By Mario Laul
Compiled by: Luffy, Foresight News
The foundations of public blockchains were laid by the cypherpunks. While the crypto industry is bound to breed a wide variety of ideas and practices, principles such as decentralization, open source software, cryptographic security, privacy, and self-sovereignty are the foundation of its most disruptive achievements. But there is a problem. In the absence of a regulatory framework to promote innovation and legitimize blockchain as an infrastructure with unique capabilities, crypto entrepreneurs face a difficult choice: adhere to the spirit of purism, thereby greatly complicating the structure and operation of their projects, or compromise on the original ideals in exchange for regulatory support and more traditional mainstream adoption. I call this the dilemma of the crypto entrepreneur.
Since its inception, blockchain has been associated with grand ambitions: the separation of currency and state, uncensorable global payment and coordination networks, software services without single points of failure, and entirely new forms of digital organization and governance. Disseminating this revolutionary ambition requires a special environment; in the case of cryptocurrency, the aftermath of the global financial crisis and the evolution of large tech companies' data and business models provided such an environment. Coupled with the global adoption of digital technology and the built-in incentive mechanisms of tokens, cryptocurrency had an almost perfect trajectory for early ecosystem development. Since then, the growth of social and financial capital within individual blockchain networks and the entire industry has made cryptocurrency a formidable force, as evidenced by its prominent role in the 2024 U.S. presidential election.
Revolutionary ambitions also require courage and naivety. Attempts to disrupt any social structure—especially those based on the rule of law—often end in failure. Cryptocurrency exploits public discontent and directs it at current 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 bypass the regulatory requirements of the various jurisdictions where the underlying infrastructure operators or traders operate, making them vulnerable to crackdowns by local law enforcement. The ultimate cost of cryptocurrency's growth 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.
Although much of the regulatory landscape is still in flux, this is precisely what we see 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 frameworks centered around national jurisdictions. However, more importantly, this process also includes 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 between the stakeholders involved. The cryptocurrency entrepreneur's dilemma exists because, like any innovation activity that may have far-reaching effects, 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 view cryptocurrency as a parallel system aimed at competing with or replacing traditional institutions, blurring the lines between the two is the source of cognitive dissonance and internal conflict. For others, it is a sign of success and the only sustainable path for blockchain to become a 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, exceeding the initial value proposition, it will further amplify the narrative ambiguity of cryptocurrency, especially when combined with various forms of institutionally controlled infrastructure. This has been a long-standing threat that will increase proportionally with the continued adoption of cryptocurrency.
So, how do we appropriately describe the relevance of the cryptocurrency entrepreneur's dilemma as public blockchains enter the next stage of the adoption curve? On one hand, the mainstream success of cryptocurrency seems more dependent on close integration with existing systems rather than adhering to some idealized and all-encompassing decentralized concept. Accepting that most 'crypto projects' will ultimately integrate with traditional businesses or open-source software programs, or that most blockchain users are unlikely to internalize the cypherpunk spirit to the extent that it becomes the primary factor guiding their consumption choices, is not sacrilege. Ultimately, decentralization should not offer any particular benefits, and there is no controversy over centralized companies using and operating public blockchains, at least as long as these systems remain publicly verifiable and more resilient than other alternatives. Thus, once the regulatory status of cryptocurrency is fully clarified, this dilemma becomes irrelevant for most entrepreneurs.
However, it would be a mistake to conclude that this marks the end of the original vision. Technologies such as 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 susceptible to corruption, mass surveillance, and single points of failure, but only if a significant 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.