Bankchain Briefing: ‘Just because the crypto application is badly designed doesn’t mean you throw out the blockchain’ – Paystand’s Gary Malhotra
- This week, we discuss the differentiation between blockchain and crypto, and why some in the industry believe that the crypto winter doesn’t negatively impact the outlook for blockchain as a whole.
- We also look at how bankrupt crypto lender Celsius Network’s customers face a major obstacle in winning back their deposits.

While many crypto firms shed jobs and struggle to stay afloat in the current crypto winter, one blockchain company, Paystand, claims to be on a fast growth and hiring trajectory.
Paystand is a cloud-based billing and payment service for B2B firms. It uses blockchain technology to offer a Payments-as-a-Service platform that digitizes the cash cycle, removes transaction fees, and automates the payments process.
Paystand says it has been growing at a rate of 100% a year for the past three years. Defying the current industry trend, the firm claims to be on a “hiring spree”, currently looking to snatch up engineers and other talent from crypto and web3 companies experiencing layoffs. Recently, the firm also acquired Mexican fintech Yaydoo to join the list of DeFi unicorns and expand into the Latin American market.
Gary Malhotra, Paystand’s vice president of corporate and product marketing, says it’s important not to paint blockchain with the doom and gloom of the crypto brush. He believes that just as the internet caused a universal shift in the production and consumption of information and winning companies emerged over time, blockchain firms will weather the current downturn while simultaneously changing the way we do business, including in the realm of B2B payments.
I spoke with Gary about the differentiation between blockchain and crypto, what Paystand is doing differently than other firms in the space, and whether blockchain and crypto firms will be able to weather the current downturn.
Here’s my conversation with Gary.
Is Paystand still growing and hiring new employees despite the crypto winter and looming recession? What is the firm doing differently that's allowing it to grow when most crypto companies seem to be struggling?
Yes, we have been growing at a rate of 100% per year for the last three years, and we are continuing our hiring campaign. We just recently acquired Yaydoo, a payments company covering much of Latin America, increasing our staff to more than 400. As of today, we have many open positions. We’re always looking for blockchain missionaries and entrepreneurs to join our team. Paystand has continued growing thanks to our focus on addressing real enterprise use cases with blockchain, an ever-growing team of innovators, and commitment to our mission, which is rebuilding the commercial finance system and blockchain.
Many people still talk about blockchain and crypto interchangeably. How would you differentiate between blockchain and crypto in terms of their use cases, future prospects, as well as the opportunities and risks involved for investors and institutions?
The benefits of blockchain and DeFi are obscured by their close association with the volatile world of cryptocurrency – a market that’s all but imploded after the UST stablecoin’s unraveling triggered a full-on death spiral for Terra and its surrounding ecosystem. It’s no wonder that many businesses are still reluctant to understand blockchain’s emerging role within the industries they operate in.
Blockchain and crypto are completely different technologies. A good analogy is to consider the blockchain as an operating system – a distributed ledger technology that streamlines transactions – and crypto as simply one application that sits on top of it. Just because the crypto application may be badly designed doesn’t mean you need to throw out the blockchain with it.
Enterprises across virtually every sector are turning to blockchain to add better automation to their businesses, improve interoperability, lower costs, and establish more trust and security through automated compliance and powerful accountability.
The result? Enterprise use cases for blockchain have the potential to drive mass adoption – and possibly even trigger the next bull run.
Is the current crypto market turmoil negatively impacting the outlook for blockchain as well? Why or why not?
After the dot-com bubble burst, a new iteration of the internet rose from the ashes: web2, or the read-write era. What this meant was that internet users – roughly 400 million at that time, compared to today’s 5 billion – didn’t just have the option of “logging on” and reading information published on various websites; they also had the ability to create and publish their own content online – an activity that many deemed useless. Well, we all know how the story ends: Twitter and Facebook are having the last laugh, and today, none of us can imagine a world without the ability to instantly upload our every thought to these social media giants.
Compare that to Terra’s unraveling in May of this year, followed by Three Arrows Capital filing for bankruptcy, and many other DeFi offerings liquidating right before our eyes. What’s happening in the crypto sphere is not necessarily the dot-com crash repeating, but it is an echo of the web’s evolution as we know it – a callback to a moment that preceded one of the most prosperous eras in human history.
So, what happened after the dot-com crash? VCs stopped funding internet companies for the sake of funding internet companies. Instead, ideas like Stripe, Slack, and Zoom were backed because they would fundamentally alter the way we work. Now, after the volatility, outsized risk, and uninformed trading that became synonymous with web3, we see an incredible opportunity for a new wave – one that ushers in enterprise-driven blockchain technology and allows businesses to achieve unmatched scalability.
How can blockchain technology be used to digitize and automate payments processes? And how can businesses benefit from using blockchain-based payments?
A blockchain is essentially a shared ledger that can’t be altered. It facilitates the process of recording transactions and tracking assets in a network without the need for a third party to verify the transaction. Uniquely, blockchains are designed for multiple stakeholders, and native to the protocols is improved data integrity, trust, and security that’s assured through a consensus mechanism.
The use cases for transparent records are practically endless and can be applied to any industry. What’s even more exciting is that blockchain is more than just a distributed database protocol with higher levels of security (even though that in and of itself would be a breakthrough). Blockchain also allows for smart contracts – a series of auto-executing code that can be enacted on top of that information. Because all kinds of business logic can be programmed into smart contracts that are enforced by the blockchain, you never have to worry about an agreement being honored or blindly accepting that an event took place. Instead, machines instantly settle your agreements and verify that your records haven’t been adulterated, virtually reinventing how your business works with other parties – and creating more trust in the process.
What are your thoughts on the future of blockchain firms and crypto firms? Do you think they will be able to weather the current crypto downturn?
The current adoption of crypto across the world is roughly at the same level of adoption that the internet had in 2000. Some of the greatest companies today were built out of the original dot-com crash. The companies that survived, thrived, and grew were ones that built real products and services but were part of a larger movement that was a change in our business and society.
Blockchain is one of the most misunderstood technologies in the enterprise today. Emerging use cases for business-driven DeFi and NFTs are even more misunderstood. And yet, future-facing companies like Facebook and Amazon, the most powerful incumbents like IBM and JPMorgan Chase, and even governmentsare all investing in blockchain.
Blockchain’s ability to transform the way companies operate is endless. The market volatility we’re seeing today isn’t an ending – it’s the beginning of a new wave that can fuel the $176 billion SaaS industry and replace existing systems, infrastructure, and gatekeepers.
According to an analysis by Coinbase, the current crypto adoption by 200 million users is the equivalent of internet adoption in 1998. At this pace, crypto will hit 1 billion users within 5 years from the current 200 million. The internet is obviously huge today, and crypto and blockchain are the future.
Celsius customers face a major obstacle in winning back their deposits
CoinDesk’s Ian Allison writes that the bankruptcy case of crypto lender Celsius Network is entering a new phase where shareholders will be pitted against the firm’s customers – with customers seemingly facing a major disadvantage as the company parcels out its assets in an auction.
A recent motion to appoint a preferred equity committee seeks to put shareholders at the front of the queue when it comes to the sale of the custody firm GK8 that Celsius owns and Celsius’ mining operations. A point of interest will likely be changes made to Celsius’ corporate structure in the midst of last year’s Series B funding round that raised $750 million, just months before the company collapsed.
That transaction put customers behind equity holders in terms of getting repaid if Celsius went bankrupt and its valuable crypto-mining assets got sold, according to Vincent Indelicato, a partner at law firm Proskauer Rose.
“The equity [holders] have a direct claim against any value derived from a sale or monetization of the mining assets, to the exclusion of all the customer claims,” Indelicato said. “And I certainly think that the examiner and other parties, such as the committee, will highly scrutinize that transaction to determine, among other things, how and why Celsius moved the customer accounts in the manner it did.”
The fate of customers and their deposits is one of the biggest unanswered questions in the Celsius case. And amateurs being last in line to get repaid, behind pros backed by an army of lawyers and bankers, is not exactly an unfamiliar story in bankruptcies.
Since Celsius filed for bankruptcy in July, the temperature in the case has kept rising. The latest bombshell was the sudden resignation of CEO Alex Mashinsky, who was later reported to have withdrawn $10 million from the firm a month before its accounts were frozen in June.
Highlights from our recent coverage
Banxa doubles down on US expansion to simplify crypto and NFT purchases
After launching in the US in 2020 on an experimental basis, Banxa found the US to be a big market for its offering. The firm is expanding its debit and credit card-based payment options for purchasing crypto, adding ACH and wire transfers.
Building bridges between fintech and Web3 with Fiserv and ConsenSys
SVP and head of fintech at Fiserv, Sunil Sachdev, and senior strategic sales manager at ConsenSys, Daniel Lynch, join us on the Tearsheet Podcast. Listen to our conversation about how a Fiserv and ConsenSys collaboration could leverage Web3 technology to make open finance more inclusive and enhance customer experiences.
How crypto firm Blockdaemon is bucking the “crypto bro” trend
For years, one of the major criticisms against the crypto industry has revolved around its lack of gender diversity, both in terms of individual investors who own cryptocurrencies and the people running the biggest exchanges and other firms in the space. Cecily Mak, COO at Blockdaemon, shares her thoughts on the current state of gender equality in the crypto industry, and what firms in the space can do to counter the long-standing “crypto bro” trend and make way for a more egalitarian future.
What we're reading
- Google partners with Coinbase to accept crypto payments for cloud services (Yahoo Finance)
- BNY Mellon starts crypto custody service (CoinDesk)
- Betterment offers four pricey and similar crypto portfolios (Axios)
- Celebrity-backed fintech Step raises $300 million to bring crypto to teens (TechCrunch)
- CNN shutters Vault NFT marketplace (CoinDesk)
- US acting comptroller urges not to rush crypto regulation (Cointelegraph)
- Why Celsius doxxed hundreds of thousands of users (CoinDesk)
- Mastercard adds security tool for crypto transactions (PYMNTS)