How Will Stablecoins Replace Traditional Banking

**Friederike Ernst** (0:00)
Welcome to Epicenter, the show which talks about the technologies, projects and people driving decentralization in the blockchain revolution. I'm Friederike Ernst, and today I'm speaking with Zach Abrams, who is the CEO of Bridge.

**Zach Abrams** (0:11)
Look, we love investing in new areas of the business, and we described a few of them. Crypto is a particular area of investment. We made a large acquisition in the stablecoin space. When I looked at stablecoins, it was very clear to me that they were an economically rational winner over time. Getting into the crypto space, the banks were like, if you're doing anything with stablecoins, you're automatically in this risk bucket. Whereas if you're doing the same activity, but not with stablecoins, you're in a different risk bucket. We're starting to make for the first time regulatory investments. The long-term success of the stablecoin space is going to be downstream of regulatory changes.

**Friederike Ernst** (0:55)
I'm Friederike Ernst, and today I'm speaking with Zach Abrams, who is the CEO of Bridge, a Stripe-acquired infrastructure platform that lets companies issue, move, hold and spend staples in various ways. We'll get into all of the weeds in just a bit. Before that, these are our sponsors this week.

**SPEAKER_3** (1:18)
This episode is brought to you by Gnosis, building the open internet one block at a time. Gnosis was founded in 2015, and it's grown from one of Ethereum's earliest projects into a powerful ecosystem for open user owned finance. Gnosis is also the team behind products that had become core to my business and that of so many others, like Safe and Cowswap. At the center is Gnosis Chain. It's a low fee layer one with zero downtime in seven years and is secured by over 300,000 validators. It's the foundation for real world financial applications like Gnosis Pay and Circles. All of this is governed by Gnosis DAO, a community run organization where anyone with a GNO token can vote on updates, fund new projects and even run a validator from home. So if you're building in Web3 or you're just curious about what financial freedom can look like, start exploring gnosis.io.

**Friederike Ernst** (2:10)
Hi Zach, it's good to have you here.

**Zach Abrams** (2:12)
It's great to be here. Thanks for having me.

**Friederike Ernst** (2:14)
For listeners who don't know you yet, give us the Cliff Notes version of your background and how you ended up in payments and money.

**Zach Abrams** (2:23)
So I founded Bridge with Sean and in maybe 2010 or so, Sean and I founded another company that was a payments company. And we were trying to build a payment network by tying together university payment networks. And I don't know if this is a thing in Germany, but in the US, every school has their own payment network. It's not like Visa, MasterCard, Amex, Discover. It's like your campus dollar situation. These payment networks facilitate billions and billions of dollars of payment volume. And we were trying to be like what Venmo is to your bank account, but for these student payment networks. And then in doing so, bootstrap a new payment network by tying these together. Anyways, we tried to build that business for a while. And we were woefully unsuccessful because it turned out to be a university sales business that we were very ill-equipped to do successfully. We sold the company to Square and basically from that point in time I spent my entire career in fintech. It's like moving money, building money, products were always the most interesting to me. And we saw from the very beginning what felt like really small changes in economic access, how big of an impact those could have with Square and making it just a little bit easier to accept card payments, enable millions and millions of businesses to you know, or individuals to start businesses and run them full time when otherwise it would not have been possible. And so I stayed on that kick for, you know, a decade plus now.

**Friederike Ernst** (3:58)
That's a long time. Payments kind of to someone who is not in payments. Payments seems, and I hate to say this, seems somewhat trivial, no? So kind of you have a balance on kind of one account or on one bank account of one wallet and kind of it moves somewhere else. Tell us about the misconceptions about how money actually moves versus how kind of the lay person thinks it moves.

**Zach Abrams** (4:27)
Yeah, I mean, I would say the thing about payments that is so interesting to me is that you have so many areas where you can be creative and find new solutions. So, you know, you could build new products at the UI layer, you know, by basically just making it easier to see balances and, you know, make a transaction or what have you. It could be at like actual the money storage layer. It could be at like the regulatory layer, you know, and it can be and it could keep going down. And like we've seen how like the best products are not just like innovations in terms of consumer behavior, but are material changes in how material changes in how, you know, in money capabilities that are facilitated by, you know, regulatory changes or, you know, enabling functionality that others didn't have. And a very quick example of this that is like totally outside the crypto realm, but Cash App, for instance, Cash App is a peer-to-peer payment product in the US. It's been very, very successful. Early Cash App enabled you to instantly send money to any bank account. This was like not possible in the US before Cash App built their product. And the way Cash App built their product was by taking advantage of a debit card refund. So everybody in the US had a debit card and you could refund money to a debit card, which then immediately credited that balance back to your bank account. And the Cash App team figured out that you could use this debit card refund to enable what felt like an instant payment in the US.