Paul Brody, Ernst & Young: The Long Stablecoin Summer Is Here

but next up we have Paul Bro from E who is speaking on the long stable coin summer is here welcome Paul thank you all righty well I said no leaving but people insisted on leaving so I only got a I only have they've given me like nine minutes to explain my entire world viiew so I'm going to get right into it basically we are here for like a long stable coin summer and when I say long I mean like 30 years so let me share a little bit of perspective on this and see if I can express that very quickly and succinctly uh there we go so basically demand for stable coins is going to get a lot larger we kind of think there's three fundamental things that are going to drive that number one way more assets to buy you need stable coins to buy assets secondly consumer payments me paying you or preferably you paying me and then of course business ecosystems right companies paying each other for Stuff uh and each one of these has some nuance and has some problems to be solved over time but we are getting there and we're going to get there I think relatively quickly over time on the investable asset side right we're mostly a lot of time people spend thinking about cryptocurrency and I think you know over the coming years we're going to see I will think I tend to think of a cryptocurrency upper limit for like Bitcoin as something around similar to Gold maybe $14 trillion so still Maybe seven or eight times or maybe 10 times more than we have today right and and keep in mind like the gold market cap includes all the world's central banks that most of whom have have uh a gold so in a future where many of the world central banks might have a Bitcoin Reserve um as seven or eight times larger size of kind of Bitcoin market cap is is not at all unreasonable stable coins are going to drive the rest of the market and for that there's a lot of stuff out there there's like you know roughly well there's overall in the world there's roughly $800 trillion of assets these I I think about 400 trillion of them are potentially very attractive and accessible for stable coins one big problem that we are going to have and we're going to need to figure out it's not really clear what it is that people want to buy right you can tokenize anything but a reasonable question that to ask is do say Japanese retail investors or institutional investors want to buy for example uh tokenized tie fractionalized real estate it turns out someone tried this and the answer is no so uh we we're there's going to be some challenges to figure out what it is that people want to buy uh secondly for Consumer payments there are a ton of consumer payment opportunities right we are going to create what amounts to a banking like experience and indeed I have already seen that sort of the alpha versions of basically onchain banking that's it's really just a smart contract with like a you know a more classical web to front end it looks like City Bank it feels like City Bank but it's really just stable coins uh Enterprises are probably the toughest nut to crack over time uh there's some stuff that's going to happen in the short term around payments but in the longer term if we really want large scale Enterprise use we have to get very very good at privacy right if you think about any business agreement it's I've got money you have stuff I'd like to change my money for your stuff under the terms of an agreement now companies generally regard the money the stuff the agreement terms as very very sensitive information they don't want that disclosed they don't want their competition knowing what they're buying how much they're paying for it and so they need privacy they need privacy on like how much they're paying and where it's going and they also want privacy on the current terms and conditions because if I can read the terms and conditions in a solidity smart contract then I pretty much know what your probably going to buy and I definitely know how much you're going to pay for it so uh I need both kinds of privacy uh and those things are they are here but they are relatively immature today now uh if we get all this done though if we get these two kinds of privacy then basically you will have full and complete Supply chains entire business operations kind of operating on chain so if you think about the the blockchain what's really happening in this picture here is tokenized stuff product is moving from left to right yeah left to right and uh tokenized money is moving from right to left right and the entire process is being run by a set of like uh uh smart contracts that are managing the payments so you can basically run your entire company on a uh a blockchain ecosystem that's certainly my expectation and hope uh all of this is going to be run at a price point that is much much lower than where we are today and I just pulled out some good consumer benchmarks right debit card fees credit card fees those are much much higher than blockchainbased fees now I I used to think that the fact that blockchainbased transactions were not they they were missing some pieces this isn't an Apples to Apples comparison a credit card transaction comes with insurance and reversibility and frequent flyer points and all kinds of other stuff that you don't always actually need and uh not what's going to happen in the future and we're already seeing this is something of an unbundling of consumer payments if you think about it a credit card payment today is like a bundle of services which includes a payment and insurance and and points and other things that are going to get unbundled what's true for consumers is even more true for Enterprise users and I I just give you a good data point at ey uh which is where I work uh we estimated that if we could move all of our business to business payments from traditional banking rails to crypto rails we could save a $100 million a year now there are a lot of obstacles to getting there but a 100 million bucks a year is a is something worth pursuing and indeed and that's what we're going to see over time we're going to see people pursuing this I'm actually really proud one of the things that we did about a month ago ey was the first recipient of a fully Automated onchain busino Business Payment using PayPal's PUSD uh token right so PayPal paid e and invoice they owed us for from their Erp system through their uh uh coinbase wallet to our uh Erp system and it showed up in our cash management system in a fully automated way no manual handling we've been taking crypto payments for years we've been taking stable coin payments for years but we used to have to do it with like you know it would take like three or four people and they would have to review there'd be a bunch of phone calls now we can do it at scale with automation uh how big do we expect this growth to be our expectation my expectation in the short term is about 25 to 30% a year growth in the stablecoin market size over the next decade right uh and turns out actually that uh historically kind of technologies that reach this mainstream adoption phase tend to grow about 27% a year uh typically for something on the order between 15 and 25 years so when I say like a long stable coin summer I mean like 15 to 25 years right and um that's true in technology but it also turns out to be true in financial services so if we look at like the shift that took place between the 1950s and the 1990s in investing Behavior Uh in the 1950s if you had a retirement fund it was 97% Stocks by the 1980s or the mid90s it was more than 50% or sorry it was 9 97% bonds by the by the mid 90s it was more than 50% stocks right so it took almost 40 years to completely transform that investing Behavior Uh and I think we again we can ex whether it's kind of long-term technology adoption or you know user Behavior change right those kinds of things especially for investing or payments they're going to take some time but still 25 30% a year growth you compound that for 30 years uh all of you here look like you're in like your 20s or something you're going to ride this train to retirement uh okay I am done uh we have 54 seconds left to go I have two two remaining things number one if you would like a proof of Paul nft minted on the ey blockchain infrastructure it will be sent to your polygon proof of stake wallet uh and this is a special one it's just for uh the Devcon week so uh and they're only available when you actually have The Misfortune to interact with me secondly I don't know what you're doing tomorrow but I hope you're coming to Industry day I in in addition to being the head of blockchain at ey I'm also the chairman of the Enterprise ethereum Alliance we are having an industry day and you know if you if you know Devcon you know there's like a no Shilling Zone we are a shilling zone right we are the commercial business focus group for uh the ethereum industry uh the ethereum foundation is actually a sponsor of Industry day so this is officially ethereum condoned Shilling we're asking people to come and talk about their business business cases and business operations we have a ridiculous lineup of speakers which finishes up with uh Michael Casey the former editor of coindesk vitalik and uh uh uh idaan who is the chief regulator in Japan right and are just the three closing speakers that's it [Applause]