Curriculum·Graduate·G602
Merchant Acceptance and Settlement Rails
Silvergate Bank and the Silvergate Exchange Network, March 2023. Silvergate was a small California bank that had become critical plumbing for the industry: its Silvergate Exchange Network let exchanges and trading firms move US dollars between each other instantly, around the clock, which is what real payments and settlement need.
Lesson 1 opens on
Silvergate Bank and the Silvergate Exchange Network, March 2023
Silvergate was a small California bank that had become critical plumbing for the crypto industry through the Silvergate Exchange Network, the SEN, which let exchanges, funds and trading firms move US dollars between one another instantly and around the clock. That is the thing real payments need: not just a claim, but final, usable dollars in the recipient's account, at any hour.4 million, shut the SEN on 3 March 2023, and on 8 March 2023 announced it would wind down and voluntarily liquidate.
The lessons
- G602-01Accepting a payment is settling itExplain that accepting a payment is only complete when it settles into usable moneyabout 33 min · opens on Silvergate Bank and the Silvergate Exchange Network, March 2023
- G602-02The merchant's real risks: volatility, finality, and the refundExplain the three merchant risks in crypto acceptance: price volatility, transaction cost, and finalityabout 33 min · opens on Valve removing Bitcoin from Steam, December 2017
- G602-03The on-ramp and off-ramp between dollars and cryptoExplain that the on-ramp and off-ramp are businesses that convert between fiat and cryptoabout 33 min · opens on Wyre, 2023
- G602-04Concentration: when the rail is a single point of failureExplain concentration risk: when an industry relies on a few shared rails, their failure is correlatedabout 33 min · opens on Signature Bank and Signet, March 2023