The Zero Margin Trustless Model

I'm Reggie Middleton, the man that called nearly all of the major global market busts and booms between 2007 and 2014, as well as peer-to-peer capital markets (advanced decentralized finance or DeFi). Let's take a traipse through memory lane, which will invariably lead us to the future, through the present.
 
President Trump is creating a US Bitcoin strategic reserve, does that mean I should buy some? How high will the Bitcoin price go? I don’t know. I don’t care, and neither should you. 

Whether you are in this game to for investment profits or to truly reap the technological benefits, these are not the questions you should be asking and definitely are not the answers that will bring you truly high risk-adjusted returns and value propositions. 

Let’s pursue this discussion in a different fashion, so we can get to the root of what really matters. Trust me, following bouncing blips on a traders screen is missing the forest because you have tree sap in your eye. Or, put another way, which would you would have rather bought in 1990s, with the advantage of foresight looking back – IP (Internet Protocol) packets, or the founding shares of the companies that became the backbone of the interconnected economy (Amazon, Google, etc.)? 

On a crisp spring morning, Nina Patel, CFO of a midsize logistics startup, sat at her desk poring over monthly financial statements. She was comparing the fees her company paid to various banks, payment processors, and—on a more experimental scale—cryptocurrency exchanges. A few days earlier, she had heard buzz about a new “Zero-Margin” approach to business models, tied to an emerging zero-trust value transfer technology. As she scrolled through the ledger, she couldn’t help wondering with a wispful, whimsical look on her face: “How much could we save if these industries suddenly slashed their profit margins to zero?” Of course, this was simply wishful thinking, after all, why would for profit businesses ever do such a thing?

The Industry Margins Everyone Pays For
Whether you’re shipping goods worldwide, transferring funds across borders, or cashing out on a cryptocurrency exchange, someone in the chain is collecting a profit margin for providing financial rails. But what if these margins vanished—replaced by a single licensing fee on a patented technology that powers trustless, peer-to-peer transactions?

To get an idea of the potential cost savings, we first need to understand the typical median gross profit margins, net of R&D, in a few sample industries (don’t be confused or mislead – ALL industries will be affected):
 

Global Payments (Visa, Mastercard, PayPal, etc.)
>Approximate Median Gross Profit Margin (net of R&D): 70–75%
>Payment networks have famously high margins thanks to colossal volumes and minimal incremental costs per transaction. R&D typically accounts for a small fraction of total expenses; once we remove that, the underlying gross margin remains steep.
 

Commercial Banking (Traditional Lenders, Large Money-Center Banks)
>Approximate Median Gross Profit Margin (net of R&D): 30–35%
>Banks earn from net interest margins, fees, and a variety of services (cash management, trade finance, etc.). Although their net interest margin might be in single digits, add-on fees and transaction services can push overall gross profit margins much higher.
 

Cryptocurrency Exchanges (Coinbase, Binance, etc.)
>Approximate Median Gross Profit Margin (net of R&D): 40–50%
>During crypto booms, trading fees, listing fees, and spreads can drive impressive profitability. In leaner times, margins compress, but overall, exchanges still typically boast robust gross margins relative to many traditional financial services.

Altogether, these margins aren’t just line items on corporate P&Ls; they trickle down to businesses and consumers as higher transaction fees, wire costs, and exchange spreads. In other words, we’re all paying extra so these incumbents can collect their slice.

‘I don’t believe in crypto. It’s a scam!’Almost everyone who says that has absolutely no idea what crypto is. Listen to the guy who invented a large part of it. So, let’s move on.
 

Enter the Zero-Margin, Zero-Trust Model
Now, picture a scenario where a patented system for “zero-trust value transfers” (a technology that allows two parties with no mutual trust to transact securely without an intermediary) goes mainstream. Instead of these incumbents charging standard markups, the technology provider itself—holding foundational patents—monetises strictly through licensing fees on the IP on an opensource software stack. All actual operations happen “at cost,” meaning no additional operating profit margin is layered on top.
 

How does that cut costs? 
Payments: Instead of a 70–75% gross margin, a “Zero-Margin” network might charge banks, merchants, or end users just enough to cover processing overhead plus the patent license fee. That’s a major leap down from current fee structures, potentially slashing transaction costs by more than half, consistently, always and forever.

Commercial Banking: Today’s 30–35% gross margin on certain fees (e.g., cross-border wires, documentary credits) could plummet. If the bank’s operational expense is 1–2% of the transaction volume, then with zero profit layered on, you might see near-zero cost wires, with only a modest licensing toll.

Crypto Exchanges: If a new exchange built on zero-trust rails is operated at cost (no big markup on trading fees), it might only pass on a fractional licensing charge per transaction. Compare that to typical trading fees of 0.1%–1%—the difference can be enormous for high-volume traders and yield farmers alike.
 

I own or control a plethora of well-crafted zero trust patents and patents pending in some of the largest economic centers in the world. Seven (US11196566, US11895246, US12231579, JP6813477, JP7204231, JP7533974, JP7533983) are issued. There have been calls for me to open source these patents. For those who do not know what that means, these parties want me to give away my hard-earned property (the inventions that resulted from 12 years of R&D and 40 years of experience and knowledge accumulation, not to mention millions in litigation, prosecution, etc. I thought to myself, “Hmmm, should I take my life’s knowledge and work, plus millions of dollars or my hard earned money and decades of sweat, toil and fighting to defend my assets, opensource it and give it away to billionaires for free, to make them centi-billionaires?”

I came to the same conclusion I am sure many of you would have. “Nah!” 
 

I did have a better idea, though. Since some many wealthy people want me to give away my goose that lays golden eggs, and these entities have so many golden geese, and appear so willing to help the world through someone else's hard work, let’s go ahead and opensouce in a way that will truly help the masses. Enter…the Zero Margin, Trustless Model (ZMTM – since I love to use those silly acronyms that have cute pronunciations [pronounced “ZimTim”]}.

This economic model represents business constructs where the primary source of economic revenue is intellectual property fees, while all other operational facets are delivered at cost (or near cost), leaving no traditional operating margin – at all!

Real-World Impact: Lower Fees, Higher Adoption
Back at her desk, Nina Patel saw immediate potential. Her firm paid close to 2.9% per transaction for credit card acceptance and international supplier payments. If a zero-profit system replaced the incumbents’ markups, that fee could dive closer to 0.5% or less—with the bulk going to cover basic operational costs plus a minor slice for the patented technology. She imagined the ripple effects: 

>Retailers could pass savings on to customers, reducing prices or increasing margins.
>Logistics firms could automate payments to suppliers around the globe without paying multiple intermediaries.
>Consumers might see near-instant, near-free remittances to family abroad—especially appealing in developing regions.
 

Core Concept: How It Works

The Foundation
The patent holder owns unique, broad, and enforceable IP around a disruptive technology—in this case, the trustless value transfer protocols. 

In abstract, “…enabling parties with little trust or no trust in each other to enter into and enforce value transfer agreements conditioned on input from or participation of a third party, over arbitrary distances, without special technical knowledge of the underlying transfer mechanism(s), optionally affording participation of third-party mediators, substitution of transferors and transferees, term substitution, revision, or reformation, etc. Such value transfers can occur reliably without involving costly third-party intermediaries who traditionally may otherwise be required, and without traditional exposure to counter-party risk.” Value is not just money. It can be defined as “a right (e.g., ownership, control, etc.) to one or more items having economic value (e.g., money, goods, services, obligations to perform, etc.)”.

Imagine if the input to the value transaction could be from AI agents that supply and/or execute and enforce contract conditions in real-time (e.g., dynamic interest rates, shipping and insurance settlement, supply chain triggers). Wow! Whoa!

Hypothetically, at least in regards to this story, this IP may cover essential methods, processes, or algorithms that other industry players must license if they wish to replicate or integrate such functionality. 
 

Monetisation Through Licensing Fees Only

Instead of charging traditional markups on hardware, software, or services offered by traditional entities, a software-driven framework (think AI agents and smart contracts running through a ledger, eg. blockchain) is created that replicates the functionality of these industries, sans the corporate profit.
 

Licensees (corporate entities) are free (or even encouraged) to operate at their own cost structures, but must pay a royalty or licensing fee for each use (or integration) of the patented technology.
 

Thus, basically, what you are used to paying for at full price, is now available to as close to free as economically and sustainably possible. Does this sound good to you, as the consumer?
 

Under-Cutting Competitors’ Profit Structures
The IP holder “reconstructs” the standard cost model of an industry competitor (e.g., a bank, logistics firm, or software vendor) but excludes the typical operating profit margin.
 

Thus, if a competitor’s cost for providing a product or service is X, plus Y% profit, the patent holder effectively matches X + minimal overhead.
 

The real revenue driver is the required license to the patent. So, the patent holder can offer or enable solutions at cost but still earn from the IP fee.
 

Value Proposition to the Consumer

Faster Adoption: By removing or minimizing operational markups, more industries and partners will embrace the patented solution.

Industry Standard Potential: If licensing is ubiquitous, the patent holder’s technology becomes the de facto industry backbone.
 

Competitive Disruption: Incumbents relying on high transaction fees or operating profits have to cut margins or adopt the patent holder’s licensed approach. This means that entire industries will have to cut costs down to the bone, benefitting everyone who has to purchase these goods and services.
 

Value Proposition to the Producer

Operating a business at just above a loss is not nearly as bad as it sounds. The original goal of the patented technology was not to cut out all middlemen and intermediaries. The goal was to cut out the rent seekers. To remove those who extracted capital and money without contributing the requisite value. Basically, the tech’s goal is to prevent you from getting ripped off. So, instead of charging you $35 to send a payment with a net cost of 3 pennies (if that much), a financial entity can charge you three cents for the transfer and actually earn the $34.97 cents by providing $34 of actual value-added services. That should have been the way it worked from the beginning, no?

'Which cryptocurrency should I invest in, Bitcoin, Ethereum or Solana?'' I’m not even going to entertain this one.
 

Why Incumbents Are Nervous, But Don’t Know It? Well, Partially Because Of Questions Like The One Above
Crypto is not about token prices bouncing up and down on computer screens or day traders trying to grab the last leveraged Satoshi they can find. It is about doing business with strangers, safely, securely and quickly. Using AI agents as super-powered data sources, the sky is the limit with this stuff. It will definitely usher a paradigm shift like no other before it.
 

Real World Scenario Number 2

On a brisk Monday morning, the CFO of a major hospital chain opens an email with an astonishing proposal: a tech consortium offers to handle all the hospital’s insurance claims via blockchain – instantly, transparently, and at virtually no cost. Her first instinct is disbelief. After all, blockchain to most executives still evokes Bitcoin speculation or overhyped crypto startups, not the mundane world of hospital billing. But as she reads on, a realization dawns: this “zero-cost” blockchain model could slash the administrative fat that her industry has quietly fed on for decades.

Similar wake-up calls are echoing across boardrooms in industries far from finance – from music and media to real estate and energy. Most people, even seasoned industry leaders, still misunderstand the full implications of blockchain beyond finance, and the finance guys barely grasp the scope of change at the doorstep. They see it as a niche technology for cryptocurrencies, overlooking its core innovation: a decentralized, trustless ledger that can eliminate intermediaries and their fees in any information-heavy transaction system.
 

Such misunderstandings are understandable. Revolutionary technologies often hide in plain sight. In the 1990s, few imagined the internet would upend taxis, hotels, and retail. Today, blockchain is at a similar inflection point – quietly maturing and poised to transform the plumbing of the economy. And the changes it portends go well beyond banking. A new paradigm of “zero-cost” transactions is emerging, one that promises to upend industries with massive hidden margins.

As visionary economist Jeremy Rifkin mused, what if consumers could “skip all the middle men, markups, and margins on the traditional capitalist value chain”​? That is exactly the promise blockchain holds: cutting out the toll collectors of our economy by making trust and verification virtually free. The stage is set for a wave of disruption that will surprise – and even shock – those who assume their sector is safe from the blockchain revolution. ZMTM is already knocking on the front door of every high-margin industry that thought disruption wouldn’t come for them.
 

Let’s peel back the layers on a few more of these sectors:

Healthcare’s Administrative Maze: Have you ever wondered why a simple medical procedure in the U.S. generates pages of paperwork and weeks of back-and-forth between providers and insurers? The reason is a costly web of billing codes, claim verifications, and payment intermediaries. In fact, U.S. insurers and healthcare providers spent $812 billion on administration in 2017 – accounting for 34% of all healthcare spending​. That’s roughly $2,500 per American just to shuffle claims and payments. It’s not just an inefficiency; it’s a profit center. The prices U.S. hospitals and doctors charge “incorporate a hidden surcharge to cover their costly administrative burden.”
 

This burden is astronomically higher than in other countries (Canada, for example, spends only 16.7% of health costs on admin​). To put it bluntly, a huge chunk of what Americans pay for healthcare isn’t for healthcare at all – it’s for the bureaucracy of trust between payers and providers.

 















 

 

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Note: See "How We Conducted This Study" for data and methods used in estimating these shares. 

Data: Authors' analysis.
 

Source: Ani Turner, George Miller, and Elise Lowry, High U.S. Health Care Spending: Where Is It All Going? (Commonwealth Fund, Oct. 2023). https://doi.org/10.26099/r6j5-6e66 
 

Even at a macro level, studies find administrative complexity is the single biggest contributor to excess U.S. health spending. As shown above, administrative costs (insurance and provider combined) make up roughly 30% of the “excess” spending that distinguishes U.S. healthcare from cheaper systems​ commonwealthfund.org. 

Music and Media Royalties: Consider the music industry, a sector most people associate with creativity, not ledgers. In reality, it’s an industry drowning in middlemen. When you pay $1 for a song on a streaming service or jam to a hit on the radio, only a few cents trickle back to the artist. Recording artists received just 12% of the $43 billion the U.S. music industry generated in 2017​. The rest? It was gobbled up by record labels, publishers, distributors, and other intermediaries in the music supply chain.

Consumers spent an all-time high on music, and yet labels and publishers took almost $10 billion while artists got about $5 billion – mostly from concert tours, not music sales. “Currently artists are at the end of the line…they get the smallest piece of the pie even though they are the ones creating the content,” noted one cryptocurrency-based music startup founder, highlighting how the creative talent shoulders the work, but middlemen reap the profits​. It’s a similar story in other content industries: writers and filmmakers often see pennies on the dollar of the revenue their work generates, with agents, distributors, and rights management agencies soaking up the lion’s share. 

Real Estate Transactions: Buying or selling property is one of the last great paper-driven processes – and it’s expensive by design. In a typical home sale, around 5–6% of the sale price goes to real estate agents as commission. On a $300,000 home, that’s roughly $15,000 straight to brokers. In the U.S., that adds up to an estimated $70 billion in residential real estate commissions each year​. Then there’s title insurance – a niche service that most homebuyers purchase without a second thought.

Title insurers research public records to verify ownership and insure against defects, and they charge a hefty premium for it. The U.S. title insurance market was about $22.6 billion in 2023​, yet incredibly little of that ends up paying claims. Title insurance companies pay out only about 3–7% of premiums in claims (a shockingly low loss ratio) and spend the rest on operations and profit. Their expense ratios average around 90%​ – meaning nearly every dollar you pay is absorbed by the process of manually checking records and issuing policies. In essence, real estate deals carry an entire mini-industry of middlemen on their back, from escrow agents and notaries to title researchers and brokers – all adding cost. 

Energy Trading and Utilities: When you pay your electric bill, you’re not just paying for electrons. In many markets, independent retail electricity providers sit between you and the power grid, billing you at marked-up rates. These retailers often “own very little of the grid infrastructure” – they exist mainly to handle customer billing and metering, tasks that technology could automate​. The result? Inefficiency and markup. A blockchain energy startup found that cutting out retail middlemen could reduce consumer electricity bills by around 40%​. And consider wholesale energy trading: large companies spend fortunes managing contracts, credit risk, and settlement for oil, gas, and power trades. It’s a complex dance of trust between producers, brokers, and buyers – one ripe for streamlining.

Supply Chain Authentication (and Counterfeits): In industries from luxury handbags to pharmaceuticals, a significant cost comes from verifying authenticity and combating fraud. The global trade in counterfeit and pirated goods was estimated at $509 billion in 2016 (about 3.3% of world trade)​. That’s half a trillion dollars of fake products – and behind each fake Louis Vuitton bag or phony batch of medicine is a failure of verification. Companies pour money into anti-counterfeiting holograms, inspectors, and legal efforts, which ultimately get baked into consumer prices. Similarly, “provenance” – knowing the origin and history of a product (like organic produce or conflict-free minerals) – is costly under current systems, often requiring audits and certifications at each step of a supply chain. All these are hidden costs we pay for trust and authenticity in commerce.


These examples barely scratch the surface. We could talk about digital advertising brokers (who collect data and fees between advertisers and publishers), corporate lobbying (a $4+ billion industry in Washington built on knowing who to talk to and how, effectively brokering influence​), or even legal settlements and escrow services (whole professions devoted to being trusted third parties). What they all have in common are juicy gross profit margins stemming from their role as intermediaries. They profit because they solve a trust gap or a coordination problem. We’ve come to accept these costs as the price of doing business. But what if that price suddenly dropped to near zero?
 

The Zero-Margin Revolution 
Such steep cost reductions can threaten established profit pools. Traditional providers—banks, card networks, crypto exchanges—arguably have two choices:

Adapt: License the patented zero-trust tech and shift to a cost-plus licensing revenue model of their own.

Resist: Invest heavily in lobbying, push for strict regulations, or fund legal challenges to invalidate the patent—similar to how some major banks and consortia have targeted disruptive blockchain patents in the past.

Either way, from the vantage point of Nina and other CFOs chasing operational savings, the zero-trust model is more than a fad: it’s a potential realignment of how money and digital value move around the planet.

A Glimpse of the Future? A Realization of the Present That So Few Realize! 
In an era where digital transformation can feel like empty jargon, the Zero-Margin, Zero Trust Models deliver a jolt of tangible possibility: lower transaction fees, global access to cost-effective financial services, and a rebalanced value chain where “paying for overhead” replaces “paying for hefty profit margins.”
 

For now, it’s still early days. But if Nina Patel’s excitement—and her spreadsheet’s eye-popping potential savings—are any indication, we might be witnessing the dawn of a world where entire industries must either adapt to life without traditional operating profits or watch a new generation of zero-margin, IP-licensed competitors eat their lunch. And for businesses and consumers alike, that might be the best news in decades. Oh yeah! Let’s not forget in closing…
 

Will Crypto Break It’s All-time Highs This Year?
I can tell you that within five years, once combined with AI Agentic Computing, the global macroeconomic value add will surpass that of the previous 100 years! Imagine putting that in your portfolio. Crypto will be the value transfer rails upon which AI agents will run.
 

Sources (Approximate Median Gross Margins Net of R&D): 

>Publicly available annual and quarterly filings of major payment networks (Visa, Mastercard, PayPal).

>Aggregate financial data from commercial banks (top-tier US and European banks).

>Publicly reported financial statements and market analyses for crypto exchanges (Coinbase, Binance, etc.).

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*All margin percentages provided are estimates derived from various analyst reports and past financial statements. Actual numbers may fluctuate year to year.   EG