Satoshi had a vision, and commerce was always at its heart. To pretend otherwise is to ignore the true purpose of any currency: a trusted exchange. And yet through today, web3’s primary innovations have led to a rich investment-focused market. This makes sense, unless you’re a merchant who can afford the volatility, why would you take on the risk of accepting cryptocurrency for your goods and services? You wouldn’t. And that’s why, though cryptocurrencies are old enough to drive in the United States, we still haven’t seen wide acceptance of them for commerce. Solving that volatility and creating a payments incentive for merchants to more widely adopt the solution is the key to unlocking the commercial potential of Web3 commerce. Fortunately, a host of innovations in technical infrastructure, stablecoins, and the allure of untapped markets are creating just the environment to solve that problem.
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The Growing Wealth of Cryptocurrency Holders and a Potential Economic Super-Charge
According to researchers at the FDIC, the cryptocurrency market’s peak represented over $3 Trillion USD in value that largely has nowhere to go. And yet, even with the considerable hurdles available to commerce, the FDIC researchers estimated that during the 2021 market peak, cryptocurrency holders added somewhere between $70-100Billion USD to the American consumer economy. How’d they spend it? Mostly, the big expensive stuff Americans always spend our money on housing, debt repayments, and other investment assets. Why not other things? Because the relative difficulty of converting crypto assets into spendable USD for merchants made it unreasonable to spend it on anything else but the biggest and most important purchases in people’s lives. But what if you could make it easy for cryptocurrency holders to spend their new-found wealth? How many other businesses would suddenly get a piece of the action this year? $200B USD worth? $250Billion? $500?
Image courtesy of Spree Finance
Stablecoins, Payments, and Growing Profit-Margins in Web3 Commerce
One maturing solution to web3’s volatility has been the spreading adoption of stablecoins. These asset-backed cryptocurrencies peg their value to more standard assets such as the US dollar, commodities (e.g. gold), or government securities (T-bills, bonds, etc.…) in an effort to offer a stable and predictable price exchange. Analysis of data from the web3 data firm Artemis, along with corresponding public information from Visa, PayPal and others, shows that stablecoins accounted for more than double the transaction volume in Q2 of 2024 ($8.5Tn vs $3.96T) than Visa. How did an obscure asset class come to lap a payments powerhouse?
Convenience. As everyone from Meta’s old Libra team to the VC gurus at a16z can attest, stablecoins now offer the single cheapest way to execute a transaction, with fees now averaging a literal penny.
Meanwhile, Visa and Mastercard, the payment behemoths, are taking 3% of the transaction for themselves––a reality far too many business owners understand. That’s three percent that could double the profit margins at struggling restaurants, neighborhood bookstores, and mega-corps like Kroger.
The problem is how can you offer a bridge for those businesses to access payments processed in stablecoins?
Everyone Uses APIs Now
Of course, not all technical innovation has to occur within the bounds of Web3. Over the past fifteen years, the proliferation of easy to connect software interfaces known as APIs has led to explosion in accessibility, innovation, and speed of adoption as businesses realized that they no-longer had to re-write entire systems to connect to other software. According to researchers, the adoption of APIs by public firms over the past 16 years has led to an additional 38.7% growth over non-adopters, with 90% of Gartner surveyed IT leaders now professing an API-first approach to their company’s systems.
And yet, too often both Web3 commerce natives and innovators at merchants across the world have decided the only way to get into the Web3 economy is to take a pre-API approach to system development and build it from scratch. Why ignore the biggest innovation of web2?
The Commerce Everyone’s Been Waiting For
Instead, by combining the power of API-driven system accessibility to the financial innovation of stablecoins and running it on the infrastructural revolution of the blockchain, you can create the kind of decentralized, low-fee, trustworthy exchange of goods that both idealists and business owners have dreamed of. Suddenly, businesses can not only tap into a new three trillion-dollar market, but they can do so at a much lower fee than the current credit card driven payments infrastructure, resulting in growing profit margins without having to undertake significant investment to do so.
From there the innovations spill forth. You know what else is being driven by APIs? AI Agents. What if you could connect your AI Agent API to a Web3 Commerce API? You’d have a world where you can book your next vacation by talking to your phone. Who said the future had to be far away?
