Everything that crypto enthusiasts envisioned a decade ago is slowly becoming "boring" enough to be practical, and this is happening at a crucial moment.

Article by Christian Catalini

Article compiled and sourced from: TechFlow TechFlow

Photo: Alex Blania and Sam Altman at the World Unwrapped event in San Francisco on December 11, 2025.

Christian Catalini

If you've been following the cryptocurrency space, you've probably noticed that everything seems to be accelerating lately. Typically, this means "the numbers are going up," but this time the driving force isn't a bull market or some kind of crypto breakthrough; it's because the rules are finally starting to be clearly defined.

With stablecoin regulations gradually coming into effect, the industry's "handbrake" has finally been loosened. Projects are accelerating their shift from "serving the crypto community" to products truly geared towards the mainstream market. After all, when you're no longer constantly worried about breaking the law, you can more boldly focus on building genuine business models.

As it turns out, the definition of “ambition” changes when the basic infrastructure is in place—when stablecoins are no longer a persistent existential threat but a regulated business.

Instead of trying to reinvent the concept of money, you're focusing on building truly useful products. The "last mile" barrier that previously limited the development of blockchain is gradually disappearing, mainly because decentralized networks are finally starting to do the obvious, even somewhat tedious, things: acknowledging one of the most useful functions of blockchain right now—at least for this stage—is connecting it to Visa cards.

Anonymity Vulnerability

Payment has always been the foundational layer that cryptocurrencies must first overcome. Payment is the basic, primal function of everything else. Satoshi Nakamoto has provided almost all the necessary elements for an electronic cash system: a digital asset, a global ledger, and the incentive mechanisms to support its operation. However, for payments to scale securely, identity verification is essential. This is because modern money is not merely a measure of value, but also a carrier of intent that needs to be verified.

Bitcoin cleverly solves the double-spending problem, ensuring that digital cash cannot be copied and pasted, but it doesn't solve the problem of identity verification. While some see anonymity as a feature, it's actually a major vulnerability for global adoption. I deeply understood this during the design of Libra. The first compromise we had to make was abandoning non-custodial wallets: despite designing many ingenious ways to secure them, regulators required us from day one to establish a secure and controlled boundary. Society strongly favors ensuring that the financial system doesn't support illicit financial activities, and if your permissionless protocol inadvertently funds terrorist activities, society will eventually revoke your permission.

Stablecoin sandwich phenomenon

The current state of cryptocurrency is a textbook example of "infrastructure inversion." Theoretically, we will eventually have advanced zero-knowledge proofs and on-chain attestations, perfectly balancing privacy and compliance. However, in reality, we are currently just patching new technologies onto old ones in the most uninteresting way possible.

Take the "stablecoin sandwich" as an example. This is an industry term referring to connecting two previously independent real-time domestic payment systems by converting fiat currency into stablecoins, transmitting the funds via a blockchain network, and finally exchanging the stablecoins back for fiat currency at the other end. While this approach is indeed feasible, its scaling is ironically problematic. It doesn't rely on the openness of the encrypted network. Businesses don't connect directly to permissionless networks because that would require additional work. Instead, they typically hire a coordination service provider to handle compliance checks and interact with the blockchain on their behalf.

This current situation is far removed from the vision of taking control of one's own destiny, instead bringing intermediaries back to the forefront. While blockchain has indeed solved the settlement problem—the transfer of value—it has neglected the problem of information. In traditional financial systems, every payment comes with relevant data: who initiated the payment, what the purpose of the payment was, and whether the payer is on a sanctions list. Without this information, even if payment settlement can be completed in seconds, it is meaningless because the receiving bank, under legal requirements, will still reject the transaction.

Human currency?

So, what will the future look like? Yesterday's World (formerly Worldcoin) event in San Francisco offered a potential answer, and surprisingly, it involves chrome-plated spheres. At the event, Alex Blania and Sam Altman took to the stage to reminisce about a time when the vision of artificial intelligence devouring the internet wasn't so obvious. However, one thing was clear to them: the ability to distinguish a human from a robot would eventually become the most valuable resource in the world. This pursuit of "proof of personhood" led Blania to build a custom hardware network to verify whether users were indeed biological entities.

After six years of development, what once seemed like a clumsy futuristic experiment—"scanning everyone's iris"—is now gradually shedding its gimmick label and beginning to demonstrate its practicality. Sam Altman, quoting Paul Buchheit, aptly summarizes this key point: "The future may require two kinds of currency: machine currency and human currency." "Proof of Personhood" has proven to be precisely the compliance function of the AI ​​era. To scale payments, you need this technology to distinguish between benevolent and malicious actors; and in a world filled with infinitely synthesized content, you need it to prove the only scarce resource: that something was indeed created by humans.

For years, the dream of cryptocurrency has been to build a global version of Venmo (similar to WeChat Pay) based on crypto technology. At yesterday's "World" (formerly Worldcoin) event, they showcased a wallet that essentially achieves this goal. While its infrastructure is quite similar to traditional fintech architecture, by integrating virtual bank accounts in 18 countries, a Visa card, and local payment networks, they have successfully bridged the gap between cryptocurrency and reality. It turns out that users' real need for global fund flows isn't a new token, but a simple solution for depositing salaries and swiping Visa cards. And the way to attract users to this service is a classic tech growth model: World offers most services free of charge.

Part of the reason is that banks need to collect rent through fees, while World doesn't. But more importantly, the core of this model is that the flow of funds should be low-cost. For a bank, a wire transfer might involve a "diplomatic mission" through three correspondent banks and a fax machine; for blockchain, it's simply updating a ledger record. World is betting that the actual cost of fund flows will approach zero.

App Store Arbitrage

Beyond payments, innovation continues to expand. Back in 2024, I predicted that "mini apps" could become the "killer apps" of the crypto space. My prediction at the time was that they might initially appear "clumsy, niche, even toy-like." This might sound trivial, even annoying, but its impact on market structure is profound. Mini apps are more than just embedding a calculator in your Twitter feed; they allow developers to distribute software without app store licenses or paying hefty 30% commissions. It turns out that escaping the "walled garden" is simply another way for developers to protect their income. Perhaps the most valuable feature a new ecosystem can offer developers is freeing them from the "landlord's" cut when processing payments.

The combination of mini-apps and strong authentication provides developers with a whole new set of basic functionalities, while also foreshadowing World's strategic transformation. Previously, World's strategy was more aggressive—"scan your iris or leave"—an overly dogmatic approach. Now, World adopts a tiered service approach, offering verified "human identity" as a premium feature. This market mechanism seems more reasonable. Users might hesitate to scan biometrics for an abstract future reward, but if they gain a higher return or a more engaging experience, they're likely to participate willingly. For example, the team demonstrated how Japanese Tinder users use World ID for authentication. It turns out that the "killer app" for sovereign identity might be proving to a date that you're not a robot. If you doubt whether users will hand over their biometrics for convenience, ask those willing to scan their eyes to skip security lines at San Francisco International Airport (SFO).

Beyond the Record

Blania clearly understands the platform paradox: you want top online marketplaces, social networks, chatbots, and financial services to use World ID as a basic feature, but they won't readily adopt it until you have enough users. And without a product, you can't attract users. Therefore, you must build your own product to attract users.

This also explains World's foray into the payments sector and its expansion into the messaging arena. World is collaborating with Shane Mac's team to directly integrate the decentralized messaging protocol XMTP into its applications. This approach offers significant privacy advantages compared to centralized alternatives like Signal, WhatsApp, or Telegram. It turns out that if you want to establish an invisible identity layer on the internet, you may first need to demonstrate your capabilities by building a better messaging product.

Before the event began, Shane Mac showed me his latest experimental project—Convos. This application, also based on XMTP, demonstrates that the interoperability of cryptographic technologies extends beyond financial services to everyday communication tools. Convos leverages cryptography to provide a user experience that requires no registration, phone number, history, or tracking. And of course, it's completely independent of centralized servers.

The selling point here is that this may be the first truly "traceable" messaging app. In a world where every Slack message and email is permanently saved, conversations that truly disappear are becoming the ultimate luxury. I imagine the earliest users will be investigative journalists, but the broader vision is to reset private conversations as the default mode of human interaction, rather than a dubious exception.

Overall, although these experiments are still in their early stages, the development trajectory is already clearly visible. The infrastructure of cryptography is finally beginning to catch up with the initial declarations. Everything that crypto enthusiasts envisioned a decade ago is slowly becoming "boring" enough to be practical, and this is happening at a crucial moment. With the accelerated development of artificial intelligence, the ability to verify the truth using cryptography is no longer just a philosophical hobby for cypherpunks, but an indispensable infrastructure for the entire digital economy.