Over the last several weeks, crypto asset prices have climbed to new heights. Bitcoin alone has broken the $300 billion market capitalization barrier, equivalent to the M1 money supply of a number of countries – from Poland, to Belgium or Austria. We can point to multiple underlying causes, including the U.S. election, the deployment of the Chinese CBDC and its $300 million in volume, and continued growth in decentralized finance and dollar-denominated stablecoins. But these symptoms are more complex than mere asset appreciation.
To understand what 21st century money looks like, let’s review the payments value chain, and in particular the relationships among a monetary instrument, financial infrastructure, the payment rail, the current assortment of payment companies and networks, and software ecosystems. In parsing the difference between the developments in these adjacent categories, we can more clearly see what progress looks like, as well as the potential destinations for our future.
Lex Sokolin, a