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I’ve been a bit of a Stripe fanboy for a while…

• they have become the standard for developer-first product, documentation, messaging
• a lot of smart people I know went to work there
• the Collison brothers seem to me extremely well read and interesting, they go beyond the usual ‘shallow’ tech bro ‘I’ve only read Ayn Rand and Sapiens’ CEO

So I like to follow what they’re up to in crypto. Hadn’t heard them talk much about it openly so I pounced on Guillaume Poncin’s interview released last week. It only has 60 views on youtube and a lot of interesting stuff, so here is my summary. Enjoy!

Links

Youtube — Spotify — Apple Podcasts

Guests

• Jim Hiltner, head of Sales at Compound
• Guillaume Poncin, head of Crypto at Stripe. Ecole polytechnique, Stanford, 10 years at Google (principal engineer)

How Stripe got into Crypto

• Stripe Crypto started in 2014. Guillaume started leading this team in 2021
• Motivated by user demand: processing fiat payments for exchanges and other crypto actors
• Realised that there is a lot of difficulty for developers in the crypto space. Node infra is now well done but a lot of other aspects are not done:
  • Onboarding users, creating wallets
  • On/off-ramp
  • Fraud detection
• Felt to them like the early days of payments (2000s era).

How they approached the industry

• They realised fiat-crypto interface is a good place to start
• They can already do fiat payments, plus fraud detection, reconciliation bits, etc. a lot of which is reusable

New announcement: Stripe fiat-to-crypto onramp

Announced Dec 1st 2022. Link

• “We rolled out support for crypto payouts to 67 countries, which allows platforms like Braintrust to pay out USDC to contractors around the world. Today, we’re announcing a fiat-to-crypto onramp for Web3 developers.”
• Problem: “Today, it’s extremely difficult to get end users “on chain”—that is, to fund their wallets with the crypto required to interface with Web3 applications. Developers have to wrestle with rampant fraud; navigate complex KYC requirements; and somehow still offer a seamless, high-conversion payments experience so that their users can actually use their Web3 applications.”
  • From a user perspective, the UX is really bad, for instance to mint an NFT you have to first create a wallet, then fund it from somewhere else to have enough gas, then go back to the mint site and mint… they want to abstract all that
• Solution: “The onramp is a customizable widget that developers can embed directly into their DEX, NFT platform, wallet, or dApp. Stripe handles all the KYC, payments, fraud, and compliance, removing the need to integrate multiple third-party services” “whole experience inline”
• Compatible with Stripe’s cross platform device: “Users save their payment and identity information to Link, enabling an instant and convenient one-click checkout experience on all future purchases across any Link-enabled Stripe surface.”
• Includes identity verification & wallet check, eg against sanctions.
• Launch partners: Audius, Magic Eden, Argent

Merchant goals

• Conversion rate. Keeping the experience inline helps with that.
• Minimising fraud. Stripe take it upon themselves (it sounds like they ‘guarantee’ chargebacks etc.) so they are a bit more expensive

Previous announcement: USDC payouts

• Idea is say you are a freelancer in Vietnam and you work for a US company, you may want to get paid in USDC rather than the local Vietnamese currency. Braintrust is an example
• Volumes remain modest but traction is picking up.
• Enables new business models for emerging markets. Interest in Vietnam, Argentina
• Last mile needs a lot of work still — what do users do with these payouts (e.g savings vs day to day spend), how to deal with tax, etc. For now Stripe does not handle this, they let users off-ramp elsewhere
• Hearing that primary value is saving in USDC for now

Stripe Crypto strategy

• Placing a bunch of bets and trying to move really fast
• Are economics better or worse than fiat?
  • Using blockchain as payment rails — they try to pass on the savings as much as possible
  • Currently onramps charge a lot for compliance at the on-ramp, but that will compress down over time
• How much blockchain-specific expertise was needed?
  • Not that much
  • A lot of the heavy lifting was on the fiat side of Stripe (fraud detection etc): “Hardest part to implement USDC in the Stripe systems was it’s a 4-letter code not a 3-letter code like every other currency in the world”
  • Partners: Alchemy, ZeroHash, Polygon, Solana. They want to add value on top, not reinvent the wheel

Outlook

• Card networks: they all have a crypto arm and pushing the envelope
• Card issuers: not a lot of activity. Stripe hopes to improve authorisation rate with crypto.
• Concerns from banks
  • Unclear regulation, many potential outcomes of future regulation
  • Yet you get a lot of the risk
  • Some banks are more experimental than others
• How do you see crypto changing the payment space?
  • Zooming out: what Stripe is trying to solve is programmable, cheap, easy, frictionless, global money movement
  • Stripe wants to compose all the building blocks to get to that end state. Crypto solves some of that and fiat payments have solved some of that
  • Today it’s incredibly difficult to move money around the world. eg you’re travelling with Airbnb and you’re from Brazil but you’re in Vietnam and you want to pay in USD, it gets incredibly complicated. Maybe crypto can make this easier
  • Remittences can be made easier today with crypto
  • Excited about how much crypto can contribute to this goal. Community has proven there’s a lot of brainpower