The foundation of public blockchains is laid by cypherpunks. While the crypto industry is destined to give birth to a variety of ideas and practices, principles such as decentralization, open-source software, cryptographic security, privacy, and self-sovereignty form the basis of its most disruptive outcomes. However, there is a problem: due to the lack of regulatory frameworks that facilitate innovation and legitimize blockchain as a unique-function infrastructure, cryptocurrency entrepreneurs face a difficult choice: whether to adhere to a purist spirit, thereby complicating the structure and operation of their projects significantly, or to compromise on the initial ideals in exchange for regulatory support and more traditional mainstream adoption. I call this the dilemma of cryptocurrency entrepreneurs.
Since its inception, blockchain has been associated with lofty ambitions: the separation of currency from the state, uncensored global payments and coordination networks, software services without single points of failure, and entirely new forms of digital organization and governance. Spreading this revolutionary ambition requires special circumstances; in the case of cryptocurrencies, the aftermath of the global financial crisis and the evolution of big tech companies' data and business models provided these circumstances. Coupled with the global adoption of digital technologies and the built-in incentive mechanisms of tokens, cryptocurrencies had almost perfect conditions for early ecosystem development. Since then, the growth of social and financial capital in individual blockchain networks and the entire industry has made cryptocurrencies a force to be reckoned with, as evidenced by their prominent role in the 2024 U.S. presidential election.
Revolutionary ambition requires courage and naivety. Attempts to undermine any social structure, particularly those based on law, often end in failure. Cryptocurrencies capitalize on public discontent, targeting current institutions, but this stance is always difficult to reconcile with the goal of establishing digital platforms that serve a vast global user base. Similarly, blockchain-based transactions bypass regulatory requirements in various jurisdictions where infrastructure operators or traders are located, making them susceptible to crackdowns by local law enforcement. The ultimate cost of the growth of cryptocurrencies is the normalization of their 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 most regulatory content 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, cryptocurrencies are gradually being incorporated into existing regulatory frameworks centered on national jurisdictions. However, more importantly, this process also includes the establishment of new case law and regulatory frameworks, which are the main battleground to ensure that the original value of cryptocurrencies is not destroyed in ideological and political struggles that will determine the balance of power among the various stakeholders involved. The dilemma faced by cryptocurrency entrepreneurs exists because, like any innovative activity that may have far-reaching effects, its legalization process is slow and contentious. This is particularly challenging for cryptocurrencies, as the behavior of some malicious opportunists has led to various misunderstandings about the industry.
Another factor worth highlighting is the increasing integration of blockchain with more traditional business and financial models. For those who view cryptocurrencies as a parallel system aimed at competing with or replacing traditional institutions, blurring the lines between the two is the root of cognitive dissonance and internal conflict. For others, this is a sign of success and the only sustainable path for blockchain to become an essential infrastructure. As the crypto industry matures and risks reduce, builders, operators, and user groups will also grow and diversify. While this makes cryptocurrencies an attractive market for traditional enterprises, beyond the initial value proposition, it will further amplify the narrative ambiguity of cryptocurrencies, especially if combined with various forms of institutionally controlled infrastructure. This is a long-standing threat that will increase proportionally with the continued adoption of cryptocurrencies.
So, as public blockchains enter the next phase of the adoption curve, how can we appropriately describe the relevance of the cryptocurrency entrepreneur's dilemma? On one hand, the mainstream success of cryptocurrencies seems increasingly dependent on their close integration with existing systems rather than adhering to some idealized, all-encompassing decentralization ethos. Accepting that most "crypto projects" will ultimately merge with traditional businesses or open-source software initiatives, or that most blockchain users are unlikely to internalize the crypto-punk spirit to the extent that it becomes a primary factor guiding their consumption choices, is not sacrilege. Ultimately, decentralization should not have any special benefits; there is no controversy in centralized enterprises using and operating public blockchains, at least when these systems remain open, verifiable, and more resilient than other alternatives. Therefore, once the regulatory status of cryptocurrencies 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 initial vision. 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. As an innovation platform, blockchain can provide alternatives to old systems vulnerable to corruption, mass surveillance, and single points of failure, but blockchain can only persist when a significant number of entrepreneurs and supporters commit to the difficult path of building truly decentralized, privacy-enhanced, and censorship-resistant systems. While the commercial success of cryptocurrencies no longer depends on it, their long-term social legacy certainly does.
[Disclaimer] The market is risky, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest at your own risk.
This article is reproduced with permission from: (Foresight News)
Original author: Mario Laul
"The Road to Decentralization is Difficult! Cryptocurrency Entrepreneurs Face Dilemmas: To Uphold Ideals or Compromise?" This article was first published in "Crypto City".