Why is blockchain payment making a comeback?
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Why is blockchain payment making a comeback?
Blockchain payments are undergoing a critical phase transitioning from exploration to application, with their core advantages gradually being recognized by financial institutions and users worldwide.
Navigating Web3 tides with focused insightsAuthors: Meng Yan, Shao Qing
As we approach the end of 2024, blockchain payments are suddenly accelerating. Major financial institutions around the world have begun ramping up their support for blockchain-based payment systems:
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September 26: BlackRock partnered with Ethena to launch USDb, a dollar-pegged stablecoin.
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October 3: PayPal, in collaboration with EY, completed its first commercial stablecoin remittance using its own PYUSD token.
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October 3: Visa announced its VTAP platform, enabling institutions to issue and operate their own stablecoins.
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Also on October 3: SWIFT announced plans to launch experiments in digital currency and digital asset transactions by 2025.
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October 16: Internet payment giant Stripe announced a partnership with Paxos to support stablecoin payments.
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October 19: French bank Société Générale issued EUR CoinVertible, a euro-backed stablecoin.
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October 21: Stripe announced the acquisition of Bridge, a stablecoin payments startup, for $1.1 billion.
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October 22: At the BRICS summit in Kazan, Russia, a new BRICS Pay system was unveiled as a competitor to SWIFT.
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October 24: Coinbase and Andreessen Horowitz jointly invested in Skyfire, a blockchain payment company integrating AI technology.
Such a high concentration of developments cannot help but attract attention. Many remember that after Meta’s Libra project failed in 2019 due to widespread opposition, blockchain payments—once seen as revolutionary—gradually faded from view. Just two years ago, following the collapse of the crypto market, most mainstream financial institutions avoided "digital currencies" and "crypto assets" like the plague. The public increasingly formed the impression that "blockchain has no future"—some believing it was useless, others acknowledging its potential but seeing real-world resistance as insurmountable. So what has changed now? Why is blockchain payment suddenly heating up? And could this signal a comeback, setting blockchain on a path of rapid development?
The Unspoken Success
Between 2014 and 2019, blockchain technology sparked global curiosity and enthusiasm, widely regarded as a revolutionary force capable of upgrading the internet and digital economy. Don Tapscott’s 2016 book *Blockchain Revolution* captured the peak of this optimism. However, over the past decade, blockchain applications have largely failed to meet expectations. Instead, public perception has been shaped primarily by negative headlines: the failure of the much-hyped Libra project, IBM and Maersk’s abandoned blockchain logistics initiative, and the collapse of the Australian Securities Exchange (ASX) blockchain upgrade. Within the tech industry, many professionals believe blockchain has yet to find practical use cases, relegated to fringe applications and thus deemed ineffective in the “real world.” Mainstream media has further stigmatized blockchain by associating cryptocurrencies with speculation, fraud, money laundering, and illicit fund transfers.
In reality, however, the opposite is true. As a technology, blockchain has achieved remarkable success—it is currently the most advanced solution for cross-border value transfer and trusted data exchange.
To understand this, we must first grasp the concept of “crossing boundaries.”
Here, “crossing boundaries” does not refer to geographical or administrative borders, but rather crossing trust boundaries between different financial systems, nations, organizations, and individuals.
A central contradiction in today’s digital economy lies between the high efficiency of information transmission over the internet and the low efficiency of value exchange caused by insufficient trust among parties. In short, information can travel at the speed of light, but value cannot cross trust boundaries. Moreover, as more cases emerge of internet platforms violating user data sovereignty and privacy, awareness of data rights and privacy protection grows, making trust boundaries in digital space increasingly dense. If unresolved, this will continuously reduce—not enhance—the operational efficiency of the digital economy.
The core advantage of blockchain payments lies in helping disparate stakeholders build trust and reach consensus, thereby bridging these trust boundaries. In cross-border payments, for example, this means establishing trust among participants, reducing reconciliation friction, increasing efficiency, and lowering costs. Traditional payment systems rely on multiple intermediaries for bookkeeping, reconciliation, and settlement—each step introducing delays and errors that compound when issues arise. Blockchain, through distributed ledgers, allows all parties to share a single source of truth, updating transaction records in real time and eliminating cumbersome reconciliation. This trust mechanism significantly improves the efficiency of cross-border payments while drastically cutting costs—especially evident in complex multi-currency, multi-jurisdictional transactions. Blockchain reduces reliance on intermediaries and minimizes friction caused by mutual distrust across financial systems.
In today’s economic landscape, blockchain’s ability to bridge trust boundaries is most prominently demonstrated in cross-border payments. Since 2015, central banks, major commercial banks, and financial institutions worldwide have quietly conducted blockchain-based cross-border payment trials—with astonishing results. For instance, the BIS’s mBridge project[1], launched in 2019 as a blockchain-based cross-border payment system, showed by 2023 that blockchain outperforms traditional systems like SWIFT by an overwhelming margin: transaction times dropped from days to seconds, and costs approached zero. Another illustrative case comes from an Australian major bank’s micro-payment experiment. Sending $100,000 split into hundreds of small cross-border transfers cost $1,240 via SWIFT—but only 30 cents using blockchain. In fact, the widely presumed-failed Libra global payment network achieved significant technical success. Though terminated due to non-technical factors, the public blockchains developed from it—Aptos and Sui—are now live and boast excellent performance.
User feedback further supports this. It is estimated that around 560 million people globally hold digital currencies, with 82 million actively using blockchain[2]. Many users report that once they start using blockchain for payments, they never want to return to traditional banking. Over the past few years, stablecoin payments on public blockchains—what might be called “retail” use—have grown rapidly. According to Visa[3], by Q3 2024, monthly stablecoin transaction volume on public chains reached $1.8 trillion—and is accelerating. More strikingly, stablecoins are breaking out of speculative circles and being widely adopted in non-speculative contexts. Circle, issuer of the second-largest dollar stablecoin USDC, reports that since 2023, USDC usage in speculative trading has dropped by 90%, replaced entirely by real-world payment and remittance use cases. Particularly in underserved areas of traditional banking, stablecoin payments are spreading like wildfire as tools for everyday transactions and value storage. These realities are forcing more individuals and institutions to reconsider blockchain payments with fresh eyes.
If blockchain payments offer such clear advantages and have made such progress, why is the public unaware?
The primary reason lies in today’s complex international political environment, where certain countries and economies adopt short-sighted policies of suppression toward this transformative technology.
The United States has set a particularly poor example—not only killing the Libra global payment network in its infancy but also actively interfering with global blockchain development. A key case is the BIS mBridge project. Launched in 2019 before the Ukraine war, mBridge confirmed blockchain’s superiority just as geopolitical tensions escalated. With the U.S. and allies weaponizing finance by cutting Russia off from SWIFT, announcing that SWIFT is technologically obsolete—and replaceable by blockchain—clearly undermines financial sanctions. Furthermore, given the deep entanglement of the U.S. dollar with existing international settlement systems, the impact of a superior, rule-based, automated global settlement network on dollar dominance warrants scrutiny. For these reasons, U.S. officials directly warned the BIS to proceed cautiously in promoting mBridge’s findings. This is a major reason the project’s results were not widely publicized. The BIS’s recent announcement considering withdrawal from mBridge[4] sends a clear signal: the U.S. is willing to suppress technological innovation to preserve the current order—a stark contrast to the enthusiastic embrace of AI, which poses equally disruptive potential.
This top-down attitude trickles down into the financial sector, where forces exist that deliberately ignore or suppress blockchain applications. Many blockchain payment experiments within commercial banks are led by peripheral innovation teams, not core business units. Much like Edison’s campaign against Tesla’s AC current, innovators face suppression due to non-technical motives—rooted in protecting entrenched interests. The classic economic “agent problem” plays out vividly here.
Another critical factor is mainstream media’s negative bias. Over recent years, media outlets have eagerly amplified blockchain’s negative image, instinctively dismissing or ignoring positive developments, causing most ordinary users to avoid blockchain payments altogether.
These combined factors have made blockchain the most misunderstood and controversial technology since nuclear weapons.
Blockchain Payments Cannot Be Stopped
Can these forces permanently suppress blockchain’s development?
We believe not. There are five key reasons.
First, blockchain’s competitive edge in cross-border and peer-to-peer payments is simply too strong to conceal. In tech, a tenfold improvement in performance or cost over prior generations defines a “revolutionary” innovation. In its ideal use cases, blockchain payments offer thousands to tens of thousands of times better efficiency and lower costs than existing systems. No amount of political power, capital, or舆论 can indefinitely block such a massive technological advantage.
Second, as understanding deepens, concerns are being alleviated. Regulators once feared blockchain would enable financial activities to escape oversight. But recent experiments show blockchain actually enables stronger supervision. For example, under guidance from the Monetary Authority of Singapore (MAS), Ample FinTech’s cross-border trial allowed regulators to monitor compliance in real time and even enforce rules directly by modifying smart contracts—improving regulatory efficiency a thousandfold[5]. Additionally, blockchain’s macroeconomic implications are now better understood. At the 2024 Financial Street Forum on October 23, former PBOC governor Zhou Xiaochuan highlighted mBridge’s potential to boost regional trade in Asia, carefully noting that mBridge and dollar usage are not mutually exclusive—that the dollar’s role as reserve and settlement currency depends ultimately on the U.S. itself[6]. Such insights help lift the constraints on blockchain adoption.
Third, complex geopolitical dynamics create favorable conditions for blockchain adoption. With rising global competition and confrontation, technological superiority is seen as decisive. The Ukraine war confirmed that the dollar and SWIFT can be weaponized. In this new era, no single power or coalition can afford to indefinitely suppress blockchain for self-interest. Conversely, once one party adopts blockchain payments, rivals cannot accept competing with a system a thousand times slower. The informal global consensus since 2019 to collectively restrain blockchain finance is clearly unraveling.
Fourth, blockchain’s expansive downstream applications compel participation. While often seen as financial infrastructure, blockchain—combined with advances in cryptography—can transform how we store, transmit, verify, and use data. In some ways, it resembles the early internet: high initial connection costs, but vast unlocked potential once connected. In the 1990s, internet access required laying cables, routers, modems—barriers that disappeared once users joined en masse, unleashing waves of innovation. Similarly, blockchain’s main hurdle is getting users to create digital identities and connect via wallets—a challenge requiring education and outreach. But once crossed, innovations will explode across e-commerce, data management, organizational coordination, and even defense. Due to this powerful network effect, no player can afford prolonged inaction.
Fifth, youth support. In the heated 2024 U.S. election, both major candidates expressed support for blockchain, with Trump especially vocal. His campaign promises include advancing digital assets and fast-tracking the FIT21 Act[7]—a landmark bill aiming to establish a new regulatory framework for blockchain and digital assets. Why is crypto a campaign issue? Because both parties seek young voters. Whether unbanked youth in Africa or Southeast Asian e-commerce merchants needing instant settlements, once users overcome the learning curve and experience blockchain’s benefits, they rarely look back. The real trend today is stablecoin payments expanding far beyond speculation, growing faster and larger than expected. Young people who master basic blockchain operations increasingly reject traditional finance. Any long-term effort to forcibly resist this trend is doomed. Worse for legacy finance: as crypto matures, traditional systems face tighter regulation, creating more friction and alienating younger users in a vicious cycle. Across many regions, traditional banking service quality is deteriorating, user complaints mounting, and trust eroding. No country can indefinitely suppress blockchain to preserve old financial models. Legacy institutions must either embrace blockchain or be disrupted.
Therefore, despite a decade of detours, blockchain’s path to mass adoption—starting with payments—is now becoming clear. In the near term, payments will drive large-scale commercial and consumer adoption, sparking innovation and generating profound economic and technological consequences.
Why Has Blockchain Payment Suddenly Surged?
Blockchain payment followed a trajectory of high hopes followed by disappointment. After 2015, several central banks exploring CBDCs initially favored blockchain, but after evaluation, chose not to adopt it. Ordinary users showed little interest in trying it. Fintech excitement cooled quickly. By 2021, few mainstream financial experts were actively researching or developing blockchain payments. Against this backdrop, the recent resurgence appears surprising. What explains this reversal? We identify four main reasons:
First, blockchain infrastructure has matured, overcoming earlier limitations and validating its inherent technical advantages.
At its core, blockchain payment is a revolutionary technology that fundamentally surpasses current mainstream systems. Its greatest strength lies in combining transfer, clearing, and settlement into one seamless process—eliminating the delays and friction of multi-ledger reconciliation and dramatically improving efficiency.
However, earlier infrastructure limitations meant high fees and confirmation times ranging from minutes to tens of minutes, negating its theoretical advantages and making it feel slow to average users.
In recent years, breakthroughs in high-performance public blockchains and Layer-2 networks have transformed the landscape. Blockchains capable of processing thousands of transactions per second are now operational. These improvements confirm early assumptions about blockchain’s inherent superiority. Faced with thousands-of-times better performance and cost efficiency, doubts about blockchain’s usefulness are now irrelevant.
Second, stablecoins have pragmatically solved the “value source” question, becoming widely accepted mediums of exchange and units of account.
In blockchain’s early days, intense debates centered on the value basis of Bitcoin and Ethereum. Economists, historians, and philosophers weighed in, completing a generational awakening in monetary theory. Yet regardless of whether one accepts Bitcoin as “digital gold,” its extreme price volatility remains undeniable. An asset that swings wildly may have underlying value, but it cannot serve as a reliable medium of exchange or unit of account—that is uncontested.
Stablecoins sidestepped philosophical debates with a pragmatic solution, reconciling differences among crypto communities, regulators, and traditional finance. Today, they dominate as the de facto currency in blockchain payments. Over 180 stablecoins circulate, 26 jurisdictions have established regulatory frameworks, and total stablecoin supply exceeds $170 billion—supporting $1.8 trillion in monthly transactions, meaning each dollar turns over nearly ten times a month. This velocity alone proves blockchain’s superiority.
Third, blockchain’s inherently low transaction costs amplify network effects.
Multiple features comprehensively reduce transaction costs. Self-custody wallets lower entry barriers. User-controlled assets minimize trust friction. Smart contracts reduce negotiation, drafting, and enforcement costs. Transparent, immutable records cut dispute resolution and arbitration expenses. Being naturally borderless and operating 24/7 eliminates time-based friction. Every stage of a transaction sees reduced friction, making blockchain a lubricant for payments far beyond traditional systems’ capabilities.
Fourth, geopolitical conflicts are accelerating blockchain adoption.
Rising global tensions have shattered globalization, erecting clearer trade and communication barriers and denser trust boundaries. In the previous era of globalization, parties maintained basic trust through international agreements, intervening manually when anomalies arose. Today, trust has eroded, anomalies are frequent, and manual oversight overwhelms regulators while burdening compliant businesses and individuals. New technologies are no longer optional. Blockchain stands as the only mature technology with real potential to break through in this domain.
Of course, challenges remain due to technical immaturity and other factors:
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User experience differs greatly from traditional internet apps, posing a steep learning curve.
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Issues like volatile fees and difficult key management persist.
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Excessive transparency limits applicability in privacy-sensitive commercial scenarios.
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Smart contracts pose significant security risks in practice.
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Digital identity, certificates, and new compliance frameworks require full supporting infrastructure.
Yet, as technology advances and user education spreads, these issues will gradually be resolved.
Regulation: Challenge and Breakthrough
A crucial point is that blockchain payments currently benefit from low regulatory oversight—a status stemming from two factors. First, a global regulatory framework for blockchain payments has yet to be established. Second, self-custody inherently dissolves the compliance responsibilities traditionally borne by intermediaries. This regulatory lightness is, for many, a key attraction. However, blockchain technology is not inherently resistant to regulation. On the contrary, smart contracts can themselves become powerful regulatory tools. Yet most global financial regulators react negatively, adopting a head-in-the-sand approach—issuing strict, blanket rules they cannot enforce, thereby stifling legitimate innovation while remaining powerless against illicit activity. It is precisely in this context that the U.S. FIT21 Act stands out. By taking a proactive, balanced approach—channeling innovation rather than blocking it—it could open a new chapter for the internet of value if enacted.
While blockchain payments have made notable progress, their future hinges on national regulatory and policy stances. Competition among nations in blockchain payments is intensifying, with regulation becoming the decisive battleground. Countries that proactively advance blockchain payments will gain strategic advantage in the future financial system.
In the global landscape, attitudes toward blockchain diverge sharply. Some nations adopt open, supportive policies to attract blockchain firms and investors, promoting legalization and broad adoption. Others remain cautious or repressive, falling behind in technological and industrial positioning. The U.S., for instance, saw both presidential candidates express support for blockchain during the 2024 election—a sign of shifting regulatory winds. Meanwhile, countries like Russia and Brazil are exploring SWIFT-independent blockchain systems such as BRICS Pay to escape traditional financial constraints.
Regulatory uncertainty remains the biggest obstacle to blockchain payment development—but also its greatest opportunity. As technology evolves and awareness grows, more nations will be forced to reassess their positions. Progressive, forward-looking regulation will drive global adoption, while hesitation or suppression will leave countries lagging in the coming financial race.
Conclusion
Blockchain payments are transitioning from experimentation to real-world application, with their core strengths increasingly recognized by financial institutions and users alike. As discussed, blockchain payments—powered by their ability to bridge trust boundaries, vastly improve efficiency, reduce costs, and win broad youth support—are emerging as an undeniable force in the global financial system. Despite ongoing challenges, the long-term trajectory points toward progressive and proactive regulation as the key driver of widespread adoption. The potential of this technology will continue to unfold, leading the transformation of the digital economy and the next generation of the internet.
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Yan Meng
