In the early days of the Internet, it was not uncommon for pundits, even in major news outlets, to disparage the fledgling technology, judging it as little more than a project with no real future.
For some, the idea that, one day, thanks to a set of new open-source protocols such as TCP/IP capable of transmitting data through telephone lines and fiber optic cables made by a new generation of telecommunications companies, people would be able to work remotely, book trips and dinners with a click, meet people from all over the world, and abandon shopping malls for online shopping, was far-fetched. A thought that did not last long.
These are actions that people take every day. And to get to this point we went through Borders and Blockbuster, later replaced by Amazon and Netflix and countless other platforms that have capitalized on the potential of the Internet.
The Internet has no future
At the time, the thought “the Internet has no future” was not entirely unreasonable. Implicit in it, however, was a decidedly incorrect assumption; that is, it was thought that the world would continue to function essentially as before and the Internet would remain a fringe technological experiment, a playground for nerds and enthusiasts.
And perhaps the Internet’s detractors would have been right if the underlying technologies and ecosystem had remained unchanged. My first dial-up Internet connection, for example, was slow and unreliable, web browsers were difficult to use, there were not many websites or apps, and people did not like long loading times. The market value of high-profile dot com startups had plummeted: in short, there was much to be skeptical about.
But open-source technology has not remained unchanged. It has evolved and matured to innovate and attract companies from around the world.
Broadband, Wi-Fi and 3G connections have increased the performance of networks, smartphones have provided convenience and accessibility at our fingertips, and developers have created new and more sophisticated applications for consumers. The rest is history.
The broadband moment for blockchains
Blockchain today bears similarities to the early Internet era, especially regarding skepticism and criticism. It is hard not to hear the echoes of past certainties whenever an analyst says something like, “Blockchains are too slow! Too difficult to use! Too expensive!” or “They have no use case!”
Sure, blockchains have been all that, and some use cases are more obvious than others. But at one time even the Internet was slow, expensive, and difficult to use; yet today it is fast enough to stream live video from space, cheap enough to be free in many places, and easy enough for a six-year-old to use.
At Visa we have been at the forefront of payments technology for more than sixty years. From the very beginning, we have grasped the potential of the Internet, playing a key role in its ascent into new forms of commerce. Today we see significant potential in blockchain and many possible futures. In particular, we focus on a few specific areas.
Efficient Global Settlement/Compensation
Two years ago we were the first major payment circuit to transact on Ethereum in USDC, with Crypto.com as the issuer. This year, however, we extended the settlement pilot project beyond issuing partners, acquirers and Solana, a blockchain whose innovative system allows it to process about 10,000 transactions per second. In the immediate term, this has provided issuers and fintech acquirers with a modern and convenient option for making and receiving payments from the Visa treasury, as well as an opportunity for acquirers to get payments to their merchants more quickly.
We envision a future in which the Visa network will involve not only more currencies and bank settlement circuits, but also more blockchain, stablecoin and CBDC networks or tokenized deposits. We envision that traditional currencies and legacy settlement circuits will long coexist with tokenized fiat that run on 24/7 real-time global blockchain networks. And we envision our role as a bridge to reach our customers wherever they are, regardless of preferred currency, settlement network, or form factor.
Cross-border disbursements powered by blockchain
Cross-border money movement has long been a challenge for users on both sides of the transaction. We have made great strides to simplify processes, introduce efficiencies and expand cross-border payment options. Today Visa Direct, our push/real-time payments platform, reaches nearly 7 billion end points, including more than 3 billion cards, 2 billion accounts and 1.5 billion digital wallets. It enables, for example, same-day payment of ridesharing drivers, rapid payment of insurance, remittances, early access to wages, real-time payments on marketplaces, and a growing number of use cases. One day soon, blockchain networks may be part of this.
For many people, especially in emerging economies, digital wallets are the main entry points to the digital economy. That’s why we are exploring how Visa Direct can enable our customers the option of transferring funds through blockchain networks in stablecoins recognized to next-generation wallets.
Helping clients understand and leverage blockchain
Blockchain technology has been around for less than a decade. And each new project, each new blockchain and each new use case, adds to its complexity. Banks and financial institutions want to understand how to best assist their customers in this area, lest they risk them going elsewhere for this service. Merchants are exploring NFTs. And central banks are studying CBDCs.
In order to provide the best for our customers and partners, we are doing extensive research in this area, we are exploring which blockchains can potentially improve payment circuits, we are experimenting with real ways to reduce complexities for end users, and we are trying to get a clear sense of what consumers want from this rapidly evolving technology.
Having a blockchain strategy
Although only time will reveal what role blockchain networks will play in our world 30 years from now, if the case of early Internet criticism can teach financial institutions anything, it is that they would do well to have a strategy anyway.