Thread by @mrjasonchoi

👉🏻 Some assume crypto has a better shot at eating retail payments in Asia because the market is so saturated in the US.

My $0.02 about why this is a lazy thesis. Happy to be proven wrong!

1/x

First, the Holy Grail - China.

China’s retail payments scene is dominated by Alipay and Wechat, which processed $37T last year alone (!!!)

A whopping 85% of purchases was on mobile...of which A and W have 90%+ share. Features like facial recognition further improve UX. 2/x

Both are licensed by the PBoC, and should a non-government issued, uncensorable stablecoin present a serious threat, on-ramps and merchant adoption can be banned.

With PBoC creating its own digital currency, I don’t see crypto as day-to-day payments taking off at all 3/x

What about somewhere with siloed, balkanized markets, multiple currencies, still-maturing mobile payments, high remittance rates, and 70%+ unbanked rate...like Southeast Asia?

Let’s take a look at just 1 of the players crypto is up against 4/x

Grab, SEA’s version of Uber, is one of the largest payments players in the area.

In H1 2019, Grab’s payments biz grew by 100%. Grab is also committing $0.5B to Vietnam, and partnering with banks and cos. in markets like Indonesia and the Philippines with a 6,000 person staff 5/x

Grab has also invested $100M in the past 12 months into AI (with another $150M earmarked) to create alternative credit scores targeting the 450M unbanked in SEA.

This is just one example, and this is what “crypto as payments” projects are up against 6/x

Unlike China, 70% of retail transactions in SEA are done in cash.

Convincing the unbanked to buy an unheard of cryptoasset with their fiat and educating them about private key management is not going to be easy.

Just because you build it, doesn’t mean they’ll come 7/x

There are many more examples and markets - but the takeaway is this:

Asia’s payment scene is either highly controlled (China) or dominated by well-capitalized tech cos (SEA) with a head start and already shipping without the hindrance of blockchain native constraints.

8/x

There *is* a window of opportunity for the bankless and permissionless crypto moonshots to chip away at the Asian payments market - especially the unbanked segment - before tech giants with distribution gobble it up (ahem @Libra_).

But that window shrinks every day. 9/x

@MakerDAO, @terra_money, @CeloHQ’s biggest competitions aren’t each other, but cash and the highly-capitalized centralized payments world.

Tech is 10% the solution - distribution is the other 90%. The battle will be epic.

cc @Shaughnessy119 @hosseeb @danzuller @spencernoon @bennybitcoins