Cryptocurrencies emerged from a rebellious spirit, promising a financial system free from centralized control and prying eyes. Built on the revolutionary idea of blockchain technology, they offered a vision of a peer-to-peer economy where users held the power. However, as cryptocurrencies gain mainstream traction, a critical question arises: can these core values of decentralization and privacy survive the embrace of the very institutions they sought to disrupt? At times it can seem like this two values are at odds, creating quite the conundrum for the cryptocurrency world.
The problem, writes Daniel Kuhn at CoinDesk, is that many adopters of cryptocurrency aren’t necessarily getting into it because of the value it offers when it comes to decentralization, privacy, and security. Instead, they’re getting into it for profit – sometimes exclusively for short term profit. And that could undermine the whole point of cryptocurrency to begin with. After all, if people getting into crypto don’t care about its core values (and aren’t taking part in self-custody), those values could eventually be lost.
“The risk of growing adoption is that new entrants aren’t aware of Bitcoin’s core principles: decentralization, self-custody, hard money, etc,” says Alex Thorn of investment bank Galaxy Digital. “If new entrants don’t learn, understand, and espouse these core beliefs, the features that make them reality may not remain in the protocols over time.”
It’s a double-edged sword. Many long-term cryptocurrency investors are hard set on mass adoption, even though adoption means following sovereign laws (which risks centralization) and creating simplified on-ramps that offer less security than the blockchain networks themselves. Meanwhile, people like Kuhn seem to prefer crypto staying niche and focusing on its original virtues.
The boom and bust cycle of cryptocurrency is also tied in with chasing mass adoption, Kuhn argues. As cryptocurrency gains popularity, more user-friendly platforms and services emerge, making it easier for newcomers to invest. This broader accessibility fuels further growth and results in price increases. However, those price increases are often driven by speculation rather than underlying value. When the market corrects, the bubble bursts, leading to significant price drops and discouraging potential adopters.
Ultimately, these boom and bust cycles can erode trust in cryptocurrencies. High-profile scams, hacks, and exchange failures during busts can make people wary of entering the market.
So why push so hard for mass adoption? It causes wild market fluctuations, and could ultimately be counter to cryptocurrency’s intended value offering of private, anonymous transactions, decentralized exchanges, and infrastructure security.
Rather than being adopted by market gamblers, which has widely been the case, crypto should be adopted by people who could actually benefit from the values it offers if it wants to preserve its intended purpose.
Of course, it’s not up to crypto who adopts it, or anyone else, for that matter. And, furthermore, some are arguing that it’s already too late to be concerned over the effects of mass adoption, given the entry of major financial institutions into the market.
“There are individual projects that are still small and niche, but with Brian Armstrong and Sam Bankman-Fried rubbing elbows in Congress, and BlackRock and Fidelity launching bitcoin ETFs, I think that ship has probably sailed,” says Molly White of Web3IsGoingGreat.
What that means for cryptocurrency in the long term remains to be seen, but given that a vast array of altcoins already exist for all sorts of niche purposes and communities, the future of crypto will likely be a spectrum.
