In 2022, billionaire investor Chamath Palihapitya predicts that developing blockchain and DeFi initiatives will dethrone Visa and Mastercard, two of the largest payment processors.
In an episode of the “All-In Podcast” broadcast Wednesday, he added, “My biggest business loser for 2022 is Visa and MasterCard, traditional payment rails, and the entire ecosystem around it.”
According to him, the world’s long-standing payment systems are a “totally constructed duopoly that doesn’t need to exist.” Palihapitya, a former Facebook employee who now manages the venture capital firm Social Capital, revealed what he believes would be his “most profitable spread bet” in the coming year.
“Be long well-thought-out, Web3 crypto initiatives that are rebuilding payments infrastructure in a completely decentralized way, and be short these firms and everyone who basically survives off of this 2 or 3 percent (transaction) fee,” he said. He also predicted, without being specific, that “a lot of these scammy crypto enterprises will go to nothing.”
“If you read the whitepapers of these crypto projects and put up a framework systematically, I believe you can be long those and short Visa/MasterCard since I believe this is their peak market cap,” he continued. A spread trade is a market order in which a trader buys one security and sells another in the same transaction. This trade is carried out by investors to profit from the spread (or difference) between the purchasing and selling prices.
Palihapitya based his viewpoint on Amazon’s decision last month to prohibit the use of Visa credit cards in the United Kingdom due to excessive transaction costs.
He explained, “The canary in the coal mine here is quite substantial.” “Amazon, in my opinion, will not do something like that unless it’s a test of what they can do all over the world. There is no need for all of these tiny businesses to be riding on the rails of Visa, MasterCard, and AmEx today. It’s pointless.” He also anticipated that the underdeveloped countries will be the first to adopt this emerging technology.
A spread trade is a market order in which a trader buys one security and sells another in the same transaction. This trade is carried out by investors in order to profit from the spread (or difference) between the purchasing and selling prices. Palihapitya based his viewpoint on Amazon’s decision last month to prohibit the use of Visa credit cards in the United Kingdom due to excessive transaction costs.
He explained, “The canary in the coal mine here is quite substantial.” “Amazon, in my opinion, will not do something like that unless it’s a test of what they can do all over the world. There is no need for all of these tiny businesses to be riding on the rails of Visa, MasterCard, and AmEx today. It’s pointless.” He also anticipated that the underdeveloped countries will be the first to adopt this emerging technology.
Visa and Mastercard have been underperformers in 2021, with stock values nearly flat year-to-date compared to the S& P 500’s almost 27 percent increase.
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