In a significant move aimed at reshaping the landscape of global payments, Stripe has unveiled its new layer 1 blockchain named Tempo. CEO Patrick Collison articulated the vision behind this innovative platform, emphasizing its potential to enhance on-chain financial services. However, the announcement has not escaped scrutiny, particularly from Christian Catalini, a notable figure involved in Meta’s ill-fated Libra project.
Catalini expressed skepticism regarding Tempo’s prospects. He contended that the project is likely to encounter the same fundamental issues that beset Libra, particularly its centralized design. In a detailed critique shared on X, he remarked, “Stripe’s pitch is a classic: all-star team, top-tier partners, and neutrality.” However, he warned that this comes at the cost of offering Stripe considerable control over global payments.
Stripe’s initiative joins a growing trend as major corporations dip their toes into the blockchain realm. The tech industry witnessed another notable announcement from Google in late August, outlining its plans for GCUL, a centralized blockchain aimed at crafting novel payment and financial market solutions. This proliferation of blockchain projects coincides with an emergence of stablecoins, spurred by recent legislative efforts such as the Genius Act, which aims to regulate digital assets.
Reflecting on the past, Catalini pointed out that he has experienced similar challenges before. In 2019, he was part of the initiative to launch Libra, a project that sought to provide robust financial services globally. However, as regulatory concerns emerged, the idea came under intense scrutiny, ultimately leading to its downfall. Catalini recounted, “We had a bad case of Silicon Valley hubris — the belief that elegant code can simply wish away centuries of financial regulation.”
Despite efforts from Meta to placate regulators, including the recruitment of experienced personnel like Stuart Levey and nearly securing approval from Swiss financial authorities, the initiative was ultimately abandoned due to opposition from lawmakers worldwide. Catalini contended that the primary failure lay not in regulatory overreach but rather in the centralized framework of the Libra network.
In revealing Tempo, Stripe aims to address the limitations Tthat existing blockchains face in accommodating the rising demand for stablecoins. The company has partnered with a range of notable organizations, including Paradigm, Anthropic, Deutsche Bank, DoorDash, and Visa, to develop this new infrastructure. Collison explained that Tempo is designed to facilitate various high-scale financial applications, from payment acceptance to microtransactions.
Yet, Catalini remains unconvinced about the viability of such corporate-led blockchain initiatives. He argued that the central challenge with platforms like Tempo isn’t necessarily technological but centers on incentives. He warned that once a company gains control over a market, the temptation to manipulate the system could become overwhelming.
If fintech companies successfully create these walled-garden blockchains, the outcome might not lead to actual financial innovation, he cautioned. Instead, it could merely result in a shift from established banking monopolies to new conglomerates led by tech giants. Drawing from Meta’s previous experience, Catalini suggested that Stripe may unwittingly invoke similar regulatory reactions. He advocates for open and permissionless networks as the true path forward, insisting that anything else is bound to fail.
As of now, Stripe has not publicly responded to Catalini’s critical remarks. Meanwhile, the broader cryptocurrency landscape saw Bitcoin trading at $111,826 and Ethereum hovering at $4,306, indicating a modest increase in market activity.
