The Next Wave of Consumer Adoption in Crypto | EBC11

Um hope you guys are all having and ladies are having an absolute wonderful day. See some familiar faces. Um so this is about consumer adoption. And I think one thing I wanted to start with just uh as a high level introduction is obviously the fact everyone's familiar with the Gartner hype cycle, right? And that is where crypto we're truly believe is no longer in that hype cycle area, but we're very much going through the flipping of the old system versus the new system.

And so that's where I'm really excited to be joined here today by these esteemed gentlemen to talk about the next wave of consumer adoption. So to kick this off, I'd love to each of you to give a very quick introduction of yourselves. Um, and also a fun fact because we like fun facts, right? Hello everyone. My name is Thomas.

Uh, I've been working in Visa for 15 years now and 25 years in payments after private equity experience. Uh, my fun fact is that I'm a Bitcoin miner since 2011. So uh, I'm very old in the in this in this ecosystem.

That's undercover. Undercover.

Yeah, almost undercover. And my job today is uh uh business development meaning I'm in charge of all the new stuff for Visa. So all across the board for for France, Belgium, Alexandberg uh including crypto obviously.

Hi. Hi everyone. I'm Mark Vandleberg and I'm chief strategy and marketing officer uh of Algarand Foundation and you probably know Algarand. Algarand is a layer 1 blockchain uh known for its uh elegant consensus mechanism that helps developers really build applications with real real world use at scale. Um fun fact um well um I've always been kind of a geek so this is going to be weird.

Um I've always been kind of a geek and so people in the room probably know the number pi but what you probably don't know is pi up to like 25 digits which I can tell you. Does any out of interest, does anyone else know pi to 25 digits or more? That's a no. Okay, you definitely won. [laughter]

That helps if you're in crypto. Um, hi everybody. My name is um I run a huge crypto exchange in Europe called uh Kcoin EU own in Europe running for license here with our headquarters uh in Vienna and uh hopefully we'll receive the license soon. Um, I will give more a laugh fact than a fun fact. Um, I'm a father of a six-year-old boy and just nine month old uh baby girl.

Nice. Congratulations.

So, um, yeah, my fun fact is I have a spoon collection. Um, that's that one to get that out the way.

Also weird. [laughter]

You won. Um, so to kind of kick things off, I think when thinking about consumer adoption, the first thing that came to my mind was the importance of um, crypto cards. And so I think looking back a little bit, I'd be interested in hearing your thoughts of have actually crypto cards been an unlock for consumer adoption. And I'm also especially interested kind of the EU versus global argument there in terms of has it been more used in the EU? We can start with Visa.

Interested to hear your thoughts. Yeah, of course. So, I I think I I would say yes. Okay. So, we've been uh issu issuing crypto cards since 2015.

We we we we began the journey with Skinbase in 2015. So, I would say yes. Uh and for many reasons. I would say that first this is a habit people in the commerce are using uh uh you know cards and uh being able to offramp the crypto portfolio is a is a nice way of making making a use and uh of those cryptos. Uh and as well new players, new banks, they love the plastic.

Even if it's in the telephone today, they they love having the plastic because this is the only object that you can touch, you know, uh apart from your wallets and obviously your cryptos because the cryptos are digital. So So I would say yes.

Okay. I'll be I'll be controversial and say no. Um so I I love the crypto cards. I love them. I think they're as you say, they're great kind of off-ramp vehicles.

um uh if you want to offramp your crypto into fiat. Um but you know, Visa cards and Mastercards work pretty well in the defa normal world, right? In the web two world. So why would you set up a crypto account in order to get a Visa crypto crypto card doesn't make any sense, right? Because you have your Visa card already, right?

That you use in a web two environment. You don't need a web 3 wallet. There's no benefit of getting a web 3 wallet in order to get a Visa crypto card, right? So, I think it's a great it's a it's a great solution for people that have crypto holdings and that want to have an easy way to spend their crypto holdings, but I don't think it will attract new users to crypto.

Yeah, that's fair.

So, I need to disagree. I [laughter] I can underline this with a a couple of facts, you know. um only this year from January to October with with our cryptocard um cool card um we had an increase of 65% in cards issuing and more than 480% in increase of uh payments and usage of the of the uh of the cards with a very famous uh provider here on on on stage and um I I believe not only for the payout but for the pay in it's it's a it's it's helping adoption for 100% Sure. Is it the end of the of the of the road? Most probably not.

I'm with you. You know, there will come new solutions. Um, for example, we also have something in place that's called Qay so that you can have direct uh payments in crypto with your merchant and you don't need a card in between anymore. And it's more or less in my point of view only a way to to get there. But as long as we have so many merchants accepting cards um still I believe this is a very good product um for our users.

Yeah, thanks for sharing and also disagreeing with each other. We want more fighting on these panels you know. Um, so that's where ultimately as a user I can go to a centralized exchange and where you become my custodian, but that is where a lot of people that have been in crypto for a very long time believe in very much like being your own bank. And so I think that's where um do you really believe that new users that are coming in and the next generation of users that are coming in are really going to be being their own bank or are simply rebanking with from the old system into the new system but using very similar players like a centralized uh entity very much like a bank in a way like what do you think the future's going to hold in that regard? So um I think it's a very interesting question.

I think it it is it is true that the first is if you look at stable coin volumes right now, right? Like um um the reality of the matter is that kind of most stable coin volumes hand are handled on centralized exchanges. They're not really you know operating in DeFi. They're operating in centralized exchanges. So it's a so it's a very valid question and I think ultimately I mean we believe in the original crypto ethos right of not your keys not your coin.

Um the reality of the matter is that most people really don't want to have to deal with the risk of like you know controlling your own money unless there is a much easier way for people to do so. And I think this is the challenge that we have currently is that you know backing up nobody's good at backing up keys. You know uh nobody's good at backing up passwords either. And so unless there is a solution for that problem um I think it's going to be very hard to kind of onboard like the next billion users. Um and that that's a significant problem that has to be solved.

And so there's there's attempts to do that right like there's for instance a DRE alliance and and Algarand is part of a DRC alliance. And the whole idea behind DRE is decentralized recovery. It's the idea that you don't have to back up your private keys. You can share uh portions of your private key with your friends and then through an automatic cryptographic mechanism, you know, those keys can be reconstituted automatically without any kind of intervention from the user in case you um you lose your keys. So you'll need stuff like that to really u u um provide confidence to users that they can actually own their own keys and and and be their own bank.

Yeah, I I also think that's that's the the future so to say. But until we get there, it's our job for example to do everything possible when it comes to security. Uh people trust their assets with us. So also with Kin for example, we really give everything on security. We even have all the certificates you know ISO and sock 2 and whatn not.

So banking banking grade security so that the user can be sure that their assets are safe with us. However, I'm an OG like you as well and I also believe in not your keys not your coins. So maybe at the end of the day there will be a mix still um and also new solutions for 100% sure will uh arrive to make it easier to have your own uh um how can I say security and wallets uh to use in everyday business. Yeah. I would love personally that all the the people could be owning their own uh keys you know and their own coins.

Obviously this is why it has been u managed from the beginning you know but if we want to be realistic today what we need is banks that just provide the access to crypto custody which is not the case as of today. So, so that's I would say maybe the the first uh the first uh stage of the rocket and then afterwards if everyone knows about crypto and wants to to to manage uh its own personal keys and and cryptos they should do it you know and make DeFi on their own. Maybe to add on that, I think this is already seen on the near horizon so to say that also the trade fires, the banks, the credit institutions will more and more offer custody for their customers as well and also have the one or the other crypto offering in partnership with maybe the one or the other exchange. But we have such a example in Austria for example where a huge bank is is having a partnership with a a huge fintech and this works very very well. However, the interesting uh thing here is that the bank said, "Okay, we didn't expect that we do not get too much new customers because they were thinking they get a lot of chap new customers because of this offering."

However, they said they managed to keep a lot of their existing customers so that they did not get out to Revolute or any of the other banks that are already offering uh crypto. So, it was more or less a retention program uh at the end of the day.

But these are all rebanking use cases, right?

Definitely. Yeah.

So, no fight on this one. [laughter]

Yeah. Well, I think that's where and and the next question I was going into was in terms of um what are the type like in terms of I guess the ease of use of using a centralized exchange. For example, if I want to get yield on my asset in a centralized exchange, it's probably one button that I have to click. Whereas in DeFi, I have all of these options of all the things that I can do. Do you guys have any thoughts on kind of that problem area around the usability?

Well, I I think usability is a gigantic problem and I think this industry is just terrible at designing user first interfaces and I come from Google like I worked 10 years at Google. I was the the CMO of Android. And so so at Google the whole idea of user first is so deeply ingrained into the culture of everything that we do. And you don't see this at all in crypto. In crypto, I think it's very much kind of a deep tech engineering culture.

And so, a result of that, you basically see interfaces that appeal to engineers and not interfaces that appeal to regular users. And even if you look at like the biggest like, you know, DeFi protocols and you look at the UI of these protocols also on Algarand, like we're not, you know, special in that regard. We're like have equally bad UIs. Um, they're terrible. They're terrible everywhere.

And so, they don't have to be, right? I think there's no reason for these UIs to be terrible. I think people just need to more spend more time designing them properly and designing them with a user first mindset. And this is this is a really big issue that I think the industry has to has to solve. And so we're really focused on this.

So for instance, we announced in our road map that we're um launching a new um uh self-custody wallet that we call Rocka and that has been completely redesigned from the ground up to be web 2 centric. So um it it includes this direct for instance for for recovery. It will completely hide the native currency. So uh it'll use fee abstraction so you can actually transfer USDC without owning algos for instance in your account. And so it'll do a bunch of this stuff to kind of re reimagine what a crypto wallet should look like and a crypto wallet that's really designed for a web two user user base.

And how do you see that atcoin given that you're kind of guiding people down one path? Abs.

Absolutely. I need to disagree again a little bit. So um we also try for sure very hard to uh get the best user experience possible in in in in crypto. We just recently relaunched our our uh app and web app um to really focus also uh on that part on usability even also for the more um how can I say um complex products because for sure on a on a platform like ours it's not only buy wholesale uh crypto you have the structured products you have the derivatives per whatn not so but also here we try to much more guide our users and also give much more uh security and in the future even much more um educ education also. Yeah.

To to train our customers that they know what they are doing when they are going up with futures. Um um so that if something happens like last last Friday, you know, not everyone gets knocked out immediately um at first hand. So yes, especially when it comes to web free wallets for example. So for DeFi wallets, there's a lot of work to do. We already have a very nice one.

However, we're not supposed to to publish it currently in Europe due to regulations for sure. So we need to do our homework here as well as soon as we have our licenses in place. But I can assure you that here is a lot of attention from our developers as as well and we really try to listen to the market and the users to then be integrated in our platform at the end to give a great user experience at all. But see, but you talk about education, right? It's like when Steve Jobs launched his iPhone, nobody needed education, you know?

[laughter] So, and I think and I think this is the

true that,

right? And and I think this this is like when the first iPhone was launched, it was actually maybe this sounds negative, but it's not. It was a packaging exercise, right? It was it because none of the technology was new. Like all of it existed, but the brilliance is the packaging.

The brilliance is like how do you put together a product and that that creates a phenomenal user experience and part of it is also what features do you kill right like that the iPhone was really good because it basically did a bunch it didn't do a bunch of stuff it basically focused on the core value proposition and it killed a bunch of features that were not relevant to the core value proposition and and we with an engineering mindset you try to put as much features as you can into the product which makes it really really difficult and really hard and So, so I think this industry needs a iPhone moment. Somebody is going to figure out how to put the pieces together in such a way that is going to be awesome.

Yeah, I like your analogy. But today, Apple strives as well with the iPhone because they already were able, you know, to make the tens of hundreds of thousands of millions of devices, you know, already. So, so they put marketing money on on top of that. I agree it was to educate it was easy but they they they they teach the use cases you know they taugh about you know the internet communication device you know remember it's an iPod it's an iPod with a phone you know app you know so so to me again adoption UX is paramount of sure but I'm sure that is going to need and this is why the defy products can't do that because you need marketing money to to to to explain that you know

sure

maybe one add on to this as uh uh topic I just arrived from Dubai from another huge conference and and and tech conference and the interesting part there was everyone is talking about AI and AI I think could really change uh the the game here could be that game changer that you are talking about everyone has his own avatar going to to deal for him on our platforms it's even possible already now we tried it with a huge uh large uh language model and um if this is going to be implemented into our systems this is going to change completely. You just maybe have to say I want to have that kind of yield with this products with that racco appetite and everything else will be done by your by your avatar for example just as an idea but this this is going to be huge in the in the future

coming soon to an AI near you. Um yeah, which and

not in a UDO due to the AI act.

This this discussion around the roles of um uh centralized versus decentralized architecture in a way is like how do you see the the topic of consumer protection from your points of view because that's where ultimately with platforms like pump.fund fund. Anybody can buy anything and can be rugpulled or whatever, lose their life savings potentially. And how do you see the roles and I think as organizations especially in regulated environments now particularly here in the EU and I think this question is more focused on uh to Mark and uh Oliver. So um so there's I think there's two answers um to that.

One is if you think about um how do you create like compliance services and so to me and and and what and there's friction of course between kind of compliance and then having privacy, right? And so to me the way you deal with this is that you have like the right type of architecture where at the base layer you have a network that can execute transactions fast with instance finality in like a completely decentralized way. Then on top of that you provide kind of compliance at the asset level. So for instance assets on Algrand by default can be enabled for freezing for clawback. So all of the things that you'd expect in a compliant architecture are actually built into our protocol and our and are um uh uh implemented at the asset level.

So that's the second level. And then how do you ensure that you still have privacy? Well um you you of course many of the transactions need KYC, right? KYC is happening offchain obviously but you can actually do zero knowledge proofs on chain so that you can maintain the privacy architecture that you've defined while still being completely compliant and making sure you complete all the KYCs and everything that's associated with that. So that's kind of like the first thing I would say.

And on the on the payment side, of course, when you think about merchants and chargebacks and stuff like that, I think obviously um uh if you look at the payment ecosystem and of course you know 10,000 times more than I do on on this. If you look at payment ecosystem, it's basically a system of exceptions, right? It's like the network that has existed for 50 or 60 years running on, you know, IBM mainframes with um cobalt programs is basically a system of exceptions. you know what happens if something goes wrong. If some if everything goes right, you don't need a complex system.

You just do the transaction and you're done. It's it's basically how you deal with all the exceptions and the exceptions on top of the exceptions and and all that. And that is a I think a very complex uh complex system uh to potentially disrupt at some point. I think it you know it will have to be disrupted because you know people going to run out companies are going to run out of cobalt engineers. I don't think many cobalt engineers are graduating from universities anymore.

There's actually

you are VI now.

Yeah, [laughter] right. Probably. Probably. Yeah. So, there's actually this company called Cobalt Cowboys.

Have you heard of that? Cobalt Cowboys. And they get hired by enterprises. They're kind of retired cobalt engineers and they get hired by enterprises to go and help them fix like you know their little cobalt programs. So, I think that'll be a while before that I think gets disrupted.

As soon as you scale, you need complex systems you know in payments. It's not complex by design. is complex just because of of the scale and and the and the fraud. You know, we just launched uh several months ago an agentic, you know, uh protocol with an MCP, you know, uh that you can call and we just said as well because it's almost a new back door because you can fake new merchants, you know. So, this is why we we we just announced last week that uh we we we can be able just to partner to certify all the merchants because now we're going to have to to to certify all the merchants or else it's going to be, you know, a super mess.

So this is why we design complex systems not for the not just for the sake of it you know because we need it.

Maybe this is also true for all these rules and regulations that we need to face on to to um have this consumer protection in place um that uh at least the governments want us to have. It doesn't matter if it's my car if it's Dora if it's me if it's e-oney most of them focus not only on anti-moneyaundering and and and and sanction stuff but mostly on the protection of the customer. Um being a qualified lawyer myself for sure I must admit that this mostly is needed also. However um I also have a second answer that to that topic. I mean especially also when it comes to DeFi Bonet what what what you were uh talking about before.

We need to think of how to stop babysitting our customers. You know we cannot think about the last possible um um scam in the world. There are so many. They are going and growing and growing and you cannot regulate everything at the end of the day. The customers need also to be educated and take serious decisions their own and not not do all their life savings on bump fun and or on a 125x leverage trade um and are bankrupt afterwards and then running to us and saying hey guys you didn't protect me before myself you know so this needs to be because if we really tried to to do that on a regulatory perspective um we would not be able to do business anymore business is risk at the end of the day and this also our customers need to Yeah, that's fair.

It's it's also it's a topic of also about freedom at the end of the day. I think you really touched on privacy and I think that's where like out of interest, who in the room knows about the travel rule? I know you know about the travel rule. That's for sure. So that side of the room doesn't really know about it, but almost every transaction you make these days anyway has your KYC details passed alongside it, right?

Um, which brings me to the last question I have, which is really on the topic of the next wave of consumer adoption, which is what do you think is next and is is up and coming or is necessary? Like you guys are free to go in any direction you want with this, but really for on boarding every single consumer on the planet like what is necessary for us to get there.

Very short answer, account abstraction and AI. So agentic of course

um I I agree with that. I think that um in addition I think the real true promise of crypto will or should be that your money always works for you 24 by7 while you sleep. You basically put money in your account. It starts generating yield automatically. It keeps generating yield until you do a transaction and then it starts generating yields on the other side.

And so this idea that you have to have a checking account that you know where you're subsidizing banks to provide loans to businesses is just not right. Right. I mean like if you you talk to any millennial you talk to like they're like you and you explain to them that you know your checking account is actually subsidizing a bank to provide a loan to business. They'll look at you like what right? So your money should always work for you and crypto has the promise of yield bearing stable coins and other mechanisms to actually have your money always work for you.

And that to me is a real promise. Yeah, that that that sounds great to me. Um I also go in the same direction, but I I frame it a little bit bit different. So um I already uh said this week in another panel that by 2030 crypto is dead.

But 2030

Yeah. But it's going to be the basis for a new way of doing finance, of doing banking, of doing uh payments. So it's going to be the ground layer. It will not be called crypto anymore. It will just be the future of finance.

Um and we are all building event. You are building that. You are building that as well. You're part of it as well. And we will it will just be normal to do your transactions, your payments, your savings, your uh yield farming, what not on chain.

And this is a bright future uh in my opinion

in a secure way.

What?

We don't we didn't fight.

No, you didn't fight. You didn't fight. Um, we have like one more minute left and so I'm wondering if you guys have a question or an argument to one of each other maybe or something random or if someone wants to put their hand up and they have a question then we can take a random question.

Yeah, I I'll repeat it. I'll repeat it. Okay. Do you hear me? Okay.

So, my uh question is for you, Thomas. You said uh crypto cards are not really interesting for people who do not have a crypto wallet at the moment, but regular crypto cards do not really have a lot of benefits as crypto credit cards do, like a cashback, free Spotify, um airport lounge access, etc. Might that not be a reason?

I'm not sure.

Get into crypto.

Um, crypto cards are for everyone, you know, people with wallets on DeFi or not or centralized exchanges or banks or, you know, I mean, you can build anything what you want, you know, any layers, any um, so I'm not sure I said that. Uh, but yes, I mean issuers can can add benefits on their own, you know. Uh, meaning uh it can be any coin. Uh, it can be any benefits just like kind of a ref share, you know. So, so points or um anything you can think of, you know, but ultimately you have um um a business model to to to I would say to respect for instance in in Europe, you know, which is a very highly regulated market especially on cards um debit and credit cards uh the interchange money so the money out of the pocket for for for the issuers is regulated.

So it's only 20 and 30 basis points. So meaning that you have to to give benefits on top of that which is not much you know. So it's this is why it's pretty difficult to to to to add some of those benefits which is easier for exchanges to do that. So I will let my partner to to talk about that if you want.

Yes.

Happy to do so. But um there's a reason why we offer this kind of products because it just work it's great for our users for our consumers. They get instant cash back. They get our crypto back uh more than that and have a lot of other uh uh beneficials. So this this is great but also when it comes to the future of of of of payments for example what we I was um introducing before I mean with all that stable coins coming uh up in the in the future and every even huge credit huge credit institutions nowadays think of issuing their own stable coins and and stuff of like that because they found out it's much cheaper it's faster it's secure um so why don't use it as well so I I'm much more wonder if what going to what's going to do swift for example in the future.

I know that they already have uh uh their their developers and their their R&D in place as well and and and elaborate how they can do that. But could for example a stable coin even um the question is which one and if there's going to be a standard and there's a lot of things to think of but um replay swift at the end of the day. Yeah. And a lot of banks are already using um um crypto as means of daily settlement within their own banks for example. Cool.

Thanks for sharing that last fun fact. Um, please give a round of applause to the these panelists. [applause] Thank you very much for joining us today.

Thank you.