Billionaire investor Chamath Palihapitiya says the old guard of the traditional payments system is likely to be decimated by emerging blockchain and decentralized finance (DeFi) technologies.
In a new discussion on the All-In Podcast, the CEO of venture capital firm Social Capital told YouTube’s 134,000 subscribers that he plans to bet against industry giants Visa and Mastercard in favor of Web 3.0 pioneers.
“The biggest loss for my business in 2022 is Visa, Mastercard, traditional payment rails, and the entire ecosystem around them.
I think this is the year you can put into place what will probably be the most profitable spread trade of my life, which is to short these companies and anyone basically living out of these 2 or 3 percent [transaction] Being well-thought-out Web3 crypto projects for a long time that rebuild the payments infrastructure in a completely decentralized way…
If you read the white papers of these crypto projects and compile a framework systematically, I think you can be long and you can be Visa/Mastercard short because I think that is the height of their market cap.”
Spread trading involves the simultaneous purchase and sale of related financial instruments as part of a single unit. Investors seek to take advantage of the price differences between each security, rather than the rise or fall in value of a single security.
Palihapitiya cites online shopping giant Amazon’s decision to stop accepting Visa credit card transactions in the UK as a groundbreaking event.
“The canary in the coal mine here is very important.
The most important thing is that earlier in the year Amazon decided to close Visa in the UK.
Amazon wouldn’t do something like that in my opinion unless it was a test of what they could do around the world.”
Palihapitiya says he is looking to countries in the developing world to adopt emerging technologies over the next decade.
“There is no need today for all these small businesses to sit at the helm of Visa, Mastercard and [American Express] bars. It is not necessary.
It will probably be developed in the developing world first, which is why I think focusing on markets like Nigeria is more interesting than talking about the lackluster Western European countries. This is where these things will happen…
We’ll look back 10 years later and [traditional payment processor] The market value will be materially lower.
Anyone in those traditional infrastructures and rails versus anyone in these new infrastructures and rails would seem like a no-brainer.”
Palihapitiya concludes by discussing the “Buy Now, Pay Later” model of the credit card system.
“Buy now, pay later is price balancing…
He begins to accustom the consumer experience to “I don’t need to pay these interest rates to the three credit card companies to facilitate the transaction of money I already have or money I am good at.”
That’s the big idea, and when you translate that to Web3 on a good project or a good series of projects, you don’t need these companies.
I think it will take trillions of dollars off the market value.”
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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should perform their due diligence before making any high-risk investments in bitcoin, cryptocurrencies, or digital assets. Please be aware that your transfers and transactions are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend buying or selling any cryptocurrency or digital assets, and The Daily Hodl is not an investment advisor. Please note that The Daily Hodl is involved in affiliate marketing.
Featured Image: Shutterstock/thinkhubstudio/Andy Chibus