Jevons' Paradox Is Coming for Finance
Short summary
The article shows how stablecoins and public blockchains cut the unit cost of payments and compliance, driving more global adoption instead of displacing existing systems. It argues that shared ledgers collapse reconciliation and regulatory burdens, unlocking new markets and users much like cheaper steam engines boosted coal demand.
- Stablecoins/public blockchains replace costly per-jurisdiction rails with one shared ledger, letting tiny firms like Sling Money (23 employees) reach 70 countries and Stripe expand to 101 nations after buying Bridge and Privy.
- Shared ledgers eliminate reconciliation costs that currently consume $61B/year and 42% of bank C-suite time, with platforms like JPMorgan's Kinexys already settling $2B daily in seconds.
- Like M-Pesa (27%→85% financial inclusion) and UPI (18M→228B transactions in a decade), driving unit costs near zero unlocks massive demand rather than just shifting existing volume.
- As GENIUS Act and MiCA clarify rules, the 1.3 billion unbanked adults become a real market opportunity for both new entrants and incumbents.
Full summary
Stablecoins and public blockchains are tearing down the patchwork of regional payment systems. Today, sending money via Venmo or PIX means building separate rails and licensing in each jurisdiction. A single open ledger removes those hurdles. Sling Money, with just 23 employees and three licenses, now offers global payments in 70 countries. Stripe bought Bridge for $1.1 billion and Privy, then rolled out stablecoin accounts in 101 nations—more than twice its previous reach. An exporter in Nairobi can now receive dollars into a virtual account, spend at 150 million merchants with a stablecoin-linked card, and earn 4–7% interest in on-chain lending, all without a traditional bank.
Inside banks, compliance eats up $61 billion a year in North America and ties up 42% of C-suite time. Examiners spend days tracing transactions across multiple correspondent banks. Tokenized deposits and shared ledgers collapse that work. JPMorgan’s Kinexys platform moves $2 billion daily, settling funds in seconds instead of overnight. The Canton Network—backed by Goldman Sachs, DTCC and Broadridge—does the same for JPM Coin. When reconciliation vanishes, banks can serve more customers in more corridors at lower marginal cost.
On the demand side, cheaper infrastructure drives massive growth. Kenya’s M-Pesa lifted financial inclusion from 27% to 85% by making mobile payments nearly free. India’s UPI exploded from 18 million to 228 billion transactions in ten years under near–zero fees. As the GENIUS Act and MiCA clarify regulations, more non-bank players will enter and incumbents will expand their offerings. When the unit cost of core financial services falls enough, the excluded 1.3 billion unbanked adults suddenly look like a huge opportunity.