The integration of cryptocurrency with traditional business and mainstream finance seems to be an unstoppable trend, but this does not mean the demise of the original vision of blockchain.
Written by: Mario Laul
Compiled by: Luffy, Foresight News
The foundation of public blockchains is laid by cypherpunks. While the crypto industry is destined to give rise to a variety of ideas and practices, principles such as decentralization, open-source software, cryptographic security, privacy, and self-sovereignty are the basis of its most disruptive outcomes. However, there is a dilemma: due to the lack of a regulatory framework that promotes innovation and legitimizes blockchain as a unique infrastructure, crypto entrepreneurs face a difficult choice: to adhere to purist ideals, thus complicating the structure and operations of their projects significantly, or to compromise on initial ideals in exchange for regulatory support and more traditional mainstream adoption. I call this the crypto entrepreneur's dilemma.
Since its inception, blockchain has been associated with grand aspirations: the separation of money from the state, uncensorable global payment and coordination networks, software services without single points of failure, and entirely new forms of digital organization and governance. Spreading this revolutionary ambition requires a special environment, and in terms of cryptocurrency, the consequences of the global financial crisis and the evolution of data and business models of large tech companies provided such an environment. Coupled with the global adoption of digital technologies and the built-in incentives of tokens, cryptocurrency had a near-perfect way of developing in the early ecosystem. Since then, the growth of social and financial capital of individual blockchain networks and the entire industry has made cryptocurrency a force to be reckoned with, as evidenced by its prominent role in the 2024 U.S. presidential election.
Revolutionary ambition also requires courage and naivety. Attempts to disrupt any social structure (especially those based on law) often end in failure. Cryptocurrency capitalizes on public discontent, aiming its ire at incumbent institutions, but this posture is always difficult to reconcile with the goal of establishing digital platforms that serve a vast global user base. Similarly, blockchain-based transactions circumvent the regulatory requirements of the jurisdictions where the underlying infrastructure operators or traders are located, making them vulnerable to crackdowns by local law enforcement. The ultimate cost of the growth of cryptocurrency is the formalization of its regulatory status and everything that comes with it. To paraphrase a famous saying: you may not be interested in government, but government is interested in you.
While much of the regulatory landscape is still in flux, this is precisely what we are witnessing in practice. From taxing cryptocurrency-related activities and classifying tokenized assets, to enforcing anti-money laundering/anti-terrorism financing rules and holding legal accountability in DAO governance, cryptocurrency is gradually being integrated into existing regulatory regimes centered around national jurisdictions. However, more importantly, this process also encompasses the establishment of new case law and regulatory frameworks, which is the main battleground to ensure that the original value of cryptocurrency is not destroyed in ideological and political struggles that will determine the balance of power among the various stakeholders involved. The crypto entrepreneur's dilemma exists because, like any innovative activity that may have far-reaching implications, its legitimization process is slow and contentious. This is particularly challenging for cryptocurrency, as the actions of some malicious opportunists have led to various misunderstandings about the industry.
Another factor worth emphasizing is the increasing integration of blockchain with more traditional business and financial models. For those who see cryptocurrency as a parallel system aimed at competing with or replacing traditional institutions, blurring the lines between the two is a source of cognitive dissonance and internal conflict. For others, it is a sign of success and the only sustainable path for blockchain to become systemically important infrastructure. As the crypto industry matures and risks decrease, the builders, operators, and user base will also grow and diversify. While this makes cryptocurrency an attractive market for traditional businesses, extending beyond the initial value proposition, it will further amplify the narrative ambiguity of cryptocurrency, especially when combined with various forms of institutionally controlled infrastructure. This is a long-standing threat that will increase proportionally with the continued adoption of cryptocurrency.
So, as public blockchains enter the next stage of the adoption curve, how can we appropriately describe the relevance of the crypto entrepreneur's dilemma? On one hand, the mainstream success of cryptocurrency seems more dependent on a close integration with existing systems than on adhering to some idealized and all-encompassing decentralization ethos. Accepting that most 'crypto projects' will ultimately integrate with traditional businesses or open-source software initiatives, or that most blockchain users are unlikely to internalize the cypherpunk spirit to the extent that it becomes a primary factor guiding their consumption choices, is not blasphemy. Ultimately, decentralization should not confer any special benefits, and there is no controversy over centralized enterprises using and operating public blockchains, at least as long as these systems remain publicly verifiable and more resilient than other alternatives. Therefore, once the regulatory status of cryptocurrency is fully clarified, this dilemma becomes irrelevant for most entrepreneurs.
However, concluding the end of the original vision based solely on this would be a mistake. Technologies like autonomous robots and artificial intelligence are bringing new, far-reaching challenges to the digital revolution, and the demand for powerful computing and information management services has never been more urgent. Blockchain, as an innovative platform, can provide alternatives to old systems that are vulnerable to corruption, mass surveillance, and single points of failure, but blockchain can only persist if a large number of entrepreneurs and supporters commit to the difficult path of building truly decentralized, privacy-enhancing, and censorship-resistant systems. While the commercial success of cryptocurrency no longer depends on it, its long-term social legacy certainly does.