SoftBank’s Interstellar platform is creating a stir, promising to shake up the digital payments industry with the disruptive technologies of Web3. The audacity is breathtaking: can a blockchain-based system really dethrone the likes of Visa and Mastercard? So, let’s get beyond the hype and focus on the data. And let’s face it, I’m a healthy skeptic.

Scalability: The Achilles Heel

Can Interstellar truly support the transaction throughput required by a global settlement layer for all the world’s money? This is the question. SoftBank can brag about real-time transactions all day, but the devil is in the details. Though they take advantage of AI computation, blockchain’s built-in flaws still exist. Ant Financial, the number 2 processor, does 200,000 TPS. And Ethereum, despite its upgrades, can barely manage a small percentage of that on a good day. Where’s the data indicating Interstellar is truly up to going toe-to-toe on this level?

Think about it: it's like promising a self-driving car that can only navigate empty parking lots. Impressive, but useless in rush hour. The onus is now on Interstellar to prove it can bear the weight without compromising performance or safety. Right now, I'm not seeing it. And you shouldn't either.

USDX: Stablecoin, Stable Risk?

A stablecoin USDX pegged to the US dollar serves as the foundation for Interstellar. Alright, what prevents this from being another Terra Luna 2.0 in the works.

Similarly, although stablecoins promise stability, their track record isn’t great. This dependence on reserves, algorithms, or simply good old “trust us” is a recipe for disaster. What are the underlying mechanisms that will guarantee USDX’s peg in the long run? Is it fully collateralized with verifiable assets? Are there robust auditing processes in place?

The collapse of a stablecoin isn’t simply an engineering oversight—it’s a threat to stability itself. If USDX fails, it may set off a domino effect of failures across the Interstellar ecosystem, eroding confidence and stopping adoption dead in its tracks. This is not only an economic consideration, this is our public’s livelihood. We need transparency, not blind faith.

Regulation: The Unseen Asteroid

Web3 exists in a Wild West regulatory environment, and that’s a big issue. Though SBC now claims regulatory compliance through licensing systems, the environment is ever-evolving. Governments around the globe are still trying to figure out how cryptocurrencies and decentralized finance should be regulated.

Consider it like trying to avoid asteroids. You can successfully swerve one asteroid, but another may be lurking just out of sight. One regulatory action and Interstellar’s business model is shot, making its world-changing technology moot.

  • Current State: Unclear
  • Future: Highly Unpredictable.
  • Impact: Potentially Devastating

Even more troubling, that promise of inclusion is already being undone. If regulations get even stricter, Interstellar may have to implement KYC and AML protocols as well. These modifications would adversely affect consumers in developing nations, precisely the population Interstellar intends to serve. Are we ready to cede tinker-toy decentralization in exchange for a regulatory stamp of approval? It’s a question we should all be asking ourselves, and one that Interstellar must answer.

TradFi's Response: The Sleeping Giant Awakens

Don't underestimate the traditional finance giants. They're not standing still. Meanwhile banks such as JP Morgan are doing the research into blockchain technology and the development of their own digital payment solutions. In addition, they have created the infrastructure, regulatory expertise, and billions to invest.

In many ways, Interstellar is a David taking on an unprecedented Goliath with a complete arsenal. The platform has a long way to go before it succeeds. It has to be better than what’s out there currently and be faster than the competition from legacy incumbents.

Might Interstellar become an unexpected agent of creativity and change, pushing incumbents like traditional finance to develop new models and innovations? Absolutely. But beating them outright? That's a much taller order. I’m not saying that can’t happen, but the data has to support that dream. Right now, I'm waiting to be convinced. And frankly, you should be too. The future of finance is at stake.