The future of crypto applications may lie in balancing the concept of decentralization with market demand and promoting widespread adoption through commercialization and technological maturity.
Author: @jessewldn
Translation: Blockchain in Vernacular
1. What will be the catalyst for a “crypto-only” comeback?
Cryptographic applications can be divided into two main categories:
Crypto only: non-sovereign SOV/payments, decentralized finance, digital art, DAOs, memecoins, parts of the DePIN network, decentralized social, etc.
Cryptocurrency brings better results: open finance (RWA/fiat stablecoin), prediction market, international payment, most DePIN, tokenized equity, etc.
“Crypto-only” applications have been challenging (outside of non-sovereign SOVs), while “better with crypto” applications have been gaining popularity.
Will this trend change? If so, how?
Perhaps the situation will reverse when there are better distribution channels, such as better encryption application scenarios, clearer supervision, and the key factor - the time required for both to mature.
This reversal may manifest itself in a "crypto-better" scenario, where by putting wallets in the hands of users, their "thumb learning" is truly exposed to those functions that "only crypto can achieve." On the other hand, it is worth noting that many "crypto-better" applications are often not truly decentralized - they just take advantage of the decentralized nature of the underlying blockchain as a backend support for openness, interoperability and settlement.
If blockchain only acts as a backend pipeline, users are likely to be unable to access its underlying architecture, and even the learning experience associated with "crypto-only" applications will become more distant or abstract.
We can think of this through Chris Dixon’s “strong and weak technologies” framework, where “encryption only” is a strong technology and “encryption is better” is a weak technology:
Strong technologies typically follow the Perez/Gartner Hype Cycle…During periods of disillusionment, entrepreneurs and those who invest in strong technologies sometimes lose confidence and turn to weak technologies because they appear closer to mainstream adoption…Nevertheless, weak technologies can succeed…Weak technologies adapt to the needs of the current world…Strong technologies push the world to adapt to its own logic.
I remain optimistic, but I am also curious to know: What will be the catalyst for a “crypto-only” comeback?
2. The impact of commercialization on encryption
The first decade of smart contract blockchain originated from the original cypherpunk spirit of Bitcoin: censorship-resistant, open source, permissionless, and hoping to build a democratic and fair Internet on a globally shared "world computer". Today, these ideal values are facing the test of the market, because the mainstream market is not pursuing these, but performance, cost, profit and compliance.
Powerful technologies are rarely used in the way their creators or early adopters intended. Look at Bitcoin, the “peer-to-peer electronic cash system,” and look at today’s Bitcoin ETFs; the same is true for USDC.
As the original values of smart contract blockchain merge with mainstream market demands, the direction of development will likely change over the next decade.
Many of the growing use cases on smart contract platforms — fiat stablecoins/real assets (RWA), open finance, many decentralized Internet of Things (DePIN) networks — are neither decentralized, permissionless, nor censorship-resistant, but simply leverage the decentralized nature of the underlying blockchain to achieve openness, interoperability, and settlement. Applications are also gradually fading L1 cryptocurrencies, which have been seen as censorship-resistant "internet money" in the past, causing many to rethink the value proposition of major cryptocurrencies, including the underlying assets of next-generation blockchains.
For early entrants into the field, this change may be hard to accept. This is not the reason many people got into it in the first place. So, does this mean it’s over?
I don’t think so. It may just be the end of a phase and the beginning of the next chapter.
In order to meet the needs of the market, cryptocurrencies are moving towards commercialization. Commercialization, especially the commercialization of open and permissionless software, is a way to promote good ideas to a wider audience, thus bringing more far-reaching impacts.
However, commercialization often comes with compromises. The real opportunity lies in shaping the form of these compromises and thus influencing the results of their commercialization. To do this, you must put aside your ideological obsessions, adapt to the existing rules of the game, participate in the competition, and work hard to guide things in the direction you want.
For example, compromising decentralization for the sake of scale (whether through rollups or integrated architectures) may better serve today’s applications that truly put wallets in the hands of the masses. If this approach is successful, the next opportunity is to gradually increase decentralization — and allow more people to re-engage and learn about those original ideals through these new applications.
This is especially important to me personally. I’m very interested in the original idea, which is what attracted me to this field. However, I’m more interested in impact. I learned this lesson in another creative field. When I was in college in Montreal, there was an extremely vibrant cultural scene there (Arcade Fire, Tiga, A-Trak, Chromeo, Grimes, Vice, American Apparel, etc.). The creativity of this local scene quickly went global, and it merged with other “literary” scenes through the Internet, especially in the era of music blogs from 2004-2012 (anyone remember Hype Machine?)
Soon, this creative atmosphere collided with the mainstream market. The result was that some mediocre artists and brands took the essence of culture, discarded its subtlety and depth, and packaged it into popular but empty products for sale. At the same time, a small number of artists and creative people in the original scene persisted and eventually became symbols of popular culture. They often had to find a delicate balance between maintaining the original spirit and catering to the masses. This combination of firmness and pragmatism is admirable because it can have an impact on a larger scale and push culture forward.
So if you feel like the values that attracted you to crypto in the first place are being diluted by the mainstream market — I get it, but try to look at it from a different perspective — because from an impact perspective, the commercialization of cryptocurrencies may mean that the real opportunity is just beginning.
Link to this article: https://www.hellobtc.com/kp/du/09/5443.html
Source: https://x.com/jessewldn/status/1840466851836420504
