Those who know me know that I’m not a fan of sports. In a moment of weakness recently, though, I watched 10 minutes of motorsport with one of my kids. Perhaps because it’s pretty simple to understand, I’m happy to allocate a very small amount of my attention to it (and perhaps a bit of sailing). But that’s it.

So, 10 minutes into watching some very fast cars racing around the streets of Dubai, I’m thinking, ‘There sure are a lot of sponsors from the financial industry plastered over these cars’. Visa, MoneyGram, Santander, etc. Once my curiosity kicked in, I was off on Perplexity.io researching this sport and where all the money comes from to fund it.

There’s a $2 billion annual sponsorship budget for Formula 1, and almost a third of this comes from the financial services and payments industry.

 

Heck, there’s two conclusions I can draw already:

  1. People with a lot of money, really like watching fast cars go really fast, and
  2. There’s clearly money in moving money around

In fact, the market globally for digital payments is estimated to be worth just over $20 trillion for 2025.

 

What happens when digital disruption really impacts the payments industry?

 

Mainstream media, now completely decimated by digital transformation, is a harbinger of what’s to come to the money industry. When businesses in NZ pay around $15,000 annually in merchant fees for something that could be next to nothing, you now get a feel for just how much treasure there is at the end of this rainbow. This sleeping giant, though, when awoken from incumbent slumber, is likely to bite. But for now, in the shadows, the competition (still unnoticed) becomes stronger.

 

Meanwhile, many in the wealth industry, myself included, value Bitcoin for the potential return possible with a relatively small investment. If you want to ‘invest’ in Bitcoin, that’s fine, but that’s not the complete understanding you should settle for in my view. While previously I would have viewed it as ‘number go up’ (NGU) technology exclusively, Bitcoin’s disrupting it’s own use-case for me. It’s not just a tool to convert our dollars into more dollars later (subject to a ‘greater fool’ than me coming along in the future); it’s a digital place I can store my analogue wealth. It’s a savings technology. And it exists outside of a system denominated by currency programmed to lose half its value in about 35 years*.

 

So, from NGU to savings – ready for the next step?

 

While originally designed and labelled as a peer to peer cash system, let’s be honest, it hasn’t yet achieved this. An other way of saying it? This hasn’t been priced in. We may be undervaluing the ability of Bitcoin to act as a medium of exchange. Bitcoin is decentralized, it’s secure, and it’s scalable but it still moves relatively slow compared to the current centralized versions we all know  today. In order to take on the likes of Visa, the scalability needs to be improved upon, without the side effect of centralization or security. The Lightning Network, a ‘layer 2’ technology built on the base layer of Bitcoin, changes everything. What would otherwise be limited to 7 transactions per second is now virtually unlimited.

 

Recently, I caught up with Dr. Simon Collins, Brandon Bucher, and Rob Clarkson. They are all co-founders of Web3NZ’s 2024 Startup of the Year Lightning Pay NZ. They’re working to disrupt, or even destroy, traditional payments, and I’m curious as to how that’s going to work.

 

 

Speculating for gains or holding on for dear life (Hodling) are not sustainable methodologies for long-term Bitcoin adoption – there has to be more to this than NGU. If the Lightning Network becomes a practical solution for payments, without it being obviously powered by Bitcoin, then this is when everyday people catch on.

 

*At an inflation rate of 2%, it would take between 34-36 years for $1 to be worth 50 cents. So, by the time you start earning in your early 30s to when you retire, everything will be worth around twice as much as it is today. Some believe that because the ‘CPI’ (Consumer Price Index) does not accurately capture the real loss in purchasing power, it could be far worse. People shouldn’t have to put their money at risk, just to retain its value. Savings accounts and term deposits should protect us from inflation, but it doesn’t. By holding forms of money that can’t be increased in supply over time, you can avoid some of the effects of central bank-programmed inflation.