January 31, 2022
Good morning, and welcome to Protocol Fintech. This Monday: Lightning's out of the bottle, Fidelity’s crypto ETFs, and the end of the Lehane saga.
We made it! Welcome to the second week of the new daily Protocol Fintech. Today, Tomio Geron takes you through a crucial issue: lowering the cost of crypto payments. So many problems, from unwelcome environmental impact to a lack of adoption by consumers and merchants, have held crypto back from its promise of disruption. Read on for the latest on a key technological development that could change that.— Owen Thomas (email | twitter)
For crypto to go mainstream, it needs an easy, cheap and fast way to make payments. Why is that still so hard?
It’s especially confounding given how long bitcoin has been around. Buzz around bitcoin for everyday purchases was building by 2013, when you could hunt around and find, say, a Subway restaurant that would exchange 0.04 BTC for a chicken bacon ranch sub. But it didn’t stick. As interest in bitcoin among retailers faded, enthusiasm from speculators grew. Why would you want to part with your bitcoin if you thought it would go up in value? (That Subway sandwich would cost $1,500 today.) Another big reason why bitcoin didn’t supplant Visa and Mastercard: Though the price has come down, the average transaction costs nearly $2, which is prohibitive for a lot of purchases. Settlement times are lengthy, too.
There’s an answer, some advocates say: Lightning. The newer technology built on top of the underlying bitcoin blockchain bypasses some of those obstacles.
The biggest name backing Lightning is Jack Dorsey. The Block CEO is a big believer in bitcoin, to the point that he dismisses other cryptocurrencies. That means he’s got to make bitcoin work.
But Lightning will have to grow beyond companies under Dorsey’s influence. Cash App and Twitter won’t be enough to solidify Lightning’s reach.
Other crypto protocols want in on the payments business. If you own the rails, you can make a fortune.
Ultimately, consumers will pay with whatever’s most convenient. Merchants may show interest in cheaper payments, since they typically bear the cost, but wide acceptance and consumer interest is crucial. It’s going to be a technological race between Lightning, which can leverage the best-known cryptocurrency, and all the other crypto payments contenders.
Businesses need applications faster than ever before, and they need them to solve increasingly complex, sophisticated problems. This means IT teams need a more efficient way to quickly deliver powerful software and a better way to partner with their business counterparts. That’s where low-code comes in.
Fidelity has filed with the SEC to launch two crypto-related ETFs. The financial services company is launching a Crypto Industry and Digital Payments ETF and a Metaverse ETF, hoping the SEC is friendlier this time after rejecting its application for a spot bitcoin ETF. The SEC has yet to approve any ETFs that invest directly in cryptocurrencies.
Robinhood shares are rallying back after its plunge. After reporting disappointing earnings, Robinhood shares fell by 14% late Thursday. Friday saw a more optimistic look as the shares gained 9.7% — a signal that investors might be excited about new product developments, or just thought the stock was oversold.
Google is expanding its presence in India with a $1 billion investment. The tech giant is entering into a partnership with Bharti Airtel, an Indian telecommunications company. Airtel Chairman Sunil Bharti Mittal hinted that payments might be part of the partners’ plans.
Crypto’s top execs formed a PAC for the 2022 midterm elections. The PAC has already raised $5.3 million with plans to spend $20 million or more, and is looking to back congressional candidates "who work to give consumers and innovators the opportunity to build and use next-generation technologies and services here in America." It has yet to endorse any candidates, though we’d note the Congressional Blockchain Caucus is a good place to start.
Reddit is testing NFT profile pictures. In a move similar to Twitter's, Reddit is running internal tests to allow users to use and validate NFTs as profile pictures. This would allow users to use any NFTs, not just CryptoSnoos, Reddit’s own Ethereum-based NFTs.
LeBron James is the latest celebrity to sign up with Crypto.com. He said in a press release that he wants to build resources for kids: “Blockchain technology is revolutionizing our economy, sports and entertainment, the art world, and how we engage with one another. I want to ensure that communities like the one I come from are not left behind.”
Ubisoft’s defense of its new NFT features caused even more backlash from gamers — probably because it was quite insulting. "I think gamers don't get what a digital secondary market can bring to them," Nicolas Pouard, VP of Ubisoft’s Strategic Innovation Lab, said in an interview.
SEC General Counsel Dan Berkovitz thinks the media exaggerates the fight over whether the SEC or the CFTC gets to regulate crypto. “It’s a collaborative relationship,” Berkovitz said at a legal conference. (So collaborative that the White House is starting to knock heads.)
Visa reported $2.5 billion in payments made with crypto-linked cards in its first fiscal quarter. “We will continue to lean into the crypto space and our strategy is to be a key partner to provide the connectivity, scale, consumer value proposition, reliability and security that is needed for crypto offerings to continue to grow,” CEO Al Kelly said on the earnings call.
Jack Dorsey and Michael Saylor will talk at a Bitcoin for Corporations event on Tuesday. The conference, held by MicroStrategy, will see the two CEOs discuss the potential benefits of bitcoin. Both MicroStrategy and Block hold bitcoin in their corporate treasuries.
Tech is making sure shopping will never be the same. How? Join Protocol’s David Pierce and a panel of tech and ecommerce execs this Tuesday at 9 a.m. PT/12 p.m. ET for a conversation on how shopping works now, how the customer experience is changing and where you can innovate.
PayPal and UBS earnings calls are set for Tuesday. PYPL’s average estimated EPS is at $0.86, down 4.4% from last quarter. UBS’ average estimated EPS is at $0.24, down 61.9% from last quarter. Look for UBS to discuss its plans for Wealthfront, the Silicon Valley robo-adviser it just acquired.
The first Open Banking to Open Finance summit for the MENA region starts on Tuesday. The two-day conference features over 20 speakers and over 150 senior execs from banks and fintech companies.
Bill.com’s earnings call is scheduled for Thursday. BILL’s estimated EPS is at -$0.53, down 12.8% from last quarter.
The two-day Nexus Dealmakers Summit begins next Monday. The conference will host a number of meetings and networking events, ending with the Industry Awards. (As a perk, you can test-drive a Lamborghini in between meetings if you want to.)
I was scouring FINRA licenses, SEC filings and Twitter and LinkedIn breadcrumbs all last week and he just … he tweeted it out. Chris Lehane confirmed Friday he was joining Katie Haun’s KRH Partners, one of my top guesses after he said he was leaving Airbnb for an unnamed crypto fund.
In subsequent tweets, he gave more clues about the makeup of Haun’s operation: Kindra Mason, chief of staff for a16z’s Crypto Fund III, is also moving to KRH, he said. And I noticed that Justin Gregorius has updated his LinkedIn to indicate the end of his employment as a protocol specialist with a16z, where he also worked with Haun on crypto.
— Owen Thomas
Thanks for reading — see you tomorrow!