B-Money Pioneer Wei Dai Laments State of Crypto Adoption for Payments

One of the use cases of crypto, retail payments, has failed to develop, and analysts are now examining the reasons behind this.

Crypto pioneer Wei Dai, known for designing the b-money system, a precursor to bitcoin, expressed his disappointment with the lack of crypto adoption for payments despite the shortcomings of fiat payments.

Dai, who also serves as the president of blockchain startup Node, created b-money in 1999 as a decentralized and electronic payment system.

This system, which predates bitcoin, aimed to be an uncounterfeitable and easily divisible monetary unit that could be used for payments.

Many of the b-money concepts, such as the use of a hash function and a chain of blocks to secure transactions, are still used in today’s cryptocurrencies.

However, despite the introduction of various cryptocurrencies and payment solutions, such as stablecoins, and the high fees charged by banks and credit card companies for processing transactions, consumers prefer using fiat currency in their daily spending.

"It's wild that merchants are still paying ~2-3% from each sale to banks & credit card companies. How come crypto has not won yet in C2B payments?" Dai asked on X.

According to him, the optimal scenario for consumers would involve token incentives, a payment app, tradfi-grade account statements, on-ramp from banks, and stablecoin savings with yield, paving the way for explosive adoption.

Similarly, for businesses, the optimal scenario would include point-of-sale apps on phones and iPads, stablecoin accounts with yield, and off-ramps to banks.

"Banks & credit card companies bootstrapped this in the 60s/70s, why can't crypto companies do this today?" he added.

Many of the problem areas Dai mentioned can be solved by issuing clear regulations for using stablecoins. This subject is currently being discussed in Congress as part of the Guiding and Establishing National Innovation in U.S. Stablecoins (GENIUS) Act, which was introduced in February by Republican Senator Bill Hagerty and is expected to be passed by the U.S. Senate next week.

Nonetheless, social media users pointed out that stablecoin adoption doesn't solve the credit issue, an area where the fiat world excels.

"Stablecoin adoption doesn't solve the issue of credit. People want to be able to spend their stablecoins today and pay them back over time, just like how credit card debt works. That's an area where the fiat world excels, and it's crucial for widespread adoption of any new payment technology," a user wrote.

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