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Crypto Experts Explain Stablecoins & the Future Financial System w/ Ali Yahya & Arianna Simpson

a16z Crypto General Partners Ali Yahya, Arianna Simpson, and Erik Torenberg break down what’s actually working in crypto today - starting with the rise of stablecoins as a real-world payments layer.

Ali YahyaguestArianna SimpsonguestErik TorenberghostErik Torenberghost

Jul 9, 202541mWatch on YouTube ↗

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CHAPTERS

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Chapter summaries

Why crypto is “working now” in 2025: infrastructure + regulatory shift
The conversation opens with a state-of-the-union on crypto in May 2025: what’s actually working versus what remained hypothetical for years. Ali and Arianna argue that faster, cheaper blockchains plus a friendlier regulatory posture have pushed stablecoins into real adoption.
- •Crypto skepticism vs. tangible 2025 progress
- •Blockchain performance improvements (cost and speed) change feasibility
- •Regulatory clarity as a catalyst for mainstream usage
- •Stablecoins as the breakout application layer
From Bitcoin’s peer-to-peer cash vision to stablecoins as practical money
Ali traces Bitcoin’s original “electronic cash” goal and explains why Bitcoin’s volatility and throughput constraints shifted it toward store-of-value. Stablecoins, paired with modern crypto rails, now better match the payments vision Bitcoin introduced.
- •Bitcoin’s whitepaper goal: peer-to-peer electronic cash
- •Why Bitcoin became more store-of-value than payments (speed, cost, volatility)
- •Stablecoins as a stable unit of account for payments
- •Mature rails enable sub-second, sub-penny transactions
Stablecoins’ moment: scale, adoption signals, and the on-ramp to DeFi
The hosts dig into why stablecoins are gaining traction now, including major volume and early enterprise usage. They frame stablecoins as a wedge that can normalize crypto rails and unlock broader onchain finance over time.
- •~$16T annual stablecoin volume cited
- •Fintech adoption examples (Stripe, Revolut, Robinhood)
- •Stablecoins ‘rip out’ legacy backend plumbing
- •Stablecoins as a gateway to DeFi and other onchain primitives
The hidden tax of payments: intermediaries, fees, and cross-border friction
Ali lays out the layered payment stack behind a simple credit card purchase and explains how fees accumulate. The inefficiencies become extreme internationally, where time-to-settlement and cost can be prohibitive compared to blockchain settlement.
- •How domestic card payments involve many intermediaries taking fees
- •Cross-border payments: duplicated stacks, 3–7 day settlement
- •High costs (up to ~10%) for international transfers
- •Stablecoin rails promise near-instant, near-free global transfer
Real-world stablecoin use cases: emerging markets, cash-in/cash-out, and institutions
Arianna describes usage spanning consumers in unstable-currency countries to regulated institutions seeking a clear, non-speculative entry point. A highlighted example shows stablecoins powering local deposit networks that become the base layer for broader financial services.
- •Consumer demand in countries with currency instability/hyperinflation risk
- •On-ramps via local agent/kiosk networks (example: Zarpe in Pakistan)
- •Stablecoins as the ‘atomic unit’ for building new financial products
- •Banks and institutions view stablecoins as a low-risk first step
Mapping the stablecoin stack: issuers, L1s, wallets, and what captures value
Ali breaks down the ecosystem: stablecoin issuers (USDC, Tether), the blockchains they run on, and the interfaces that connect users to crypto rails. He predicts that stablecoin legislation could commoditize issuance and shift value capture to infrastructure and distribution.
- •Core players: issuers (USDC/Circle+Coinbase, Tether)
- •Infrastructure layer: L1s where activity happens (Ethereum, Solana, Sui, etc.)
- •Edge layer: wallets/fintech UX that abstracts crypto complexity
- •Expected legislation may commoditize issuance; value shifts to rails and wallets
Is stablecoin adoption the “iPhone moment” for crypto? Waves of onboarding
Erik asks whether stablecoins could be crypto’s mass-adoption product. Arianna argues stablecoins are strong candidates but expects multiple waves (games, AI, payments) to onboard different user cohorts over time.
- •Mass adoption may not hinge on a single killer app
- •Stablecoins have a clear, broad value proposition
- •Crypto adoption comes in waves tied to cycles (games → AI → payments)
- •Stablecoins address real pain points for both consumers and businesses
Enterprise pull: treasury management and the Stripe signal
They discuss how companies already use stablecoins for cross-border treasury operations and how Stripe’s ecosystem is increasingly stablecoin-centric. The theme: stablecoins are escaping the crypto bubble into mainstream finance workflows.
- •Companies using stablecoins for treasury movement across countries
- •Bridge (acquired by Stripe) as an enabling piece of infrastructure
- •Stripe Sessions highlighting stablecoins as a major topic
- •Regulatory friendliness accelerates enterprise experimentation
Startups vs incumbents: why big tech struggles to adopt crypto (and AI parallels)
Ali explains that crypto’s decentralization threatens incumbents’ centralized business models, making adoption culturally and economically difficult. He draws a parallel to AI becoming disruptive for incumbents when it threatens to cannibalize profitable legacy products like search.
- •Incumbents fear optics, regulation, and reputational risk
- •Decentralized networks undermine centralized control and monetization
- •Personal anecdotes: resistance at Google X; similar at Facebook
- •AI shifting from sustaining to disruptive as it pressures core businesses
Decentralized social networks: product readiness vs consumer switching costs
The discussion turns to why decentralized social hasn’t broken through: switching costs around social graphs, user inertia, and attention scarcity. They argue the challenge is more about consumer behavior and network effects than raw technology, though UX remains a hurdle.
- •Consumer preference and network effects dominate social adoption
- •Graph portability is hard; people stay where the graph is
- •Users tolerate ads and data extraction because switching is costly
- •Crypto UX still has friction; consumer app quality bar is high
Where crypto-native consumer networks can win: owning new niches (Blackbird example)
Arianna highlights that new networks can succeed when they target under-owned categories rather than trying to displace entrenched giants head-on. She uses Blackbird to illustrate how tokenized ownership plus cheaper payments can align incentives for restaurants and diners.
- •Opportunity in categories without an entrenched ‘default’ platform
- •Blackbird: restaurant loyalty/network as an ownership-enabled alternative
- •Web2-quality UX with Web3 incentive alignment
- •Stablecoin payments reduce fees; network ownership improves margins
AI × crypto intersections: identity, decentralizing compute, and new internet business models
Ali outlines three major intersections: authenticating humans/media in a deepfake world, decentralizing AI power via compute markets, and enabling new compensation models for content used in training. He frames crypto as a counterweight to centralized AI and a tool for verifiability.
- •Proof-of-humanity/anti-deepfake authentication (Worldcoin, ZK proofs)
- •Decentralized compute marketplace vision (Gensyn) using idle GPUs
- •Verifiable ML properties (e.g., bias claims, execution correctness) via cryptography
- •New business models: attribution + micropayments to reward data contributors
Do AI labs care about crypto? Mostly no—so far it’s founder-led crossover
Erik asks whether major AI labs will adopt crypto primitives. Ali suggests most labs are focused on AI alone; the meaningful work is happening in startups whose teams straddle both AI and decentralized-network commitments.
- •Big AI labs generally not prioritizing crypto integration
- •Crypto-native teams exploring AI intersections more aggressively
- •Founder backgrounds matter (AI expertise + decentralization philosophy)
- •Crossover is emerging but still early and uneven
Misconceptions about crypto in 2025: tokens, regulation, and what blockchains really are
Arianna argues many builders still believe launching token networks in the U.S. is untenable, even though the policy climate has shifted materially. Ali adds a broader misconception: people still think blockchains are ‘just money ledgers’ rather than programmable, censorship-resistant computers enabling new primitives.
- •Past U.S. regulatory hostility chilled token network launches
- •2025 shift: friendlier administration and agency leadership changes
- •Ethereum’s key difference: programmable, autonomous smart contracts
- •Blockchains invert the hardware/software power relationship, enabling more than money
Smart contract platform ‘wars’: Bitcoin as digital gold, Ethereum vs high-performance L1s
Ali evaluates the current L1 landscape as a multi-dimensional trade-off space rather than a single winner-take-all contest. He positions Bitcoin as durable ‘digital gold,’ Ethereum as decentralization-oriented for high-stakes finance, and chains like Solana/Sui as performance-oriented for exchange-like workloads.
- •Different chains optimize different points in the trade-off space
- •Bitcoin’s simplicity/hard-to-change nature supports store-of-value narrative
- •Ethereum’s decentralization suits DeFi and asset issuance despite slower evolution
- •High-throughput chains better fit payment rails and onchain exchange workloads; outcome remains open
Policy reset and the “Libra that might have been”: new opportunity space for founders
They revisit Meta’s Libra/Novi as an example of how regulation previously blocked large-scale consumer crypto payments. Arianna closes by emphasizing that investors and entrepreneurs should now recognize a newly opened design space—and build aggressively into it.
- •Libra/Novi as a distribution-driven stablecoin/payment thesis blocked by regulators
- •Talent diaspora from Libra contributed to new ecosystems (e.g., Sui/Mysten)
- •Investing as ‘recognizing what’s possible’ when conditions shift
- •Expectation of a burst of new entrepreneurship under the new regime

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