Original author: Mario Laul
Original translation: 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 aspirations: the separation of money from the state, censorship-resistant global payment and coordination networks, software services with no single point of failure, and entirely new forms of digital organization and governance. Propagating such revolutionary ambitions requires special circumstances, and in the case of cryptocurrencies, the aftermath of the global financial crisis and the evolution of data and business models at large tech companies provided them. Combined with the global adoption of digital technologies and the built-in incentives of tokens, cryptocurrencies had a near-perfect recipe for early ecosystem development. Since then, the growth of social and financial capital in individual blockchain networks and the industry as a whole has made cryptocurrencies a force to be reckoned with, as evidenced by its prominent role in the 2024 U.S. presidential election.
Revolutionary ambitions also require courage and naivete. Attempts to disrupt any social structure, especially those based on law, often fail. Cryptocurrencies exploit popular discontent and target incumbent institutions, but this posture is always difficult to reconcile with the goal of building digital platforms that serve a large global user base. Similarly, blockchain-based transactions bypass regulatory requirements in various jurisdictions where the underlying infrastructure operators or traders are located, making them vulnerable to crackdowns by local law enforcement. The ultimate price of cryptocurrency growth is the formalization of regulatory status and all that it brings. To paraphrase a famous saying: You may not be interested in the government, but the government is interested in you.
While much of the regulation is still in flux, this is what we are seeing in practice. From taxing crypto-related activities and classifying tokenized assets, to enforcing AML/CFT rules and holding legal accountability in DAO governance, cryptocurrencies are gradually being incorporated into existing regulatory regimes centered around national jurisdictions. More importantly, however, this process also includes the development of new case law and regulatory frameworks, which are the main battlegrounds to ensure that the original value of cryptocurrencies is 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 innovative activity with the potential to have far-reaching consequences, the process of legitimization is slow and controversial. This is particularly challenging for cryptocurrencies because the actions of some malicious and opportunistic practitioners have created 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 cryptocurrency as a parallel system designed to compete with or replace traditional institutions, the blurring of the lines between the two is a 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 beyond the initial value proposition, it will further amplify the narrative ambiguity of cryptocurrency, especially if combined with various forms of institutionally controlled infrastructure. This is a long-standing threat that will increase in proportion to the continued adoption of cryptocurrency.
How, then, to aptly characterize the relevance of the crypto entrepreneur’s dilemma as public blockchains enter the next phase of their adoption curve? On the one hand, the mainstream success of cryptocurrencies appears to depend more on tight integration with existing systems than on adherence to some idealized and all-encompassing idea of decentralization. It is not blasphemous to accept that most “crypto projects” will eventually merge with traditional enterprises or open-source software initiatives, or that most blockchain users are unlikely to internalize the cypherpunk ethos to the point where it becomes a primary factor guiding their consumer choices. Ultimately, there should be no particular benefit to decentralization, nor is there much controversy about centralized enterprises using and operating public blockchains, at least not while these systems remain publicly verifiable and more resilient than alternatives. As a result, once the regulatory status of cryptocurrencies is fully clarified, this dilemma will become irrelevant to most entrepreneurs.
Yet it would be a mistake to conclude that this is the end of the original vision. Technologies such as autonomous robots and artificial intelligence are bringing new and far-reaching challenges to the digital revolution, and the need for powerful computing and information management services has never been more urgent. Blockchain, as an innovative platform that can provide an alternative to legacy systems that are vulnerable to corruption, mass surveillance, and single points of failure, will only continue to exist 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 cryptocurrency no longer depends on it, its long-term social legacy certainly does.
