Opinion by Kyle Torpey, a Bitcoin journalist since 2014.
Crypto began as an idealistic movement to decentralize digital finance, but the long-term trend since Bitcoin originally launched in January 2009 has been towards ever more centralized and permissioned activity.
These issues have been obvious for some time, particularly in relation to the reliance upon centralized stablecoins throughout the industry. But the devolution of crypto into traditional fintech is now becoming more blatant with the blockchains upon which these stablecoins operate becoming more centralized as well.
So, what has crypto become? Or perhaps better put: What are we even doing here at this point?
From Bitcoin’s decentralized vision to crypto’s centralized reality
In a January 2009 post, Bitcoin creator Satoshi Nakamoto pointed out the reliance on trust in centralized third parties that exists in the traditional financial system. Nakamoto’s removal of the need for trusted third parties is the underlying value proposition of his invention
Since then, Bitcoin has evolved with its fundamental investment thesis built around the digital gold narrative. Since there is no central party that controls bitcoin’s monetary policy, it is resistant to the sort of dilution that can be found in centrally-issued digital assets, whether they be fiat currencies or privately-issued crypto assets.
Ethereum and other layer-one blockchains that enable more expressive smart contracts were originally intended to bring this same sort of decentralization to other areas of finance such as trading and lending.
While these platforms have exploded in popularity over the past decade, much of the activity on them is centered around centrally-issued stablecoins such as USD Coin (USDC) and Tether (USDT). Additionally, Ethereum has faced increased competition from alternative crypto networks, such as Solana, that are willing to make even greater tradeoffs…
..
