a16z: What Stripe’s acquisition of Bridge means for fintech and stablecoins

Author: James da Costa & Sam Broner, a16z crypto; Translation: Golden Finance xiaozou

In February of this year, Stripe completed the acquisition of stablecoin platform Bridge - the company's largest acquisition in history. Stripe had previously reopened its cryptocurrency payment services to US businesses last year. In the bigger picture, after years of growth in stablecoins, this acquisition marks the first time the payments industry has publicly acknowledged that stablecoins are moving toward the mainstream. In 2024, the settlement amount of stablecoins will reach 15.6 trillion US dollars, and the transaction scale will be on par with Visa.

What is a stablecoin? Stablecoins are crypto assets that are pegged to the value of a fiat currency (usually the U.S. dollar). Currently, the most common "fiat reserve stablecoin" (such as USDC issued by Circle) is fully backed by short-term US Treasury bonds and bank deposits at a 1:1 ratio.

Stablecoins have seen significant adoption over the past year in countries with volatile local currencies (such as Nigeria and Argentina); regions with high cross-border remittance costs (such as Colombia); and markets with low international credit card acceptance (such as Pakistan). Stablecoins allow users to: store asset value in US dollars; make fast and cheap global transfers; and spend on international websites that support stablecoins (when local bank card payments are not available).

From small corner shops to multinational corporations, everyone can benefit from stablecoins. Stripe CEO Patrick Collison likened it to the "room-temperature superconductor of financial services" on Twitter, and predicted that "global businesses will enjoy the speed, coverage, and cost advantages of stablecoins in the coming years." As a developer-first payment company (similar to Stripe's philosophy), Bridge enables the conversion of any stablecoin in US dollar format through a single API, and mainly provides three services:

Fund Scheduling: Developers can transfer, store and receive stablecoins with just a few lines of code, and Bridge is responsible for handling all compliance requirements and technical complexities.

Issuance service: Developers can create their own stablecoins in minutes. Bridge will invest its reserves in U.S. bonds and share the profits with developers.

Global Remittance: Provide cross-border transfer and USD/EUR account services for developers' end users.

Current application cases include: Starlink recovering funds from Argentina through Bridge; Nigerian users using stablecoins to pay for YouTube Premium and ChatGPT; and small American businesses receiving payments from global customers.

The acquisition is in line with Stripe's mission to "expand the total size of the Internet economy." Specifically, stablecoins bring dual advantages to Stripe: first, in areas with weak payment infrastructure (i.e. markets where Stripe has limited coverage), stablecoins can reduce cross-border costs, reduce transaction failure rates and increase conversion rates; second, they provide merchants with a more economical payment option than credit cards. In 2024, Stripe's processing amount increased by 38% to US$1.4 trillion. The addition of Bridge is expected to drive a new round of global expansion through stablecoins.

From a more macro fintech perspective, we believe that the popularization of stablecoins faces three major obstacles: the global regulatory framework is still unclear (although it is rapidly improving); the user experience is still cumbersome (traditional banking channels are insufficiently covered); and some trust issues slow down the speed of adoption. But a16z partner Chris Dixon pointed out that stablecoins can "reset" the current closed and fragmented global financial system, calling it the "WhatsApp moment of currency" - just as email revolutionized communications, stablecoins will enable open, instant, and borderless value transfers for the first time.

In addition to scenarios such as cross-border payments, stablecoins also provide new possibilities for AI agents to break through the limitations of traditional financial infrastructure. For example: When an AI agent needs to pay on behalf of a user, whose card or wallet should be used? Who authorizes the transaction? How is risk attributed? How do AIs settle directly with each other? With the inherent programmability of blockchain, stablecoins can solve these problems through functions such as budget rule setting, conditional triggered payments, and micropayments. Stripe’s existing AI agent toolkit already supports the creation of one-time virtual cards to complete e-commerce transactions (which Perplexity is using for autonomous shopping experiences), and stablecoins will become a more suitable alternative or expansion solution.