0/ @stripe 's new Treasury service is one of the most important product launches in the history of fintech

The crypto community has for the most part ignored it because it's not crypto...

...Yet

A thread https://stripe.com/treasury 

1/ To understand the significance of Treasury, you have to understand the motivations behind....

Libra!

(er, Diem)

2/ What does Diem - as a permissioned blockchain - offer that Stripe treasury doesn't?

Dollars? both offer

Modern APIs? both offer

Smart contracts maybe? But even those can be recreated inside the permissioned garden of Treasury

So net net, the answer is "not much"

3/ Let's think about this from Fb's perspective

What is Fb's unassailable moat? Data.

They have data about *everything*

Your friends, what you like, where you go, etc

Is that data useful for providing financial services? Does fb know how to do ML at scale?

Yep!

4/ So, why did Facebook bother to create to Diem (which is just USD on permissioned crypto rails)?

Diem provides Facebook a single, modern, global API for moving USD around the world

Diem is an abstraction on top of the legacy banking system, powered by crypto rails

5/ What is Stripe treasury?

An abstraction on top of the legacy banking system, powered by web2 rails

Hm, these are starting to sound similar

6/ There's a great Ray Ozzie quote from 2010 I'll never forget. He made this observation shortly after Google announced Chrome OS. Remember, this is when Android was still immature

"Android is a bet on the past. Chrome OS is a bet on the future"

7/ There are lots of ways to interpret this, but the one that I always found to be most salient was

Native pre-installed code vs real time interpreted code

8/ Also remember, this is was around the beginnings of HTML5, and it was common at the time to say that HTML5 would finally obsolete native code, and the world would finally achieve Java's original dream of "write once, run everywhere"

Ha!

Look how that played out!

9/ Well, obviously Android won. And it won huge.

I love this analogy because actually, it shares a lot of similarities with the current transition from legacy banking to crypto

10/

The old way of doing things has massive entrenchment, with some real drawbacks, eg. app updating (native code, legacy banking)

11/

The new way is in some ways efficient (trusted computing vs trust-minimized), but offers new vector of improvements that are impossible in the old paradigm cannot replicated

12/

Will the new way outright displace the old way?

On any reasonable time scale, no

Will the new way make inroads? Almost certainly

Will there be incumbents who bridge past and future, and promote the past? Yes (Apple, Stripe)

13/ So, looking ahead, there are a few major players innovating on different vectors

14/

Stripe - building a modern web2 abstraction on top of legacy banking

Diem - building entirely new crypto rails to abstract legacy banking

USDC/Circle - building entirely new crypto rails to abstract legacy banking

15/

I have no special insights on when/how regulators will let Diem launch in some reasonably unconstrained form

Meanwhile, USDC continues to grow. I expect it to at least 3x in 2021, if not 5x or 10x

16/

Diem is important because Facebook has massive consumer distribution

But Stripe has far more reach to the stakeholder group that matters more: merchants

So USDC will keep growing, and Treasury will leverage Stripe's distribution to explode in usage

17/

The big obvious question is, will Stripe eventually integrate Diem and/or USDC?

And it's hard to see a world in which the answer is no

So I see Treasury as the best bridge between past and future

{fin}