Author:Christian Catalini
Compiled by: Deep Tide TechFlow
Image: 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 might have noticed that everything seems to be accelerating lately. Usually, this means "numbers are going up," but this time the driving force isn't a bull market or some breakthrough in encryption technology, but because the rules are finally starting to be clearly defined.
As stablecoin regulations gradually fall into place, this industry's "handbrake" is finally been released. Projects are accelerating their shift from "serving the crypto insiders" to truly building products for the mainstream market. After all, when you no longer constantly worry about breaking the law, you can focus more boldly on building real business models.
It turns out that when the building blocks are in place—when stablecoins are no longer a lingering existential threat but a regulated business—the definition of "ambition" changes accordingly.
You're no longer trying to reinvent the concept of money; instead, you start focusing on building truly useful products. The "last mile" obstacles that previously limited blockchain development are gradually disappearing, mainly because decentralized networks are finally starting to do the obvious, even somewhat boring things: acknowledging that one of the most useful functions of blockchain right now—at least at this stage—is simply connecting it to a Visa card.
The Anonymity Loophole
Payments have always been the foundational layer that cryptocurrency had to break through first. Payments are the fundamental primitive for everything else. Satoshi Nakamoto provided almost all the necessary elements for an electronic cash system: a digital asset, a global ledger, and the incentive mechanisms to run it. However, for payments to scale securely, identity verification is essential. This is because modern money is not just a measure of value; it is a carrier of intent that needs to be verified.
Bitcoin cleverly solved the "double-spending problem," ensuring digital cash couldn't be copy-pasted, but it did not solve the problem of identity authentication. Although some see anonymity as a feature, for global adoption, it is actually a major loophole. I learned this deeply during the design of Libra. The first compromise we had to make was to abandon non-custodial wallets: despite designing many clever ways to secure them, from day one, regulators required us to establish a secure and controlled boundary. Society strongly prefers to ensure that the financial system does not support illegal financial activities, and if your permissionless protocol accidentally funds terrorism, society will ultimately revoke your permission.
The Stablecoin Sandwich Phenomenon
The current state of cryptocurrency is a textbook case of "infrastructure inversion." In theory, we will eventually have advanced zero-knowledge proofs and on-chain attestations, perfectly balancing privacy and compliance. However, the reality is that, for now, we are just splicing new technology onto old technology in the most boring way.
Take the "stablecoin sandwich" as an example. This is an industry term for connecting two otherwise separate real-time domestic payment systems by converting fiat into stablecoins, transmitting them over a blockchain network, and finally converting the stablecoins back into fiat on the other end. It works, but the way it scales is ironic. It doesn't rely on the openness of the crypto network. Businesses don't connect directly to the permissionless network because that requires extra work. Instead, they typically hire a coordinating service provider responsible for compliance checks and interacting with the blockchain on their behalf.
This status quo is far from the vision of controlling one's own destiny; instead, it brings intermediaries back to center stage. It turns out that blockchain does solve the settlement problem—the transfer of value—but it neglects to solve the information problem. In traditional financial systems, every payment comes with relevant data: who initiated the payment, the purpose of the payment, and whether the payer is on a sanctions list. Without being able to transmit this information, it's meaningless to settle a payment in seconds because the recipient's bank, bound by legal requirements, will still reject the transaction.
Human Money?
So, what will the future look like? Yesterday's "Yesterday’s World" (formerly Worldcoin) event in San Francisco offered a potential answer, and that answer surprisingly involved chrome spheres. On stage, Alex Blania and Sam Altman reminisced about the past, a time when the prospect of AI consuming the internet wasn't so obvious. However, what was clear to them was this: the ability to distinguish a human from a robot would eventually become the world's most valuable resource. This pursuit of "Proof of Personhood" led Blania to build a custom hardware network to verify that users are indeed biological entities.
After six years of development, what once seemed like an awkward futurist experiment—"scanning everyone's iris"—is now shedding its gimmicky label and beginning to show its utility. Sam Altman quoted Paul Buchheit, perfectly summarizing the key point: "The future might need two currencies: machine money and human money." It turns out that "Proof of Personhood" is the compliance function for the AI era. To scale payments, you need this technology to distinguish good actors from bad actors; and in a world full of infinite synthetic content, you need it to prove the one thing that is truly scarce: that something was indeed created by a human.
For years, the dream of cryptocurrency has been to build a global version of Venmo (an app similar to WeChat Pay) based on crypto technology. And at yesterday's "World" (formerly Worldcoin) event, they showcased a wallet that basically achieves this. Although the infrastructure it relies on is quite similar to traditional fintech architecture, by integrating virtual bank accounts from 18 countries, a Visa card, and local payment networks, they successfully bridged the gap between cryptocurrency and reality. It turns out that the real user demand for global fund movement isn't for a new token, but for a simple solution where you can deposit your salary and swipe a Visa card. And the way to attract users to adopt this service is the classic tech growth model: World makes most services free.
Part of the reason is that banks need to charge fees to collect rent, while World does not. But more importantly, the core of this model is that the movement of funds should be low-cost. For a bank, a wire transfer might be a "diplomatic mission" involving three correspondent banks and a fax machine; for a blockchain, it's just updating a ledger record. World is betting that the actual cost of moving money will approach zero.
App Store Arbitrage
Innovation isn't just limited to payments; it's expanding. Back in 2024, I predicted that "Mini Apps" could be crypto's "Killer App." The prophecy at the time was that they would debut "clumsy, niche, even toy-like." It sounds trivial, even annoying, but its impact on market structure is profound. The significance of mini apps isn't just about embedding a calculator in your X (Note: the new name for Twitter after rebranding) feed; it's about allowing developers to distribute software without the permission of app stores and without paying up to 30% fees. It turns out that escaping the "walled garden" is just another way for developers to keep their income. The most valuable function a new ecosystem can provide for developers is to let them handle payments without the "landlord" taking a cut.
The combination of mini apps and strong identity verification provides developers with a series of new foundational functions and also signals a strategic shift for World. In the past, World's strategy was more hardline—"scan your iris or get lost"—which was clearly too dogmatic. Now, World is adopting a tiered service approach, treating 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 it means getting a higher yield or a more interesting experience, they might be willing to participate. For example, the team showed how Japanese Tinder users could use World ID for verification. It turns out the "killer app" for sovereign identity might be proving to a date that you're not a robot. If you doubt whether users would trade their biometrics for convenience, just ask those willing to scan their eyes to skip the security line at San Francisco International Airport (SFO).
Off the Record
Blania clearly understands the platform paradox: you want top online marketplaces, social networks, chatbots, and financial services to adopt World ID as a foundational function, but they won't adopt it until you have enough users. And without the product, you can't attract users. So, you have to build the product yourself to attract users.
This also explains World's move into payments and its expansion into messaging. World is collaborating with Shane Mac's team to integrate the decentralized messaging protocol XMTP directly into the application. Compared to centralized alternatives like Signal, WhatsApp, or Telegram, this approach offers significant privacy advantages. It turns out that if you want to be the invisible identity layer of the internet, you might first need to demonstrate your capabilities by building a better messaging product.
Before the event started, Shane Mac showed me his latest experiment—Convos. This app, also based on XMTP, shows that crypto's interoperability isn't limited to financial services but can extend to the communication tools people use daily. Convos uses cryptographic techniques to provide an experience that requires no registration, phone number, history, or tracking. And, of course, it also completely avoids relying on centralized servers.
The selling point here is that this could be the first truly "traceless" messaging app. In a world where every Slack message and email is permanently stored, conversations that truly disappear are becoming the ultimate luxury. I imagine the earliest users might be investigative journalists, but the broader vision is to reset private conversation as the default mode of human interaction, not a suspicious exception.
Overall, although these experiments are still in their early stages, the trajectory is clear. Crypto infrastructure is finally starting to catch up to its initial declarations. Everything the crypto enthusiasts envisioned a decade ago is slowly becoming "boring" enough to be practical, and this is happening at a critical moment. As AI accelerates, the ability to use cryptography to verify truth is no longer just a philosophical hobby for cypherpunks, but an indispensable infrastructure for the entire digital economy.
