that we can use them for these purposes. So I think this industry component is extremely important and could be a real breakthrough for Europe in payments, where Europe doesn't always play a big role. And, of course big role. And, of course , the topic of cross-border payments is extremely important extremely important , where stablecoins are increasingly used today ; I wouldn't say it's ; I wouldn't say it's very active, because the volumes in traditional finance are much larger, but this is the second group of use cases where blockchain payments in any form can bring significant value. Okay, Christian, do you want to answer this question too?

Yes, definitely. I would say that primarily in Western Europe we cannot talk about market failure, right? If you look at what has evolved organically over the last 50 years, what has now resulted in Apple Pay and Google Pay, which are accepted everywhere— accepted everywhere— it works, but it's really an organic development. And if you look under the hood, the difference between real-time authorization and settlement in a world that is becoming increasingly interconnected, digital, and fast-paced looks a bit archaic. At the same time, I want to say that while everything is working very well everything is working very well , and we, like many other people, are making efforts to make it happen, I think that now, as we rethink the very concept of money through a digital euro, stablecoins, or tokenized bank deposits, the opportunity is huge not to start from scratch, but to do everything right now and re-configure the financial system .

Isn't that right? And there are a lot of things that we can carry over from the traditional financial system, especially when it comes to what Pelis was talking about: KYC, AML, compliance, consumer protection—all these boring things that are extremely important hygiene factors. I think we need to take these elements and use programmability—all these exciting possibilities. And I think this is where we would like to be, at the intersection of the old and the new, making the most of these opportunities. And, as noted earlier, I believe we need to be clear about what we are talking about.

Are we talking about a €5 coffee transaction that happens, say, 150 times an hour in the same coffee shop? Maybe I'm exaggerating a bit , or we're talking about how you transfer me 100,000 euros, I don't know, from Colombia to my business in Ethiopia, and there will be different use cases and different solutions for that, but I think the possibilities are huge. Joey, do you want to join in on this too? No, I think everything that has been said so far coincides with my point of view. I truly believe that one of the key factors, especially with regards to implementation and payments, is the ability to get on board efficiently, seamlessly and quickly.

I like to think of it this way, if I were to use an analogy: you arrive at the airport, you have a ticket in your hand, and that ticket is your access to digital assets, to stablecoins, and you need to log in , and to do that, you need to get on a plane. But the login process , I would say, was pretty bad. You arrive at the airport, get stuck in a line, go through customs, security, have to wait in a horrible, dirty waiting room if you're lucky. It's just a horrible experience to get on a plane, and the plane is obviously the place where you can log in and get your cryptocurrency. Now imagine a scenario where you have your boarding pass in hand , you arrive at the airport, and it's a true first class experience.

You are instantly passed through security. You get a three-course meal, the best champagne, caviar, and then you get on a plane then you get on a plane , and of course you don't have to go and sit with everyone else. You are going left. This is exactly what we are trying to build from a BAS perspective: the ability to log in quickly, efficiently, and seamlessly. And yes, of course, AML is a key factor in this as well.

You want to find a solution that delivers everything the panel discussed, again in a smooth, compliant, and seamless way. I believe this is also key to driving the adoption of crypto payments. OK. Thank you. Hmm, Christian and Jonas, I think you both mentioned that regarding the implementation of payments, we need to distinguish Western Europe, where the payment infrastructure is very well developed and the market seems to be functioning, but the question arises: why are crypto payments needed and what benefits do they provide?

So perhaps the first question for you is: what do you see as the potential benefits of crypto payments? Again, I take a very broad view that encompasses payments in crypto assets, transactions with stablecoins, and possibly CBDCs if they develop in the future. Yes. I would probably rule out CBDCs for now, at least retail CBDCs, because they don't necessarily have much to do with blockchain. If we are talking about a retail digital euro, it is important to understand that it will not have a blockchain component at its core .

So personally, I'm more likely to think of the rest: stablecoins, cryptocurrencies, and perhaps even tokenized money from commercial banks that we might see. And for me, decentralization offers huge benefits in terms of efficiency—it depends on the design, but it can be cheaper and more inclusive if designed that way. So, a lot of "ifs", of course, this can be automated using smart using smart contracts. So I think programmability is a really important aspect, as is resilience. Security resilience.

Security is something that just adds to that dimension, and I think in some parts our payment system has certainly evolved over many decades, even 100 years. And for me, it's kind of just another update to the payment systems through which some payments will be made. I don't expect us to get rid of everything else, meaning I don't want us to give up cash or anything like that. Honestly, I like cash because of the privacy. But I think that's how it fits into the payment spectrum.

Yes. And what we see , very simply put: some people just have digital assets. They hold them as part of their portfolio and want a way to spend them, but you see that few sellers want to mess with wallet addresses or take the risk of Bitcoin's price volatility . We bridge this gap by offering the entire Mastercard network for payment cards, but the merchant receives payment in fiat currency, and the transaction is converted in real time on the digital asset provider’s platform. No one in the value chain, other than a licensed organization, deals with cryptocurrency, and there is value in that.

There are now 600 million cryptocurrency users in the world , and we are seeing different business are seeing different business models for how people want to use it. And future generations will use it more and more often, and the main thing for us is main thing for us is to offer a choice. We do not impose the idea that you must pay with Bitcoin, but if you, as a consumer, want to do so, we strive to provide you with that option. This is first of all option. This is first of all , and it is relevant all over the world.

And world. And secondly, as you mentioned, Jacob, if you don't have access to fair exchange rates, if you don't have access to capital markets that allow you to escape a hyperinflationary financial system, then USDC, or the euro, or then USDC, or the euro, or any other stablecoin that suits you, is a perfectly acceptable alternative. It actually helps people become more commercially successful. And again, we are convinced: as long as it is safe, reliable and meets regulatory requirements, we want to implement it, because such conscious innovations make sense. Now let's move on to what Jonas mentioned.

If regulators around the world—taking into account the differences between retail and wholesale CBDCs—say, “Okay, we’re taking all the benefits that blockchain or other technologies can bring to digital currencies,” then I think it would be unwise for us as a payment network not to have our own position. Of course, I think we can add a lot , because we have been successfully operating on this scale for several years. If I may, I'll also insert the word: I was sitting there, listening to one of the participants in the discussion, and he said something that, to me, sounds completely logical. He said that digital assets are that digital assets are essentially the separation of money from the state, and I thought, “Yeah, that sounds absolutely right to me.” In Western Europe, we are corrupt, we have a very developed—you can argue, but still—developed system of regulators and a banking system.

My mother is from Nigeria. If you think about it, it's about separating money from the state. In Nigeria, you want your money separated from years of government mismanagement, corruption, and other government mess. The naira, the local currency in Nigeria, is just a bunch of crap. It's not even worth the paper it's printed on.

So when we think about digital assets and stablecoins, it is a real lifesaver for Nigerians. It's a seamless, seamless tool that takes money out of government incompetence, and that's why I'm so excited about this field and what the future holds. As a side question, do you think cryptocurrency payments will be used more often outside of Europe? In all its manifestations, especially when it comes to stablecoins or other cryptoassets, but perhaps to a lesser extent CBDCs. Will they be more popular outside of Europe, or do you see use cases in Europe as well ?

Short answer. I think so. I will not comment on CBDC. I'm not a big...well, I hate them, but that's my subjective opinion.

I am not a supporter of CBDC. But to answer your question quickly and succinctly—yes, I think so. Yes. Yes. Let me add : I 100% agree that in the short term, stablecoins compete with the lack of payment solutions.

They perform an extremely important function in countries where people do not have access to normal payment systems. I founded one of the first Bitcoin companies in sub- Saharan Africa, in Kenya, and I also encountered centralized systems there. But the use case was obvious: people were willing to put up with a poor interface just to be able to make payments in currencies other than Kenyan shillings. However, I believe that in the long term, as we often see, we are moving out of this disruptive initial phase where there is no reason to use stablecoins for regular payments, but over the next few years we will see that. So I would say that probably in 5 years a significant portion of payments in Europe, the US and other major developed economies will be made using stablecoins.

But most people who use these systems don't even realize that they are payments in stablecoins, because the technology is evolving. The advantages are obvious: we have real- time payment systems that work all over the world without the use of the use of correspondent banks and other such things. So there is real value in this . So, it's almost here . So now, in my opinion, the question is not where exactly the use case is, we need to focus on it because it is part of our movement forward.

Now we need to focus on security, on the ability to align everything with the real world and implement it in the real economy. If I may, by expanding on your point, I completely agree, and I think that by the standards of the financial services industry, we are moving quite quickly, no pun intended, but if you take digital assets, blockchain appeared 16 years ago with Bitcoin. We are now at a stage where everything is properly regulated by MiCA. If you look at the development cycles of payment cards, for example, in the past for example, in the past , we still have magnetic cards in some parts of the world, right? So I completely agree with you and believe that cryptocurrency up until now, in terms of user experience, has been like the MP3 cycle before the iPod.

It worked. You could upload files, drag and drop them manually, and all that . And despite these shortcomings, we already have such acceptance. But now that the technology is ready, the regulation is in place, and all the drama has faded into the background, I think there is a window for scaling, because we at Mastercard have learned one thing: people don't like to pay and they don't really care how it works. It should be easy, reliable, simple and safe.

And whether it's checking accounts, stablecoins, batch or instant payments—people don't care. But I think as an industry we need to care about this, and we can do great things in this direction. It might also be worth looking at the situation from another angle: what other challenges exist beyond those you, Pello and Yu mentioned regarding AML compliance. We've already discussed a bit about regulation and the potential difficulties associated with it. Are there any other challenges, in your opinion, for the implementation of crypto payments?

Do I mean consumer confidence or something else? I don't know, Pello, if you want to start. Yes, there are many problems with this technology today. The most basic blockchains are simply wonderful. This is probably the best billing system we've ever had.

It is truly powerful and simply incredible. However, the UX ( user experience) is terrible. That's because compared to the internet, we're in a world before DNS and SSL, where everyone communicates through unencrypted messages between IP messages between IP addresses, you know? This is a very, very bad user experience. And the industry, in the name of what I increasingly call "the increasingly call "the theater of decentralization"...

of decentralization"... Decentralization, by the way, is very good and important. But people refuse to address some of the core issues with crypto payments, such as using blockchain addresses as the primary identifier. This hinders adoption more than anything else because it's just an address on the blockchain. I do n't know who I'm sending the money to.

I have been in the crypto industry since 2010. I understand how it works. But I get scared every time I send funds to a blockchain address. How do I send money to my children? Using Wise, right?

Because it works. I can send it to them. I know they will get them. I understand how stablecoins work. I understand all this , but it's still scary.

And as an industry, we seem to have a collective " collective " Stockholm Syndrome" about this UX. We are so protective of this terrible, just terrible user experience. And we expect to get, you know, the next billion— next billion— everyone keeps talking about the next billion users. Make them overcome it? They will do it if they really need to.

For example, if you are stuck with naira and want to make transfers, you will go through all these hurdles, but ordinary users in Europe are unlikely to do so. I definitely agree with this . So, that's another obstacle. another obstacle. Secondly, I believe that it should also be easily accessible and easy to distribute.

So I think this is very important. You know, what important. You know, what you do at Mastercard, and what more and more banks are actually offering the ability to buy cryptocurrency. I know this is often viewed with mixed reactions by crypto with mixed reactions by crypto enthusiasts, but I believe it is important to attract the next billion, and at some point education will become key. I checked interest in Bitcoin on Google today and it is currently at an all-time low.

It has increased slightly since the advent of the Bitcoin ETF . Now again , we're interested in it, but not everyone is. So I think it's all up to us: to educate people and create good companies and solutions. And the last aspect that I really want to mention is the topic of budgets, because we see that in the US a lot of money is allocated for these topics , in Asia the same, in Europe... same, in Europe...

you know, it's always so difficult to attract funding, it's difficult to get funds from government sources, and R&D budgets in corporations are not very large right now. Honestly, I think that ultimately it is also a question of money, and I hope that we solve it in Europe, because otherwise there are many things because otherwise there are many things , and I don't want this to move to the US, Asia or other prosperous regions of the world. If I may, very briefly: I agree about consumer trust and their safety. I find it very challenging to reach out to the average person who is unfamiliar with digital assets and get them to transact in them. We here take it for granted because we know and understand it.

But, again , for the average person, this is not the case. And if you look at traditional payment systems, yes, they are slow, sometimes expensive. But the fact is that they are ineffective for most people in the world. And when you look at, I would say, innovation, um, in, in digital assets, I mean, we can talk about financial innovation, but for me personally but for me personally , the truth is, I think, of course, you know, regulators and banks, they like to leave things as they are because digital assets represent what they fear the most, which is the most, which is control. Um, so the point I'm making is that when we talk about education, I mean education, I mean I've been hearing about educating people for 10 years.

Education, education, we need to educate people. Um, why can't we teach them? Why do we have to keep harping on about learning, learning, learning? It's actually not that hard to understand. So there must be more fundamental reasons why mass adoption has not yet begun.

And again , I think it's purely because it's convenient, essentially, you can't have a centralized mechanism for something that is fundamentally decentralized. And I believe that until you solve this dilemma, you will not see the next billion users start using digital assets. I don't want to sound like a conspiracy theorist, but that's just my opinion. Okay, Christian. Joy not only beat me to it, he stole my idea.

Um, no. But seriously, um, I also wanted to talk about consumer protection, and a little bit from a different angle, because I think the idea on paper that everyone can be their own bank is liberating, it's exciting, and all that. But about 4,000 years ago about 4,000 years ago , you know, banks came into being, or 3,000 years ago, and I think, generally speaking, and I don't want to downplay the importance of banking crises, they worked pretty well. And in Europe, again in Europe, we see deposit insurance up to 100,000 euros, zero liability, refund rights . But if I send money to the wrong wallet address, or if I do something, it almost brings us back to Pelle's words: it's gone forever, right?

I can't return them. And while I believe in the opportunities that crypto and self- storage present, especially with respect to the perhaps unfulfilled promise of open banking, to touch on that very briefly, I believe in it. However, I think it needs to be smoothed out a bit when it comes to the level of security that consumers know and value in the traditional financial system. And we see that, right? Now with Ledger you can restore access, and more and more such initiatives are emerging.

But this is the question, when you ask Jacob what exactly is holding back implementation, it's still consumer protection, I would say, we need to improve on that. Yes, excuse me, let me intervene if I may. Yes. Kristen, do you think it's possible to sit on two chairs at the same time? Because, again, the whole fundamental thesis and spirit of digital assets lies precisely in their decentralized nature.

Now that regulators are starting to regulators are starting to , you know, basically, tightly regulate everything, does n't that defeat the point? And I understand your point that everyone can be their own bank, have their own wallet. But, in essence wallet. But, in essence , these are adults making adult decisions. So if you decide to have your own non-custodial wallet and you make a payment, and that payment goes to the wrong person—that's essentially your responsibility.

So do you think it's possible to combine these things? I don't know, if I knew, I would be very rich, right? But I think to some extent we need to overcome this trade-off, and it's always a temporary balance between convenience, security, decentralization and control, and all these schemes where you divide everything into three parts. I think there is a way to do it. I think this is a temporary phenomenon, and again, consumer control should be the top priority top priority .

But there are people for whom it is important to have someone to call if something goes wrong, and I think this idea is very deeply rooted. This is not a technical problem. People will say that there are smart are smart contracts for this, but it's very hard to get that out of people's heads. Yes. No.

And I saw many in the audience nodding as we talked about user experience and whether my payments were actually going through. So is this the main issue the industry needs to address regarding crypto payments, or is there something else we need to address? Maybe, and I think it's a struggle when it comes to payments. Compete with the iOS or Android devices iOS or Android devices that people have in their pockets. They just put their finger in, do it, bang—and it works.

And usually, you know, it's difficult. We need to do better. And better means faster, more convenient, and all that. Because otherwise people say Because otherwise people say : you know, payments don't really bother me. I wanted that coffee.

I want that song, I, you know, I want to watch that movie. So I think we really need to do better. Yes. And I believe we can do better. better.

First of all, you know, public blockchains public blockchains are the best open payment system , right? And by "open type" I mean that mean that anyone can connect, send funds to send funds to anyone within the system, and it should remain that way . So, for example, regarding your previous point about non-custodial wallets and all that— wallets and all that— we need all of that. Just like the internet allows you to do whatever you want on it. The underlying blockchains should be 100% should be 100% permissionless, there should be ongoing support for innovation, non-custodial technologies, decentralized protocols, and all that.

This must happen. But we also need to build the tools, the companies, and the processes to engage not just the next billion, but, you know, the next five billion people. And speaking of improvement, I think we can create a much better user experience (UX) if we take it seriously . We can do it. We communicate a lot with regulators.

We often speak to FATF, FinCEN, and many other regulators around the world, and tell them about the vision that from a compliance perspective, public blockchains are much better. There is complete transparency of everything that happens, and if we give companies the tools and transparency, we can work much better. Many people in the crypto community now believe that they are the ones constantly under pressure from regulators. But FATF has just launched a program, trying to improve the quality of the implementation of the " travel rule" through SWIFT, Visa or Mastercard, they are updating the rules. Because, as I joke with them, we in the crypto industry have proven that we are an order of magnitude better: we are in high definition, we are interactive, while the information about the "travel rule" in traditional systems is like AM radio quality, like sending a fax, it's very, very bad.

So, in terms of compliance and risk, we are already better, and over the next few years we will become an order of magnitude better than what happens in traditional systems traditional systems . But we still need user adoption, of course, and I, I totally agree. And I know, uh, regulation—it's always an ambiguous term. And while I won't comment on, you know, the travel rules and the intricacies, I think the very fact that a regulator, again 16 years after the technology came out, is saying, "I take this seriously enough to make it safe for everyone it safe for everyone , and I'm setting the rules of the game and explaining to people how it's supposed to be done." And maybe it's not, you know maybe it's not, you know , the rules aren't going to be 100% perfect the first time, but I think it means that you're now part of this adult conversation, and you have the opportunity to scale it up, taking advantage of all the benefits of technology.

And here's how I would like to look at it: you now have the right to participate, you know, in the mainstream. Uh, Joey, any comments on that ? And maybe, somehow, uh, you know, there was some disagreement, not a disagreement, but a discussion, I guess, between a decentralized approach and a somewhat more centralized approach. And I think when we talk about payments, I guess it's sometimes a little more, uh, centralized, and you need, I guess, some form of, you know, regulation here. But do you think it could be Me, me, I think so.

I think so. Uh, again , I, I love it, Christian, when you say that there should be adults at the table. I think it would be, you know, a little immature to think that this could be completely decentralized. Er decentralized. Er , and that there can be no rules or regulations around this.

Uh, and yes, Uh, and yes, decentralization doesn't exist, uh, in a vacuum. It can operate on a continuum. Uh, but I think ultimately you want to get to a place where we've built the rules and the systems, uh, where true decentralization can become possible. I mean, fundamentally, the payment systems of 20, 30, 40, 50 years ago, uh, are outdated to me. Uh outdated to me.

Uh , now it's a new generation. Uh, they don't, you know, work like our parents. They don't live like our parents. So why would they want to use the same payment systems our parents use, right? Uh, so, parents use, right?

Uh, so, as you mentioned, we need to do better, and I think we can do better, and I think we have the right people in this room to do better. Thank you. And I think that was almost your last remark, and maybe it's worth giving the other three panelists the opportunity to make final statements about how you see the future of crypto payments? Well, I'm very inspired, because right now we're discussing crypto payments, and what I see in a few years is just payments, and that's it . It's also important to note that everyone approaches this topic from a different angle topic from a different angle , right?

For some, Bitcoin is the solution to everything; for others, it is to everything; for others, it is just a means of storing value; and some people don't care at all , they just want to buy coffee. So I think we need different solutions for this. This is why both independent asset control and custodial decisions are important —depending on who you are. And I think it's important to take this into account and create products that can satisfy both target groups, because these are the people who use them. I just think it's a very exciting time for our industry as we digitize money at its very core.

This will change the payments landscape. I can't say what the share of crypto payments will be—5, 15, or some other percentage—in 5 years. But we are happy to be part of this journey. OK. Many thanks to all the panelists.

Maybe a little applause from the audience, and a sincere thank you for listening to us. Thank you.