As Mass Adoption Approaches, Crypto Has Forgotten Its Roots

Opinion by: Dr Corey Petty, chief evangelist at Logos

When early cryptocurrencies were conceptualized, the vision was not one of complex leverage strategies, celebrity rugpulls and government treasuries. Rather, cypherpunks sought, through cryptographic tools, to empower people through the privacy-given freedom to exchange goods and services without the threat of government overreach and mass corporate surveillance

The crypto landscape is turning from one of decentralized networks into an extension of traditional finance. Centralized exchanges regularly account for over 80% of daily crypto transactions. If crypto is to hold onto its original ethos, privacy cannot be optional.

Privacy is a tool for carving out the most important properties that support individual freedom in the digital realm: permissionlessness and censorship resistance.

Privacy as a principle to surveillance capitalism

In this era of regulation, blockchain’s peer-to-peer value proposition means little to institutions. With a pro-crypto administration in the United States, institutions have poured billions into decentralized finance (DeFi). This liberatory technology is quickly becoming a backend for institutional finance, complete with surveillance architecture and walled gardens.

A recent report by Samsung showed that nine out of 10 Europeans are worried about their online privacy while remaining unaware of the options available to them, like the potential of blockchain to safeguard this privacy. Policies like the UK’s push for crypto firms to report customer data have been accepted across industries. Protocols are hardwiring surveillance architecture and compliance-heavy frameworks that mandate data tracking into their offerings — all in an effort to secure institutional validation and large-scale inflows.

Prioritizing profit over purpose by design, perpetuates inequality. The unique properties of blockchain allowed for censorship-resistant solutions that have more recently been used to leverage highly lucrative airdrops, memecoins and casino-style trading strategies, as flagship cryptocurrencies have grown in value.

Products have begun to alienate the very people that crypto was designed to uplift. Instead of get-rich-quick schemes and institutional lobbying, DeFi should be prioritizing accessible financial tools: low-cost layer-2 solutions that reduce transaction fees to pennies, intuitive user interfaces that don’t require technical expertise and products that address real-world needs with the end goal of enabling financial freedom for millions of people.

From a lost cause to a brighter future

If DeFi will not advocate for crypto’s potential for self-sovereignty, then it is up to the remaining cypherpunks to find other avenues to apply it. Self-governance is perhaps the most comprehensive example of such an application, offering freedom of choice for people over how they wish to be governed and by whom, providing an exit from financial institutions and state-corporate surveillance.

In blockchain governance, the same ledger that supports transparent financial transactions ensures open and immutable voting systems. Tokenized citizenship models can enable fluid participation and serve as an anonymous yet functional digital ID, ensuring access to services.

Using smart contracts, cyberstates — also called network states — enable communities to form voluntary associations based on shared values rather than geographic boundaries. Citizens can exit oppressive jurisdictions and opt into governance systems that align with their principles, creating competitive markets for governance where the best systems attract the most participants.

Rather than being subject to the surveillance and control of traditional nation-states through cryptographically secured systems that take privacy as a cornerstone principle, individuals can organize in decentralized communities, govern themselves through direct democracy, and return sovereignty to the individual, fulfilling the original cypherpunk vision.

Related: Network states will one day compete with nation-states 

Early visions are already being built. Charter cities and projects are pioneering experiments that combine blockchain governance with physical communities. Meanwhile, decentralized physical infrastructure networks are demonstrating that blockchain has transformative functions far beyond finance, enabling communities to collectively own and operate real-world infrastructure from agricultural supply chains to computing power.

As blockchain technology reaches the masses and institutional adoption becomes inevitable, it is time to reclaim the founding mission. The technology that was built to free individuals from centralized control must not become another tool of that control.

Opinion by: Dr Corey Petty, chief evangelist at Logos.