The foundation of public blockchains was laid by Cypherpunks. Although the crypto industry has been destined to embrace diverse ideas and practices from the beginning, the core principles of decentralization, open source software, cryptographic security, privacy protection, and self-sovereignty have always been the cornerstone of its most disruptive achievements.
However, the industry also faces a core problem: in the absence of a regulatory framework that supports innovation and recognizes blockchain as administrative infrastructure with unique functions, crypto entrepreneurs have to face a difficult choice - whether to stick to pure doctrine, thus making the structure and operation of the project more complex; or compromise on the original ideals in exchange for regulatory recognition and a more traditional mainstream path to success. I call this dilemma “Cryptopreneur’s Dilemma.”
Since the birth of blockchain, it has carried grand visions: to achieve the separation of currency and state, to establish a censorship-resistant global payment and coordination network, to develop software services without single points of failure, and to create new digital organizations and governance. form. To promote such revolutionary changes requires a special background.
For the crypto industry, this backdrop is shaped by the aftermath of the global financial crisis and the evolution of Big Tech’s data and business models. At the same time, the global popularity of digital technology and the built-in Token incentive mechanism provide almost ideal conditions for the rapid development of the early ecosystem of the encryption industry. Since then, with the accumulation of social and financial capital within individual blockchain networks and the industry as a whole, the crypto industry has gradually become a force to be reckoned with, especially in the 2024 U.S. presidential election.
However, driving revolutionary change requires not only audacity but also a certain degree of “sociological naivety.” Any attempt to subvert social structures, especially those based on law, is often far more likely to fail than to succeed.
The crypto industry has indeed captured public dissatisfaction with traditional systems by challenging existing institutions, but this confrontational stance is difficult to reconcile with the goal of building a digital platform that serves global users. Likewise, narratives in which blockchain transactions attempt to circumvent regulatory requirements in the jurisdiction in which they are located (either the operator of the underlying infrastructure or the counterparty to the transaction) are always at risk of intervention by local law enforcement.
If the crypto industry wants to achieve real growth and influence, it must accept the formalization of its regulatory status and the consequences that come with it. As a famous saying goes: "You may not be interested in the country, but the country must be interested in you."
While many aspects are still changing, this is what we see in practice. From taxing crypto-related activities, classifying tokenized assets, to enforcing anti-money laundering and counter-terrorism financing (AML/CTF) rules, and clarifying legal responsibilities in DAO governance, the crypto industry is gradually integrating into national jurisdiction-centered systems. existing regulatory system.
However, what is more noteworthy is that this process has also given rise to new types of case law and customized regulatory structures - these structures have become key battlegrounds to defend the original values of the encryption industry and avoid it from ideological and political games (whether intentionally or unintentionally) ignored or destroyed. This “crypto entrepreneur’s dilemma” exists because, like any far-reaching innovation, the process of legalization has been slow and contentious. This process has been particularly difficult for the crypto industry, as the actions of some malicious opportunists have led to a misunderstanding of the industry’s image and unnecessary collateral damage.
Another trend worth noting is the increasing integration of blockchain into traditional business and financial systems. For those who see the crypto industry as a parallel system designed to replace traditional institutions, this convergence blurs the lines between the two and can cause cognitive contradictions and internal conflicts. For others, this integration is precisely the sign of success and the only sustainable path for blockchain to become a systemically important infrastructure. As the industry matures and risks are reduced, its group of practitioners, operators and users will continue to expand and diversify. This trend, while attracting the attention of traditional companies, may also further exacerbate the ambiguity of the crypto industry narrative, especially as traditional institutions seek to control ostensibly neutral infrastructure. The risk of this “institutional capture” will increase proportionally with the popularity of the crypto industry.
So, how should the “crypto entrepreneur’s dilemma” be repositioned as public blockchains enter the next stage of their adoption curve?
On the one hand, the mainstream success of the crypto industry seems to depend more on deep integration with existing systems than on adhering to some idealized, fully decentralized vision. Accept the fact that most "crypto projects" may end up being no different than traditional enterprise or open source software initiatives, or that most blockchain users are unlikely to fully embrace the cypherpunk ideals or even use them as a primary basis for consumer decisions , this is not something unacceptable. As long as these systems can maintain open verifiability and be more resilient than existing alternatives, then "decentralized performance" has little practical meaning, and there is nothing wrong with centralized enterprises utilizing and operating public blockchains. Therefore, once the regulatory status of the crypto industry is clarified, this dilemma may no longer matter to most entrepreneurs.
However, it would be incorrect to think that this signals the end of the original vision for the crypto industry. Technologies such as autonomous robots and artificial intelligence (AI) are injecting new and profound changes into the digital revolution, and the need for powerful computing and information management services is more urgent than ever.
As an innovative platform, blockchain can provide an alternative to traditional systems that are vulnerable to corruption, mass surveillance, and single points of failure. Blockchain will only survive if enough entrepreneurs and supporters persist on the difficult path of building a truly decentralized, privacy-preserving, and control-resistant system. While the crypto industry’s commercial success may no longer depend on these ideas, its long-term social impact certainly still does.
This article is reproduced with permission from: (Shenchao TechFlow)
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"Cryptocurrency entrepreneurs are in a dilemma!" You may not care about regulation, but regulation must care about you." This article was first published in "Crypto City"