Finance is not prepared for the coming wave of value destruction

• Key insight: Just as internet connectivity destroyed the market for long-distance telephone service, blockchain technology is going to make high-margin transactions, like cross-border funds transfers, dirt cheap.
• Supporting data: $50 international wire transfers are about to be replaced with transactions that cost under $0.05.
• Forward look: Established players should brace themselves.

When you pitch a startup to investors, you always focus on the TAM, the total addressable market. 
In the world of blockchain and crypto, that often means looking at the size of the traditional financial markets in play. Cross-border payments are a good example: The low-value cross-border payments revenue pool stands at roughly $100 billion a year, in a market characterized by transactions that can take days and cost between $15 and $50 each.

This looks like a juicy market ripe for disruption, and it is, but there is no guarantee that what is left after transformation will be very attractive. Media network executives have famously complained that the transition they have to live through with streaming is one of analog dollars turning into digital pennies. 

The same is about to happen across swaths of the global finance industry. $50 international wire transfers are about to be replaced with transactions that cost under $0.05. For those keeping score at home, that is a price cut of 99.9%. So, what's going to happen to the cross-border TAM? You've guessed it.

This pattern is going to repeat itself over and over across every sector of finance. You can launch a new token on an Ethereum Layer 2 for a few dollars. Do not be surprised if the pure technical transaction cost of executing an initial public offering eventually converges on that cost as well.

What blockchain is doing to transaction costs, AI is doing to administrative and documentation overhead.

The world of AI is caught up in a lot of talk about Jevons Paradox, usually traced to William Stanley Jevons's 1865 book The Coal Question. Jevons argued that greater efficiency in coal use could increase, rather than decrease, total coal consumption because lower effective cost would unlock new demand. The result: an industry that grew dramatically.

This dynamic is playing out clearly in AI. If we compare 2024 frontier API pricing from the OpenAI GPT-4o launch with lower-cost 2026 state-of-the-art and near-frontier model tiers in OpenAI API pricing, we see that cost per million tokens for state-of-the-art AI models has declined roughly 90% over the past two years. This happened even while Google AI token processing rose from 9.7 trillion tokens per month in 2024 to 3.2 quadrillion in 2026 — about 330 times the starting level, or roughly 33,000%.

The same dynamic is not working nearly as well in finance. Blockchains are delivering transaction-cost reductions of 1,000:1, and while stablecoin and on-chain activity are growing rapidly, those demand gains are not yet enough to offset the depth of fee compression.

The blockchain industry itself has been the first casualty of this efficiency. DeFiLlama shows that ethereum monthly fees paid by users peaked at about $1.83 billion in November 2021. By March 2026, the lowest complete month after that peak, monthly fees had fallen to about $10.6 million, a 99.4% decline. April 2026 recovered to roughly $24.4 million, but that still left ethereum's monthly fee base down about 98.7% from the 2021 high, before counting the additional fee compression from activity migrating to cheaper Layer 2 networks.

Stablecoin

Why Standard Chartered, BNY launched stablecoin rails

The banks now let institutional clients mint and redeem Circle's USDC directly, turning them into stablecoin infrastructure providers.

By Carter Pape

July 9

Even successful blockchain companies have cut staff despite surging transaction volumes.

The same mechanism is coming for the rest of traditional finance. Blockchains and smart contracts will ultimately cover everything from account administration to loans, liquidity management, and stock trading. A world in which banking fees decline from 75% to 90% would completely change the valuations of the global financial services sector.

If this all sounds preposterously gloomy, think again. In January 1982, AT&T agreed to break up the Bell System, the massive, government-regulated monopoly on telecommunications. The divestiture took effect on Jan. 1, 1984. One supposed upside was freedom from old consent-decree limits, including the ability to pursue computer, information-services and customer-equipment markets. At the time, local and toll voice service represented about 95% of AT&T's operating revenue, and total 1983 revenue was about $69.4 billion, roughly $226 billion in 2025 dollars.

As the internet spread and the telecom network digitized, waves of new startups entered the market, some of which aimed to transform voice telephony with subscription plans that were much less costly than traditional landlines but ran over internet rails. Eventually most of these companies died as voice telephony went from being expensive to being cheap to being basically free, and voice calls were absorbed as a value-added feature into other offerings, including messaging apps, wireless data plans, and enterprise CRM systems.

Are payments like voice telephony in 1980? If that is true, then you cannot succeed simply by being a better payment company, because in the very near future, payments will not be a product. They will just be a feature. How much of the traditional finance sector is really just a feature inside another application? What if someone starts a paid airport lounge network that includes free banking? It's only a joke until the pitch gets a billion-dollar private-equity commitment.

So, what do you do if you know transformation is coming and you cannot predict where future value will accrue? Simple: Put chips on every number on the roulette layout before the croupier releases the ball. That explains the flurry of transformation going on across the finance and blockchain industries right now: a rush for vertical integration.

The push is coming from both incumbents and attackers: Deals like Mastercard buying BVNK or Stripe buying Bridge and then launching Tempo represent TradFi's incursion into blockchain. 

Crypto natives are, for their part, working to secure their own beachheads in traditional finance, with companies like Bullish buying Equiniti and just about everyone in crypto obtaining banking licenses and launching payment networks.

Voice telephony became free and a $230 billion dollar a year market disappeared, but telecom, data and wireless infrastructure markets are bigger than ever. AT&T had the right idea about the future and the same is likely to happen in finance. The finance industry today has about $14 trillion in revenue and about $3.2 trillion in annual profits. It's all in play.