The bitcoin, ethereum and crypto price boom—pushing the combined crypto market to around $2 trillion from under $500 billion in just 18 months—has sparked a wave of blockchain-based development, including in high-tech ethereum rivals such as solana and cardano.
Now, Chamath Palihapitiya, a former Facebook executive who runs the venture capital fund Social Capital, has warned there’s “a swarm of activity [coming] to dismantle” Visa and Mastercard.
Want to stay ahead of the market and understand the latest crypto news? Sign up now for the free CryptoCodex—A daily newsletter for crypto investors and the crypto-curious
“Visa and Mastercard, I think, are doing the single dumbest thing they could do, by being a duopoly—which is raising prices, especially into an inflationary moment, which just lacks complete knowledge and sensitivity of the moment,” Palihapitiya said, speaking on the latest episode of the All-In Podcast. Visa and Mastercard are preparing to increase merchant fees, it was reported by the Wall Street Journal last month.
“This week, I was able to see a little bit under the hood of Solana Pay, and that’s really exciting,” said Palihapitiya, who’s gained a reputation over the last couple of years as the “SPAC king” for his successful sponsorship of blank-check funds, or special purpose acquisition companies (SPAC), that raise money in the public markets to buy private companies. “So it’s all coming, I think. It’s like a swarm of activity to dismantle these payments businesses.”
Solana Pay, a digital payment platform that runs on top of the solana blockchain network and can support a range of digital assets such as NFTs, claims to be able to compete with Visa and Mastercard in terms of transactions per second. While bitcoin, without additions such as the Lightning Network, averages just seven transactions per second and ethereum averages only thirteen, solana boasts 65,000 transactions per second without the need for a third-party such as a bank or payments processor.
Late last year, Palihapitiya, who abruptly resigned from his position as the chair of the Virgin Galactic board in February, predicted Visa and MasterCard would be the “biggest business loser[s] in 2022” calling the pair a “completely contrived duopoly that doesn’t need to exist.”
“Be short these companies and anybody that basically lives off of this 2% or 3% (transaction) tax, and be long well-thought-out, web3 crypto projects that are rebuilding payments infrastructure in a completely decentralized way,” he said.
While solana is a decentralized network, it has sacrificed a high degree of decentralization for increased transaction speeds and low fees. Solana has suffered several outages and periods of transaction congestion in recent months, somewhat casting doubt over the blockchain’s ability to scale to the same level as bitcoin and ethereum.
Sign up now for CryptoCodex—A free, daily newsletter for the crypto-curious
However, earlier this year, analysts at Bank of America predicted solana could win a significant amount of market share from ethereum and become the “Visa of the digital asset ecosystem.”
“[Solana’s] ability to provide high throughput, low cost and ease of use, creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (web3) and gaming,” Bank of America analyst Alkesh Shah wrote in the note to clients.
The crypto market has bounced back this week after a sudden sell-off over the weekend, with the bitcoin price climbing back over the closely-watched $40,000 per bitcoin level.
Solana has led the crypto price rally, climbing 5% over the last 24 hours. The ethereum price has meanwhile shot back over $3,000 per ether.