Why are intermediaries like PayPal or Venmo still needed if Bitcoin transactions can be pseudonymous?

It's not that we necessarily need PayPal or Venmo to send money; these platforms are essentially their own ecosystems. Think of PayPal and Venmo as dedicated apps that allow users within their networks to send money to each other seamlessly, instantly, and with an excellent user experience. However, PayPal benefits by charging transaction fees, making money as funds move internally within their system or ledger. It's an efficient process.

On the other hand, Bitcoin is often associated with anonymity, but it's important to understand that true anonymity doesn't exist, and Bitcoin is not fully anonymous, despite what some may believe. Additionally, Bitcoin wasn't designed for instant peer-to-peer (P2P) payments or small transactions. It takes time for transactions to be verified on the blockchain, which isn't ideal if you want to send money instantly.

While there are solutions like the Lightning Network, the reality is that we have various types of payments—physical world payments, trade payments, merchant payments, telco payments, trade finance payments, stock exchange payments, and more. These range from P2P and B2B to P2P2C and B2B2C. There's no single system that can handle all these payment types seamlessly. As a result, we'll continue to have multiple payment systems, networks, and methods. Some will work well together, achieving interoperability, while others won't.

Additionally, governments are increasingly interested in controlling payment systems, often for reasons like imposing sanctions or preventing sanction evasion. This adds another layer of complexity.

Ultimately, we will always need financial intermediaries, whether in the fiat or crypto space. We may also see new intermediaries emerge that combine fiat, crypto, stocks, bonds, commodities, and other forms of value. Over time, payment systems will become faster, cheaper, and more specialized for different industries. That’s my take on the matter.