“Innovation distinguishes between a leader and a follower.” – Steve Jobs
On August 7, 2023, PayPal announced that they were launching PYUSD. In five years, we will look back at this exact moment and realize this was the beginning of the turn in history. Why do I say that?
Up until this date, the majority of the builders in crypto were just that: in crypto. The largest companies operating the space were exchanges and stablecoin issuers. The largest market capitalizations were for the blockchains themselves. Most of the activity in the space was deeply self-referential, with the ICO boom, DeFi Summer, and the rise of NFTs all catering primarily to users and builders who were already in the space, enabling them to use more of the technology with each other.
Austin Campbell is the founder and managing partner of Zero Knowledge Consulting, and an adjunct Professor at Columbia Business School.
I’ve called this phenomenon the bad habit of building “more crypto for crypto” elsewhere, but up until this point in time, it is largely what defined the growth and evolution of the industry.
That changed this week. PayPal, one of the largest payments companies in the world with 430 million-plus customers, has planted a flag saying that blockchain technology is important enough that they are willing to spend years building a product to evolve their business model. Of course, PayPal still has the PayPal app (and ubiquitous checkout button), PayPal still has Venmo. But now PayPal also has PYUSD.
Why is this so important?
Blockchains are a fundamentally different form of economic organization. A public blockchain, in particular, is an open, many-to-many interface for exchanging value without needing a centralized intermediary.
PYUSD brings us back to the original promise of blockchain: the ability of a two-legged human, anywhere in the world, to send value to another two-legged human without having to trust or pay a bank (or worse, interminably long string of correspondent banks) to facilitate their transactions. This sort of platform erodes monopolies over time, allowing people to form their own financial connections without the need for centralized counterparties to control them. It returns the power over money to the people.
This week the snowball was pushed from the top of the hill
However,…
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