Coinbase CEO Brian Armstrong: The key to successful crypto payment apps is fees

In a tweet, Coinbase CEO Brian Armstrong said that future scenarios for large-scale payment adoption should be based on Layer2 technology rather than traditional Layer1. As competition among crypto payment services becomes increasingly fierce, payment processing fees will become a key factor in competition. Armstrong emphasized the importance of Layer 2 to improve payment efficiency and reduce costs, which will help drive the widespread adoption of cryptocurrencies in daily payments. His remarks highlighted the crypto industry’s continued evolution and innovation, paving the way for a more efficient and sustainable payments ecosystem. Armstrong’s views also reflect the crypto payments industry’s efforts to find more effective solutions and improve user experience.

Payment applications require cheap infrastructure

Merchant encryption collection module Coinbase Commerce provides tools for merchants to collect cryptocurrency payments and is one of Coinbase's important product lines.

However, some members of the crypto community discovered on the cryptocurrency social platform that the suite only accepts payments in cryptocurrencies such as Bitcoin and Litecoin from users with Coinbase accounts, and does not accept assets from other self-hosted wallets. The move sparked confusion and discussion within the community. Coinbase CEO Armstrong wrote an article explaining the company’s position and thinking in detail.

The key to payment applications is network fees rather than tokens themselves

Armstrong believes that payment applications should be built on a lower-cost basis. The most likely way to achieve this goal at present is to use Layer2 network to build payment services.

As long as the network fee is low, of course, it is not limited to stable currency payment. Various tokens such as ETH and BTC are suitable for payment applications.

The probability of Layer 1 being used as a payment tool in the future is very low

Currently, most L1 blockchains, including the Bitcoin network, have not reached this level, so Coinbase Commerce has not reached this level in some generations. Tokenshang currently does not support external wallet interaction to ensure user experience.

Armstrong believes that the possibility of L1 becoming the mainstream infrastructure for payment application scenarios in the future is very low. Although Solana may be an exception, Coinbase will still be committed to the development of L2, and therefore continue to promote the development of its own Base network, and even The inclusion of Lightning Network technology in the future is not ruled out.

Encryption payment competition is fierce

In addition to Coinbase, payment infrastructure providers include MoonPay, Stripe to Web2 giant PayPal, while stablecoin providers range from USDT, USDC, DAI to the recent Rapid The rise of FDUSD shows that competition in the payment field is becoming increasingly fierce. In the absence of differentiation and clear positioning, it has gradually become a red ocean market.

Therefore, various companies have begun to iterate in the two directions of improving user experience and reducing costs. However, if competition intensifies, it is expected to eventually see a price war, and cheap encrypted payment applications will also emerge. , but time is running out for Coinbase.

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