Payments Ep #58

EPISODE SUMMARY

In this special Payments episode of the Solana Podcast, Austin Federa guest hosts a conversation between Jeremy Allaire (CEO, Circle) and Sheraz Shere (Head of Payments, Solana Labs). They discuss merchant payments, stablecoins and Solana Pay: the newly released, open, and free-to-use payments framework built on Solana. Learn more at solanapay.com 00:39 - Intro 01:51 - pencilflip’s background03:30 - Working at facebook vs. web 3.0 07:31 - How pencilflip got into crypto 08:52 - Views on NFTs 10:45 - Getting into Solana 15:29 - Experience working in lower level 17:56 - What was his method to learn Solana? 21:01 - What’s the hardest concept on Solana? 23:53 - How fast did he move from Rust to Anchor? 27:35 - Building on Solana 33:24 - Advice to people moving to Web 3.0 DISCLAIMER The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

EPISODE NOTES

In this special Payments episode of the Solana Podcast, Austin Federa guest hosts a conversation between Jeremy Allaire (CEO, Circle) and Sheraz Shere (Head of Payments, Solana Labs). They discuss merchant payments, stablecoins and Solana Pay: the newly released, open, and free-to-use payments framework built on Solana.

  • 00:45 – What is Circle?
    03:35 –  The use case for stablecoins and the mechanisms to build them
    09:34 – Solana Pay
    13:42 – Integration of USDC and Stable Coins
    18:45 – How could Solana Pay become mainstream? 
    25:27 – The Solana Pay toolkit
    27:39 – Can businesses operate without a bank account?
    30:05 – Looking at Data Privacy in Solana Pay and Circle 
    34:35 – Hopes for Solana hackathon outcomes
  • 00:39 – Intro
  • 01:51 – pencilflip’s background
    03:30 – Working at facebook vs. web 3.0
  • 07:31 – How pencilflip got into crypto
  • 08:52 – Views on NFTs
  • 10:45 – Getting into Solana
  • 15:29 – Experience working in lower level
  • 17:56 – What was his method to learn Solana?
  • 21:01 – What’s the hardest concept on Solana?
  • 23:53 – How fast did he move from Rust to Anchor?
  • 27:35 – Building on Solana
  • 33:24 – Advice to people moving to Web 3.0

DISCLAIMER

The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Austin: (00:09)

Hello and welcome to the Solana podcast. I’m Austin Federa guest hosting this week. Today we’re going to be talking about stablecoins, USDC and Solana pay. So we’re joined today by Sheraz Shere, the head of payments at Solana labs and Jeremy Allaire, the CEO of Circle. Welcome to the show.

Jeremy: (00:27)

Thank you.

Sheraz: (00:27)

Thanks Austin.

Austin: (00:28)

Great. Well, let’s start off with Jeremy, talk a little bit about Circle. Can you tell us a little bit about what is Circle and what’s its role in the US DC stablecoin?

Jeremy: (00:37)

Sure, absolutely. So Circle is a global financial technology firm. We operate a suite of services to help businesses take advantage of digital currency in payments and treasury applications on the internet, which is all really a mouthful. But specifically we have a couple of really critical things. The first is we operate a stablecoin market infrastructure as we call it called USDC, and we’ll talk, I know more about that, but USDC is a dollar digital currency that is an asset backed or fully reserved digital currency that can be used for payments and settlement on the internet. And it’s already used really, really widely in the crypto economy.

And so we run that infrastructure and provide that to businesses institutions, and through many, many of our partners out to tens or perhaps even hundreds of millions of end users that interact with USDC. And then we also operate a suite of services for companies to have payments and treasury management and other things that are needed to integrate this into the way that they operate. So almost like a crypto native bank account for businesses to store and transact, and then alongside that a broad set of API products.

So basically Circle APIs that connect the existing fiat system, credit cards, bank accounts, bank transfers with stablecoins, with the custody, security, blockchain management, and other things that are needed to use that and integrate that into your own application. So lots and lots of fintechs, startups, companies like building on those APIs to kind of integrate stablecoins and fiat in their applications. So hundreds of companies use those and those are the key things that we do. And we’ve been growing with other products in what we call to treasury services. So Circle yield, which is a stablecoin yield product, which has been growing really fast too.

Austin: (02:50)

Yeah. I want to get into that kind of in a minute. So stablecoins, they’re foundational to a lot of how DeFi has been enabled over the years. So there’s lots of different applications for that. Sometimes it’s just as a common transacting layer between multiple currencies. There’s lots of different applications for it, but as you mentioned, there’s more and more sort of enterprises and traditional companies, as well as fintechs that are in that space that are looking to use stablecoins in their business operations. At the same time, you have a bunch of DeFi Degens who are sort of the original core audience for a stablecoin. What does that decision making process look like at Circle when you’re trying to balance such a diverse user base?

Jeremy: (03:33)

Yeah, it’s a great question. And sometimes I’m asked “What’s the use case for USDC,” and my answer is sort of “What’s the use case for a dollar?” Well, the use cases are incredibly broad, and we see that actually today, we see people who are making personal point to point payments internationally. We see people making micropayments for digital IP through NFTs, and at the other end you see institutions that are using USDC to settle half a billion dollar bilateral trades. And that’s a pretty broad range of use cases that are out there. I think more importantly, conceptually when we built USDC and you can go back and read the original white paper behind it. And the idea of fiat backed digital currencies, our ultimate belief is that what’s needed is a sort of protocol layer for traditional money on the internet.

So you can have dollars and euros and pounds and yen and other currencies that just function on top of the internet, the same way that other protocols support the exchange of information and communications. And if we had that, and we could use those protocols at the speed of the internet with the cost efficiency of moving data, which is what I think blockchains hold that promise, Solana’s executing really well on that, but hold that promise, that it could really unlock the storage of transmission of value to be a kind of commodity free service on the internet. And so ultimately our belief is that anything that any person or household or firm might need to do in the digital economy on the internet could be done with stablecoins.

And so we definitely expect that to grow. Now, when we got started, it was anchored in what I call crypto capital markets. So it’s anchored in market participants that, for all the work that they do and all the assets that they might be interacting with, they’re all digital assets, and they all move at the speed of blockchains, whatever that is and the efficiency of that. And so they need their dollars to work the same way, and so that kind of gave demand for payment and settlement mediums that could kind of work at the speed of those markets and those blockchains. So, that was a good bootstrap use case, and that’s really what brought a lot of this into existence. But now the way I like to describe it is stablecoins are both protocols and money formats. It’s a protocol that works on top of a blockchain with assurance and security and finality settle a transaction, but it’s also a particular representation of value of a dollar or a Euro or whatever it is, and protocols and kind of formats our network affects businesses.

And so the more people who have that, the more valuable or more useful it becomes, and the more products and services that are plugged into a protocol, the more useful and in utility that exists. And so we’re now seeing the spillover of the use cases go into everyday businesses more and more everyday businesses saying, “Wow, this is a very, very efficient medium. It’s very inexpensive, it’s very fast, it’s secure. I know it’s final and it works globally.” So we’re certainly seeing that pick up. And at Circle, as we think about use cases, we really believe that the acceptance of payments in a business context using digital currency like this is going to proliferate pretty significantly in the coming years, because it’s got so many attributes that are superior to existing electronic payments methods.

Austin: (07:12)

Yeah. And so you touched on something that’s really interesting, which I think everyone thinks of USDC as a protocol, but unlike most organizations that have launched a protocol, the underlying token of USDC is USDC. Its whole point is it does not fluctuate in value, it does not go up, not go down. It stays solid at an equivalent of one US dollar. But Circle, it obviously for-profit organization, what are the mechanisms there that actually allow you to run a business as an organization that has created USDC?

Jeremy: (07:48)

There are a lot of pieces. So the first is today USDC is approaching 50 billion in circulation, and Circle administers and reserves those assets. And so we generate income from that, from that $50 billion we generate income. And as that grows to be a hundred billion or 200 billion, we’ll continue to generate income from that, and certainly in a rising rate environment, that’s significant. The second is we run a whole set of, what we call transaction services and treasury services, and those are services that we charge fees for. So transaction services are taking traditional fiat payment methods, using our infrastructure to do blockchain, native, custody, and payments. And so those are kind of usage based and scale up kind of like a Stripe or equivalent type of transactional service.

And then we also provide treasury services. So people who want to lend their USDC can lend their USDC in a self-service way through our platform, and get fixed term fixed rate returns on capital on USDC, and we generate a spread income from that as well. So we’re building out this sort of suite of commercial services that are globally available increasingly, and that provide a lot of incremental value. So those are several buckets as well, that are really helping us scale our business.

Austin: (09:14)

So we were talking about transactional services. Again Sheraz, You have been intricately involved in building and launching the Solana pay protocol. Can you give us an overview of what that is, and how stablecoins are an important part of that system?

Sheraz: (09:29)

Sure. Yeah. So Solana pay is basically a new blockchain based merchant payment system. It’s open, permissionless, and decentralized, and it’s premised on enabling merchants to connect directly with consumers in a peer-to-peer fashion with no intermediaries. And it’s really premised on the notion that merchants would accept stablecoin like USDC. Most merchants, unfortunately for crypto natives, don’t really care that much crypto per se, they care about running their business. And that’s why having stablecoins, US dollar denominated stablecoins are critical, because what this affords us is the ability to move digital assets at speed and cost of the internet, as Jeremy mentioned.

So for Solana pay, what we’re really trying to do is enable for merchants, things like instant settlement, near zero cost transaction processing, and something that’s really important is the removal of intermediaries. If you think about it from a merchant perspective the most important thing a merchant does is collecting payments and engaging with their consumers with commerce, but there’s a lot of friction tied to enabling payments of and commerce. And with friction comes intermediaries and with intermediaries come cost and the loss of control. So if there’s one headline for Solana pay, it’s really about giving power back to the merchant for the most important function, which they do.

Austin: (10:48)

So can you talk a little bit about that? Payments is obviously a many billion dollar industry globally. There’s some big name that have reached some pretty astronomical valuations nowadays based off of providing credit card payment processing solutions and that sort of thing to e-commerce and non e-commerce business. What’s the sort of difference of approach here? How would you compare something like Solana pay to a company maybe like Stripe?

Sheraz: (11:15)

Sure. Yeah. And Stripe, I would say that the removal of intermediaries doesn’t mean that a lot of the traditional payments companies don’t have a role to play. The actual act of moving a digital asset from a consumer to the end merchant, that’s the piece where there isn’t need to be a friction, right? So with the Solana blockchain and a stablecoin like USDC, the movement of digital currencies from a consumer’s wallet to the merchant wallet should happen like an email going on the internet, it should happen instantly with no cost. However, once a merchant has accepted a USDC stablecoin or settled in a stablecoin, there’s a lot of interesting services that are needed to be done that merchants typically don’t want to necessarily do themselves. So setting up token accounts, doing treasury management, reconciliation, integrating into legacy bank accounts.

So there’s a lot of work in the core stack of post settlement of payments that traditional payment companies can be involved in. The protocol itself is just trying to simplify one component of payment processing, which is the most critical one, which is that the transfer of value between the consumer and the merchant. One of the interesting things that we’re building on the spec is the ability to also have a bidirectional communication. The benefit of having a true peer-to-peer connection between a merchant and a consumer and not having an intermediary is that this allows the merchant to, for example, send digital assets back to the consumer. So what this could look like is something like, let’s say you buy a new shoe, using this protocol the merchant can send you back an NFT of that shoe into your wallet, which you can now take into the metaverse. Just an example, but illustrating why the notion of a peer-to-peer, a true peer-to-peer interaction between a merchant and a consumer can open up a whole new set of new things.

Austin: (13:09)

So Jeremy, Sheraz was talking there about one of the pieces of the stack that Solana pay is trying to solve, that payment from a consumer directly to a merchant. You in Circle work with companies that have extremely complicated payment flows that are trying to bring USDC into. What are some of the areas that integration has been easy and straightforward for these companies, and what are some of the areas that are still challenges for enterprise adoption of USDC and stablecoins?

Jeremy: (13:37)

First of all, just to say, as you know, we’re really excited to be supporting Solana pay. And we believe that the problem space here is a really critical one, and solving this problem of how to build a better connection between an end user and a business and building beyond just the underlying digital asset transfer and solving some of these problems is really, really critical. The way I would kind of answer the question is there’s sort of the base layer of you’ve got a blockchain and you’ve got addresses and wallets and you’ve got this settlement finality mechanism of moving an asset like USDC as well. And that part is kind of fairly low level.

Jeremy: (14:27)

And so businesses that want to use this as a substitute for say, a card payment, they can implement that out with Circle APIs, they can take Circle APIs and they can automatically generate new addresses automatically for each payment. They can then track that payment to a given payee. And then they can collect that and store it in USDC, or they can sweep it out to their bank account through an automated API that pushes a wire or other things. So there’s like critical kind of behind the scenes treasury kind of infrastructure that’s there. The problem is most end users, they don’t really necessarily know what all these things are. And so I think being able to introduce things like having metadata associated with a payment, such as what the price is, what the product ID is, any other kind of merchant information that would be needed to kind of tie that payment to a commerce transaction, to be able to have of follow on interactions that are associated with that payment.

All these problems are I think really important and become things that people expect, whether it’s through a traditional legacy payment mechanism, like handling something like “You sent me the wrong product I need a refund,” is like the most common, or some loyalty mechanism that maybe is inducing me to want to use the payment instrument. And so how can I use a blockchain to provide that loyalty mechanism as an inducement as well, building a stronger connection between say the business and the user?

And so I think the pain points are more that there’s incremental value that’s needed for both the end user and the merchant to kind of bring this to a point where it’s a superior payment, medium to legacy payment rails. And so those are the kinds of things that we see, but certainly the getting started piece is there. There’s so much low hanging fruit. And I think so Solana pay is a really good start at hitting some of the low hanging fruit and creating a way for wallet creators. And then folks like Circle on the other end to make this a little bit more seamless for all the parties.

Sheraz: (16:41)

I would say that if you’re a developer, a founder, or even a legacy payments company, there is a tremendous amount of interesting stuff to build. We just kicked off a hackathon and we have a payments track in that. And as Jeremy mentioned, the protocol itself is pretty low level, it’s pretty basic if you look at it, right, it’s just a very simple… The most native transaction on a blockchain is moving value from one token account to another token account.

And we’ve put some specifications around that to put in like transaction identifiers and things like that. The real innovation is really going to come thinking about what are the new features that can be built on top of this. Now some of this will look like traditional commerce things like offers and loyalty, but there’s a whole new set of commerce related features and consumer value props that have yet to be discovered. And I think that’s what’s really interesting is that there are going to be new businesses built on top of these protocols that will leverage the power of the blockchain. Because this technology opens up, again a peer-to-peer connection between a merchant and a consumer, eliminates the need for intermediaries, and now it gives power back to the merchants. So both the customer relationship, the data, and power in terms of controlling costs.

Austin: (18:00)

Sort of to push on that little, payments has been the killer feature of blockchain since blockchain became a thing, but there’s been no real successful blockchain payment systems that have really emerged. I think the closest is there are some exchanges where you can get a debit card that allows you to spend out of your exchange account, but that’s still a custodial relationship with the exchanges holding your tokens. The places where USDC and other stablecoins have been really successful is not on the payments level as much as so far has been on that sort of collateralization level or within the DeFi space. So Sheraz what about both Solana pay or Solana is actually making this a useful place for payments to actually go mainstream?

Sheraz: (18:48)

So yeah, absolutely crypto payments have been tried before. I mean, it’s been talked about ever since maybe the pizza example. The problem is the traditional approach to crypto payments have been settled with several problems. So the first of all is that merchants don’t want to settle in volatile currencies, right? With some edge cases aside, most merchants say, “I want to settle in US dollars or something that is the equivalent of a US dollar.” Second is that the blockchains in the past have taken minutes or longer to settle, and that just doesn’t work when you’re trying to complete a transaction right? On an e-commerce site every second, that delay is more card abandonment, so waiting minutes for a transaction to settle just doesn’t work. And then blockchains, transaction fees that exceed the actual cost of the item that you’re buying just doesn’t work.

So to alleviate all this intermediaries came in and said, “Okay, great, look, I’ll remove some of this friction for you. I’ll exchange the Bitcoin and settle with you in US dollars. Oh, and by the way, I’ll take on some of the risk of settlement taking 10 minutes. I’ll give you an instant authorization and I’ll just settle with you 24 hours later, and I’ll eliminate some of the fluctuations in network fees. And for all that trouble, I’ll charge you 100 basis points.” And then it starts to feel and look a lot like traditional payment systems where you’ve got an intermediary, there’s a lot of friction and a lot of cost and an intermediary is saying like, “I’ll simplify all that for you, and I’ll charge you a hundred basis points. And by the way, I’m the intermediary between you and your end customer.”

And that’s really, well from what I’ve seen, what the attempt at crypto payments have done. What’s different now is a couple of things. So one is rise of stablecoins and specifically USDC as a US dollar backed stablecoin. And then the Solana blockchain technology that has the speed throughput and low cost that eliminates a lot of that friction. Right now you have instant settlement, you have costs measured infractions of a penny, and you have throughput. You’re not dealing with congested blockchain networks.

And then the other thing is we now have a growing interest in crypto, there’s tens of millions of wallets out there. People are more and more kind of normies as we call them, I guess, are dabbling into crypto. And I think you’re going to see two kind of mental models, right? One is I buy crypto for speculation and investments, but I think more and more people are going to realize like, “Oh, I can use this for transactions. There are transactional currencies that I can use that provide me utility.” So I think there’s the combination of all of these factors coming into place with these new technologies are kind of going to give crypto payments a new shot in the arm.

Jeremy: (21:36)

Yeah. And I would just add to that just at a high level, I think one thing to note is stablecoins and public blockchains have achieved an astounding amount as payment system. I mean, these are decentralized infrastructure, running globally, supporting literally trillions of dollars of transaction throughput, and supporting pretty material volumes that have grown, and including in a wide variety of payment use cases. And we see that all the time, the number of businesses that are just signing up for Circle accounts, because they want to use USDC as just a payment medium outside of the markets themselves. And so it’s a pretty amazing achievement, and that’s happened in a very short period of time. I think there’s many, many thousands of products and services that have integrated USDC.

It took like 50 years to get to like 10,000 issuers, which are people who have integrated the visa credentialing. And so the adoption of these standards is happening at a really fast rate, which ties into the other piece, which is there have been a number of things that have been really necessary. I think one has been regulatory clarity, people being comfortable that this form of dollar is as good as an ACH dollar or a credit card dollar in terms of its usefulness and its legal clarity. Businesses knowing that these are legitimate financial infrastructure that they can rely upon and build upon. The other’s been, as we’ve talked about here already is just the reality of the economics, the unit cost of transaction, the speed of a transaction, and through platforms like Solana, we’re seeing that be solved for.

And so I think what we’re seeing is many more businesses, large merchants, traditional digital wallet companies who have large installed bases of consumers who want to wire up these protocols. And I think it’s not just that they want to wire them up because this is a way to pay businesses. They want to wire them up, because these are interoperability standards that make it possible for digital wallets everywhere to kind of share value with each other, which is kind of moving outside of walled gardens and into the open internet of value. And so we’re seeing all those kind of combined with each other and those are all mutually reinforcing factors that will then I think have more and more businesses saying, “Why don’t I just add this as a payment method?”

Sheraz: (24:00)

As Jeremy said, I think in payments more broadly, tremendous traction and use cases and international remittances B2B. My view is a little thinking more about specifically about like retail, consumer emergent payments. And I think there’s this open question that I keep hearing is like, “Well, we can’t use USDC to buy milk.” Well, we ran a physical point of sale transaction using so Solana pay and purchased a gallon of milk. So we’re happy to share the video of that, but wanted to demonstrate how simple it is to use this currency and set up a small mom and pop with our in-store web app.

Jeremy: (24:40)

I mean, it reminds me of when the web was taking off and it was like, “Well, you can’t use the internet to do this, this and this.” And people are just wiring this stuff up and it’s going to become something that’s just so extraordinarily common and every business will be… they’d be idiots not to take digital currency payments as an alternative to the things that they do now, just like they would’ve been crazy not to set up email accounts or let customers contact them through the web, or through an online forum or through a Facebook page or whatever. It’s just, these are just going to be, you have to do this if you just want to be a native internet business.

Austin: (25:15)

Look, the Internet’s great, but all I can buy on amazon.com is books, and I can do that at my local bookstore.

Jeremy: (25:20)

Yeah. Right. Yeah. Yeah.

Sheraz: (25:22)

That’s right.

Austin: (25:23)

So Sheraz, when you’re talking about this tool kit for Solana pay, what is actually live now, if someone is interested in actually setting this up for their business and enabling people to buy a gallon of milk with USDC, what’s that toolkit look like, and how could they get started?

Sheraz: (25:39)

Sure. Yeah. We have a physical point of sale client, which is a simple web app. It’s a very dead simple onboarding experience as well. We have an e-commerce SDK as well, so if you have your own website, the tooling is there to support both QR code payments and browser plugin. And we have a great set of partners that are working with us to both distribute these tools and help us build the future of this protocol and specification.

We have integrations with a set of wallets, FTX, Phantom, and Slope and others on the way. You know, part of the goal of this is that this is the first at bat at the first inning. We’ve built some of these tools to provide some reference implementations and tooling for people to start building, but there’s a whole roadmap of additional things that we want the community to build with us.

Jeremy: (26:53)

Yeah. And we’re super excited at Circle to support this. And we see getting these kinds of standards adopted in more and more wallets, it’s great to see. And I think we’re hoping that standards and efforts like this can get adopted in many, many other kind of crypto native wallets and other digital wallets that are kind of coming online to support USDC payments.

Austin: (27:15)

So, Jeremy, with this sort of front end component where you can now receive payments and USDC via Solana pay there’s a whole series of other tools you’re talking about, whether it’s deposit into accounts for merchants. How soon of a future do you think it’s going to be possible for someone to run a business, and make payroll and accept payments without actually having a bank account?

Jeremy: (27:39)

I think we’re getting really, really close to that. I think with a Circle account, we provide businesses with the ability to open an account, it’s got multi-user support, and administration so you can have multiple employees or people in your finance department using it. It provides on chain payments across multiple blockchains, it provides legacy bank payments, so if you need to get money out into legacy bank accounts, you can do that. We have a pretty exciting roadmap for new things that we’re going to build there, so that kind of interoperability with legacy payouts is important as well. And then you have the ability to take your working capital and put it into yield. And so as you collect payments and you have working capital, you can deploy that and generate high interest rates on your USDC.

And so those are things that are there today, and there’s obviously a lot more that can be built out there. We have a pretty exciting roadmap for things that we’re building. We want really any crypto native business clearly to sort of make this their global financial account for their startup or their growth company, but more and more traditional companies as well, who are getting into this who want to use this as payments infrastructure, but then will tie it into some of their working capital management and treasury management.

And then underneath that is like any developer that really has something they want to do custom, everything is just a platform. Everything’s a set of APIs that you can build on. Developers can automate all the different rails. They can automate how they store and move funds. They can kind of control all of that in a very, very fine grain way. And so while there is like that self-service experience, but a lot of startups want to kind of do this unique to their business so they can automate more and more of it. So we think this year is going to be a year where these types of hybrid digital currency bank like products are really starting to take more and more hold.

Austin: (29:33)

Yeah. So, sort of along those similar lines, the existing payments rails and industry is one where a lot of it still runs on data collection and data marketing as a way to help subsidize the cost of running a lot of those rails, right? Whether it’s American Express offers or whether it’s something like a company that actually is tracking purchases that are made in-store and using that to do marketing through direct mail or other means. How does data privacy play in both with Solana pay and Circle, and how are those things part of your decision making framework?

Sheraz: (30:08)

I think one of the most important aspects of the whole notion of the peer-to-peer transaction and removal of intermediaries is that now when you’re accepting as a merchant, accepting a payment through this per protocol you’re not necessarily going through Google or Apple or MasterCard or Bank of America or some other intermediary, right? You have a direct connection with that consumer, and because of that you’re not potentially losing data. You don’t have third parties accumulating all of this data. And the beauty of this protocol is that it’s open, so any merchant could take this. We’re not pushing an end solution down anybody’s throat, this is an open decentralized protocol. Any merchant could take this and build the equivalent of the Target Red Card system, which is a very popular solution that Target built or the Starbucks closed loop payment system.

So I think the most important thing is that if merchants have control over commerce and the protocol is open and they can kind of craft on top of it, it gives them much more control over their data. We also have under development APIs as part of our core token program that can provide additional layers of data privacy. So we have a confidential token API that’s under development. And there’s a lot of technological solutions that can be built in to give either the consumer or the merchant more privacy, or whatever level of privacy they’re interested in, but the key is they have control, they’re building it in the way that suits their business needs.

Jeremy: (31:41)

One of the principal benefits of digital currency and stablecoins and public blockchains is the higher degrees of privacy and security that they afford. And I think that’s something that people value and it’s inherent in the architecture of these cryptographic forms of money and that’s really key. And so we merely provide ways to interact with that infrastructure, and so we don’t really stand in any specific data around users in that way. And even new technologies that we’re working on in digital identity are designed to use cryptographic proof of identity, not pass around a whole bunch of PII. And that’s going to be really critical as you start to marry digital identity with payments, with merchant behaviors. How can I, as a consumer present myself and prove to a business that I’m a legitimate individual that’s been compliance checked, and make a payment to you without bleeding all my PII to you, and for me as a business to say, “No, I know this is not a drug trafficker or a terrorist or what have you that I’m transacting with,” and have those settlements be fast and secure and final and private?

So I think those are really, really important things. At the same time I think that the building blocks of crypto give us new tooling for incentivizing customer relationships in new ways. NFTs and commerce are really powerful, powerful phenomenon, which we’re seeing early experiments in. But I think for businesses that want to entice customers to give them more information or have a more direct relationship and where that information exchange can be valued in some way, I think NFTs create a really interesting and powerful way to do that. And that’s something that can be direct between the consumer and the business and not something that’s, again, bleeding all that information and out to other networks that are repurposing that. And so I think there’s a chance to rebuild customer loyalty, incentives, loyalty marketing, and secure privacy preserving payments in a way that’s superior to what we have with existing electronic payment systems today.

Sheraz: (33:58)

Yeah. It’s like being a founder or an entrepreneur in 2000, right? Think about all of the things that needed to be built then and were built. And we are just on the starting point of this. So I think it’s an exciting time to be an innovator and a developer and a founder and an entrepreneur.

Austin: (34:20)

I love that vision for the future. So, one last question before I let both of you two go. Riptide, the Solana global hackathons going on right now, if there’s one thing that you would love to see a team build coming out of this, what would it be? And Sheraz, we’ll start with you.

Sheraz: (34:38)

Sure. I mean, there’s a bunch. I think one thing that could be really interesting is what does buy now pay later on chain look like, right? So we have so many crypto users that are sitting on SOL, and other assets that they want to hold that right, they’re hold all that. They don’t want to use that for transactions. So how could we enable so someone to purchase from a merchant using Solana pay, over collateralize their SOL holding and just buy now pay never? Use your staking rewards to pay for the purchase, call it buy now pay never. That’s one example, that one could be really interesting.

Jeremy: (35:18)

I think we’re excited to be part of the hackathon and putting forward some of our APIs that can be worked in conjunction with Solana pay as well. And so, I mean, just generally, we’d be very interested in seeing people who are building wallet experiences that are geared towards payments, whether it’s a P2P payment or a person-to-merchant payment in particular, but really building experiences that are optimized for that flow, as opposed to being a DeFi Degen, or trading. And so I think those kinds of products that combine person-to-business and person-to-person payment experiences that abstract away some of the complexity, and then do that around these standards, I think we’re super, super excited about that. And we’re obviously excited to see what comes out of the hackathon. We’re investing in a lot of companies now, and so we’ll be watching really closely, because this is a space that we’d love to be investing in as well.

Austin: (36:20)

Well, Jeremy Allaire CEO of Circle Sheraz Shere end of payments at Solana Labs, thanks for joining us today.

Sheraz: (36:26)

Thank you, Austin.

Jeremy: (36:27)

Thanks.

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