SOL - How Solana Pay Lays the Framework for Cryptocurrency's Future
To help grow the Solana (CRYPTO: SOL) ecosystem, a company called Solana Labs recently unveiled a new digital payments platform called Solana Pay. In this episode of "The Crypto Show" on Motley Fool Live , recorded on Feb. 9 , Fool.com contributor Travis Hoium talks about why this new peer-to-peer payments system is an exciting addition to the cryptocurrency space.
Travis Hoium: To be clear, I don't necessarily know where the price of Solana as a cryptocurrency is going, and that's not really how I look at cryptocurrency in general. I'm really interested in what is the utility that is being built on the cryptocurrency. I think of it a little bit like a digital economy. So, do you want to be long U.S. dollars or euros? Well, long term, basically, you're betting on the economy of the U.S. or the economy of Europe. That's the analogy that I think of cryptocurrencies as, and Solana is a booming digital economy, and that's what I think is truly interesting. I don't hold very much Solana at all. I'm primarily buying NFTs for the utility or whatever you're building in NFT projects, and that's what I'm excited about is that ecosystem that's building out. And that brings us to Solana Pay, which is one of these really interesting and potentially really disruptive innovations happening in cryptocurrency and they're basically, Solana has introduced the ability, the infrastructure for developers to create a peer to peer. A peer might be a buyer at a coffee shop and a coffee shop owner. To make that financial transaction directly between the two of them. Where today sitting between them would be, let's say you're shopper on Square or Block , you'd be paying Visa or Mastercard or American Express and whatever bank is associated with those. You'd have basically about a 3% fee that you're paying just for the right to take somebody's money from a credit card. And Solana Pay, what it does is it basically destroys that intermediary layer, and like Chris said, the transaction costs can be fractions of a penny. That's very interesting for me. We always talk about decentralized finance and it's like this catchall term for financial stuff that you can do with crypto and nobody really knows what it means. Here's a really concrete example of how we could be using cryptocurrency in the future, and to be clear, the structure that they have introduced so far is based on using what's called the USDC coin. It's a Solana-based coin that is tethered to the U.S. dollars. You're effectively paying U.S. dollars, it's just instead of going through Visa's network, it's going through Solana's network. and instead of the shop owner paying a 3% fee, they're paying 0.002 pennies. That's effectively what you're looking at. I put a couple of links in the Slido if you want to see what developers have done with this in a matter of days. It's amazing to see what people can build extremely rapidly in the world of cryptocurrency, and this hopefully gets you a little bit of a taste of why I'm excited about the developments that are going to happen in this space because this was literally announced last week, I think a day or two before the show last week. In a matter of 48 hours, developers had come up with payment systems that they can launch at shops. I think it's already live in about 20 shops around the San Francisco Bay area. You can go in and pay with Solana or USDC in those shops today, so this is happening really, really quickly. It could be really disruptive to the traditional finance and banking credit card space.
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How Solana Pay Lays the Framework for Cryptocurrency's Future