Author: Mario Laul
Compiled by: Luffy, Foresight News
The foundation of public blockchains was laid by the cypherpunks. Although the crypto industry is destined to give birth to all kinds of ideas and practices, the principles of decentralization, open-source software, cryptographic security, privacy, and self-sovereignty are the foundation of its most disruptive achievements. However, there is a problem: 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 the spirit of purism, thereby greatly complicating the structure and operation of their projects, or to compromise on the initial ideals in exchange for the support of regulators and more traditional mainstream adoption. I call this the dilemma of the crypto entrepreneur.
Since its inception, blockchain has been associated with lofty ambitions: the separation of money and state, uncensored 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 the case of cryptocurrencies, the aftermath of the global financial crisis and the evolution of the data and business models of large tech companies have provided this environment. Combined with the global adoption of digital technologies and the built-in incentive mechanisms of tokens, cryptocurrencies have had an almost perfect way to develop their early ecosystems. Since then, the growth of the social and financial capital of individual blockchain networks and the entire industry has made cryptocurrencies a formidable force, as evidenced by their prominent role in the 2024 US presidential election.
Revolutionary ambition also requires courage and naivety. Attempts to disrupt any social structure (especially those based on law) often end in failure. Cryptocurrencies have capitalized on public discontent, targeting incumbent institutions, but this posture has always been difficult to reconcile with the goal of building digital platforms that serve a global user base. Similarly, blockchain-based transactions bypassing the regulatory requirements of the underlying infrastructure operators or traders in various jurisdictions are vulnerable to crackdowns by local law enforcement. The ultimate cost of the growth of cryptocurrencies is the normalization of their regulatory status and all that it entails. To quote a famous saying: you may not be interested in the government, but the government is interested in you.
While much of the current regulatory content is still in flux, this is what we see in practice. From taxing crypto-related activities and classifying tokenized assets, to enforcing anti-money laundering/counter-terrorist financing rules and holding DAO governance legally accountable, cryptocurrencies are gradually being incorporated into the existing regulatory system centered on national jurisdictions. However, more importantly, this process also includes the development of new case law and regulatory frameworks, which is the main battlefield for ensuring that the original values of cryptocurrencies are not destroyed in the ideological and political struggles that will determine the balance of power between the various stakeholders involved. The dilemma of crypto entrepreneurs exists because, like any innovation that could have far-reaching implications, the process of legitimization is slow and contentious. For cryptocurrencies, this is particularly challenging, as the actions of some malicious speculators have created various misconceptions about the industry in the public eye.
Another factor worth emphasizing is the increasing integration of blockchain with more traditional business and financial models. For those who see cryptocurrencies as a parallel system aimed at competing with or replacing traditional institutions, blurring the boundaries 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 a systemically important infrastructure. As the crypto industry matures and risks decrease, the community of builders, operators, and users will also grow and diversify. While this makes cryptocurrencies an attractive market for traditional businesses, going beyond their 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 stage of the adoption curve, how can we properly describe the relevance of the crypto entrepreneur's dilemma? On the one hand, the mainstream success of cryptocurrencies seems to depend more on tight integration with existing systems, rather than adhering to some idealized and all-encompassing decentralization ideology. 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 cypherpunk spirit to the extent that it becomes a primary factor guiding their consumption choices, is not blasphemous. Ultimately, decentralization should not have any special virtues, and the use and operation of public blockchains by centralized enterprises should not be controversial, at least as long as these systems remain publicly verifiable and more resilient than other alternatives. Therefore, once the regulatory status of cryptocurrencies is fully clarified, this dilemma becomes irrelevant to most entrepreneurs.
However, it would be wrong to conclude that the original vision has come to an end. 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 innovation platform, can provide alternatives to old systems that are vulnerable to corruption, mass surveillance, and single points of failure, but only if a large number of entrepreneurs and supporters persist on the difficult path of building truly decentralized, privacy-enhancing, and censorship-resistant systems. While the commercial success of cryptocurrencies no longer depends on this, their long-term social legacy certainly does.
