Fintech has hit a wall. Blockchain will break through it.

Financial technology has seen incredible growth for investors and innovators. But in the not-too-distant future, blockchain will become the only aspect of fintech that matters.

Fintech’s success story over the past 15 years has been defined by massive developments in electronic and online payment systems, with companies like PayPal, Venmo, and Stripe becoming household names. (Not to mention the evolution of monoliths like American Express, Visa, and Mastercard.)

Just three years ago, venture capital funding for fintech companies topped $140 billion. But since then, investment in the sector, especially in the first few lapshas fallen to levels not seen since Barack Obama was in the White House, totaling just $25 billion in 2023.

Disclaimer: I’m a big fan of fintech. I’ve spent most of my career in fintech, first at Braintree (acquired by PayPal) and then as head of product at Venmo. I’ve seen firsthand how these companies have transformed societal attitudes toward money.

But after diving down the rabbit hole of smart contracts and cryptography, it became clear to me that blockchain is the new foundation we have been looking for to create a new global financial system.

Building a system that involves traditional financial payments is complex and requires developers to take on many responsibilities: collecting user data, integrating payments, and managing security, risk, and compliance. If any one of these components fails, the entire system is doomed to fail. This is a big responsibility for any project, and often requires small armies of developers to maintain it.

So much time and resources are invested in overcoming risk and compliance hurdles that we rarely see real innovation in fintech product creation. Ultimately, many of these hurdles are tied to a complex web of regulations and requirements that have only gotten more complex as fintech has grown.

Blockchains not only solve these problems, they avoid them. Universal accounts mean there is no need to collect user data. Blockchains’ public, immutable ledger provides a single, universal, and flexible payment system. Self-custody means developers cannot access user funds, greatly simplifying security, risk, and compliance considerations.

In short, blockchain has eliminated many of the responsibilities that developers normally have to take on to build applications. This allows small teams to deliver unique and valuable products to millions of people.

Just consider the impact that DEX pioneers like Uniswap and dYdX have had, growing from the heads of individual founders to quickly rivaling large, centralized enterprise exchanges in terms of trading volume, and then continuing to maintain absurdly small development teams.

Critics like to claim that cryptocurrency developers “don’t want to follow the rules,” but the reality is that blockchains and public-key cryptography render many old rules irrelevant.

As a sector, cryptocurrency is obviously riddled with regulatory inconsistencies and blind spots. Applying old rules to new systems with radically different characteristics would never have made sense.

Innovation in fintech is hampered by the increasing obsolescence of the traditional financial system. Blockchain offers fintech a new future, as it is developing from a much stronger technical base, the possibilities of which are only just beginning to be explored.

Ben Mills is the co-founder of Meso, a payments platform connecting banks and blockchains. Prior to Meso, Ben spent a decade building payments products as a team member at Braintree (acquired by PayPal), as a product lead at Venmo, and working on Solana Pay at Solana Labs.

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