Why the Future of Blockchain Payments Could Stay Narrow

Blockchain’s proponents have long touted it as a silver bullet for much of the traditional financial sector’s woes.

As cryptocurrency inches closer to the mainstream, those same proponents are set on building the new payment networks and global value-transfer ecosystems they view as a replacement, not a refinement, of the existing status quo.

For example, Circle Internet Group CEO Jeremy Allaire said Circle is building “an Economic OS for the internet,” during his firm’s third-quarter 2025 earnings call Wednesday (Nov. 12).

“This is a winner-take-most market structure,” he said, citing the launch of the Arc public testnet as the centerpiece of Circle’s strategy. The company previously described Arc as a “programmable financial infrastructure” for global commerce.

Allaire isn’t alone in his vision. The narrative that has continued to proliferate is that once blockchain reaches a critical mass of adoption in one area, be it cross-border transfers, merchant payments or remittances, its utility will naturally spill into adjacent domains.

However, the payments industry is deeply heterogeneous, and the challenges that blockchain can solve in one vertical may not translate neatly to others.

Looking ahead, it is entirely plausible that blockchain payments could expand through a series of vertical footholds rather than a broad-based platform expansion. Each foothold may be defined by specific economic pain points, like invoice reconciliation, loyalty point settlement, corporate treasury netting and tax operation, rather than general-purpose transactions.

If so, long-term blockchain payments may resemble an archipelago of specialized systems rather than a unified global settlement layer. That doesn’t diminish the technology’s potential for real-world value and utility; it simply reframes it.

Read also: Stablecoin Orchestration Becomes New Blockchain Battleground

Moving Past Blockchain’s Potential Platform Fallacy

For the past decade, much of the crypto industry has oriented itself around platform logic by building expansive ecosystems where developers, users and financial flows can converge. The thesis borrows from the playbook of consumer internet giants. Build enough composable tools and services on a shared ledger, and the network effects will compound until the system becomes self-sustaining.

The trouble is that payments are structurally different from social media, eCommerce or cloud platforms. Network effects in payments are real, but they arise from liquidity, trust, regulatory compliance and the ability to plug into existing financial rails, not only from developer activity or token incentives.

Most of the world’s successful payment networks grew gradually, not because they attempted to be platforms at the outset, but because they solved a specific problem so well that adoption became unavoidable.

Blockchain’s platform-first approach has created technological ecosystems. But it has rarely yielded mass-market payment adoption because the abstraction layer is too broad. When everything can be built, nothing necessarily gets built in a way that meets a clearly defined need.

See also: The Stablecoin Debate for CFOs Isn’t Around Yield; It’s Around Plumbing

The Rise of Vertical Blockchain Infrastructure

Look across the broader blockchain payments landscape, and a pattern emerges. The success stories that involve true operational adoption tend to be narrow, domain-specific and integrated into existing industry workflows.

Supply chain finance, cross-border corporate payouts, invoice factoring, loyalty points settlement and B2B treasury functions are all closed-loop or semi-closed-loop systems with well-defined participants and compliance requirements.

The Wednesday (Nov. 12) news that NH NongHyup Bank, a top-five South Korean bank by size, launched a proof-of-concept to test a stablecoin-based VAT refund system in collaboration with Avalanche, Fireblocks, Mastercard and Worldpay underscores the appeal of crypto’s narrow utility. VAT refunds for tourists are a specific but high-volume use case, making them ideal for testing automation to track measurable benefits around speed, cost reduction and improved user experience.

“We do think it’s going to be real,” Mark Nelsen, head of product for Visa Commercial Money Solutions, said during a discussion posted Wednesday about Visa’s launch of creator-targeted digital asset solutions. “The technology is too efficient. It’s just right for this type of deployment.”

“There are 30 million creators and they’re in all these markets where the local currency isn’t really strong,” he added. “That’s where stablecoins can offer a sweet spot in being able to say, ‘We can pay you immediately.’”

Nelsen said the most significant short-term opportunity of stablecoins “is fixing some of the cross-border flows that are really inefficient when using traditional transaction flows.”

In such environments, blockchain is not competing with mainstream consumer payments. It is competing with spreadsheets, batch reconciliation files, legacy ERP systems and manual audits. The bar for improvement is lower than it is in retail payments, and the pathways to adoption are clearer because the incentives are aligned.

Why Crypto Firms Don’t Lead These Solutions

Still, if narrow verticals are where blockchain can demonstrate real-world utility, why aren’t crypto-native companies the ones driving these deployments?

Part of the answer lies in strategic incentive design. Crypto firms often optimize for ecosystem growth, token circulation, developer engagement and network effects. Their revenue models depend on transaction volume within on-chain platforms, not on optimizing a specific financial workflow from end to end.

Banks, payment processors and enterprise-focused infrastructure providers have different incentives. Their business models revolve around reducing operational costs, lowering settlement risks, enhancing compliance and improving customer experience. For them, a single use case that delivers measurable efficiency is meaningful, even if it does not lead to broader platform adoption.

For blockchain advocates, this might feel like a retreat from grand visions. In truth, it may be the most sustainable path forward. Technologies often gain traction not by transforming entire industries overnight but by fixing overlooked problems that incumbents cannot easily solve.