Payments account for 19.2% of VCs investment focus over the past 180 days, however, for Coinbase specifically, through its investment arm “Coinbase Ventures,” payments make up 23.8% of its investment focus.
If we look further into the data available to us for the Venture’s investment activities, there's a great deal of evidence that Coinbase is very obsessed with payments and generally to dominate the network of solutions that handles or enables crypto’s value flow.
This conclusion is simply based on the fact that in addition to explicitly “payment” apps or platforms being funded by Coinbase Ventures, the corporate venture capital arm has its investment focus on Data services at 19.1%, API and Wallet at 14.3% each, DEX, Digital Identity and NFT elements at 9.52% individually.
The flow of value is where the venture arm has its hands in, evidently. This data is public and accessible via Cryptorank.io.
Just a couple of days ago it was revealed in an article I published that Coinbase makes more money from the USDC stablecoin than Circle, the issuing company.
Stablecoins have lately been a hot topic both within the cryptocurrency ecosystem and within traditional finance but all for the same reasons.
As the new form of fiat currencies like the USD and Euro for payments amongst other use cases, banks and a long list of financial institutions are working overtime to develop means to capitalize on the technology.
One thing that I personally find flawed in all that's coming with stablecoins in respect to traditional players is that they all miss the point of why these assets exist in the first place. Certainly, this is in part due to the fact that leading options when it comes to said solutions are centralized, giving the rest of the financial world the idea that this is the system that's welcomed or looked forward to.
Someone remind me though, how's PayPal’s stablecoin doing these days? Let's quickly check Coingecko…
The ticker is PYUSD, and apparently there's $793M in circulation but when you look at the volumes you know for sure that nobody is using it. My point exactly?
PayPal processes trillions of USD in payments annually, certainly it should have had consumers jump on PYUSD, especially considering that the target market within crypto would have be saved some layers of complexities with off-ramp services.
Move to PYUSD and spend in crypto using an application you're already familiar with, but that didn't happen, why?
We can certainly say that it's too early to judge but we also need to consider that USDT and USDC already have the market locked-in when it comes to centralized options, as such, the only thing that can truly compete are decentralized stablecoins.
This is why am a bit skeptical about Coinbase’s obvious plan to be the banking giant that dominates crypto being a success in the long term.
You see, crypto is designed to enable peer-to-peer, censorship-resistant and borderless transactions. Centralized stablecoins go against the values of crypto and these payment solutions being funded by VCs like Coinbase add a layer for “intermediaries” to exist, essentially making them something the ecosystem will look to build above to avoid the control of the banking system on the vast flow of value on-chain.
I expect that we'd see a wave of developments surrounding payments that will challenge centralized solutions that seeks to be a bank but disguised as something that brings ease and flexibility.
For the most part, when it comes to crypto, people will learn to embrace manual payments to great lengths, we already do that with traditional bank apps, so services that accept crypto payments will just have to do that directly to their personal addresses without forcing users to use integrations that may require custody of user funds.
Certainly, said payment solutions can still build to be focused on the business-side of the equation as opposed to playing both sides because crypto users really don't need payment apps, they just need companies to accept crypto, display the receiving address and payment will be made p2p.
Coinbase’s obsession with payments shows that they want to be a banking giant that controls crypto and that is a great threat that needs to be built around. Their crawls within Circle, which also has prominent names like Blackrock and Fidelity invested is evidence of how they intend to secure that dominance.