The article, “Do Advances In Real-Time Payments Make Crypto Less Interesting?” fails to recognize the key differences between the two payment platforms and poses the question, Are these “parallel but separate” rails? The obvious answer is “Yes, they are!” While crypto and RTP provide similar functions, there are two critical differences which are not related to payment rails; these differences are about funding and worldview.
Investors won’t get rich investing in RTP. In fact, achieving breakeven is likely to take many years. As a result, RTP will never receive the level of investment crypto gets today (VC’s invested $3B in 2020 and $25B in 2021). RTP investments today are only building a bank-to-bank transfer network. This means additional investment is still required to build the products that expose RTP to consumers and businesses. Crypto investments, on the other hand, directly create products and assets for consumers and businesses. As such, crypto isn’t just a network, it’s also an asset class and a solution that directly serves consumers and businesses, but with minimal oversight. If you believe unregulated social networks are contributing to criminal activity and social disorder, unregulated assets and payment networks will create even greater criminal activity and disorder.
Crypto developers have a worldview focused on a model that eliminates all centralized aspects of finance. Crypto developers embed this worldview, described by many as anarchist, directly in the code they write and the products they deliver. As a result, decentralized finance (DeFi) is often more about a creating a new status quo than it is about technology, and this worldview eventually impacts our politics due to the wealth it creates for investors as crypto businesses grow larger.
To protect the billions of dollars invested in DeFi (estimated at $78B as of February 23, 2022), crypto companies and investors lobby Congress to open up and allow competition and to change laws that will enable DeFi. As a result, the investors and the millionaires crypto has created directly support a lobbying effort to enable broader use of crypto, which enables DeFi and minimizes government’s ability to control outcomes.
So, the main difference between RTP and crypto is that crypto enthusiasts have a revolutionary worldview that is codified in the platforms they build, which in turn has received billions in investment dollars. RTP is the manifestation of a centralized and regulated environment, the antithesis of the goals of crypto.
I know I sound like I am anti-crypto, anti-DeFi, and anti-NFT, but I am not. These products and solutions can be integrated into a safe and regulated worldview, but such restrictions will slow deployment and slow the payoff investors expect. If regulators need a place to start, I’d suggest they start with demanding identity be established for all asset acquisitions, regardless of value. Then criminals might start to sweat that they can be found and prosecuted (granted, this is a much harder problem). Otherwise, we will likely see increasing amounts of criminality and chaos.