The dawn of blockchain introduced an entirely decentralized digital financial system for the first time in human history. The bedrock of this technology were the principles of self-sovereignty, provably secure, sound money and a radical alternative to the current way we store and transact value. The flame of this philosophy has been kept alight for over ten years since its first small sparks, despite market volatility, economic uncertainty and looming regulation in certain jurisdictions. Indeed, the New York Times headline “With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue” was forged into the final bitcoin block before Bitcoin’s 2020 halving occurred, as a reminder that the world’s first cryptocurrency remains committed to its original ethos. This ethos, and the applications that spring from it, strives towards a world of greater financial inclusion and individual independence.
Given that the communities behind Bitcoin and blockchain in general often position themselves as the antithesis of traditional financial ways of working, how does institutional adoption of such technology fit into the larger picture of realizing democratic financial governance?
A look at history: Institutional adoption and the internet
It is often said that while the internet democratized the flow of information, blockchain democratized the transfer of value. For the internet, the core of this democratization was the development of protocols which changed the way we exchange information and communicate. These protocols gave rise to the ‘killer apps’ we know and use on a daily basis for sending and receiving emails, streaming videos and music, having video calls and much more. All of these fundamentally changed the way we work and live. These protocols were key building blocks of the foundations of the digital centric societies we live in today.
The role of institutional adoption in the early internet was a boon, not a hindrance, to the use, utility and adoption of such protocols. This boon came in the form of much-needed financial and human capital investment into transforming these protocols into the use cases we enjoy today. For example, Google’s email service Gmail relies on Simple Mail Transfer Protocol, and continues to add new security standards as extensions to this protocol. Another example is the CALO (Cognitive Assistant that Learns and Organizes) research project, the basis of which provided the foundation for Siri, even though this research began as a DARPA project to integrate numerous AI projects as a cognitive assistant. Adoption of protocols by institutions for commercial or consumer applications has traditionally, on the whole, had a track record of adding value to society, by solving clear and existing problems experienced by the end users.
Without the institutional adoption of such protocols, access to such technology would remain out of reach for many lacking technical skills, as was the case in the early days of the internet. This is the case for many protocols today which, although valuable and extremely useful, remain in the realm of open source projects which often rely on the contributions of passionate volunteers. Other technologies which did not receive the golden touch of institutional adoption remain obscure and under-utilized despite their massive potential to improve the experience of using the internet, such as PGP.
While many of us may take for granted our ability to access these protocols embraced by institutional adopters under the surface of our modern apps at the touch of a button today, they nonetheless have a profound benefit to our lives. A key benefit was that institutional adoption of these technologies democratized the access to and sharing of information for billions of people across the globe.
What does institutional adoption of blockchain look like?
Blockchain, just like the internet, has introduced protocols which change the way people transact and store value. Blockchain’s use-case today is not limited to money, as is the case with Bitcoin, but also how we store and retrieve data (the Filecoin project), interact with supply chains (VeChain), privately transact (MobileCoin) and much more. Successful institutional involvement in blockchain will harness these and other protocols to improve the lives of the customers these institutions serve. This will radically expand the scope and access to such technology. For example, institutional adoption by legacy financial institutions will provide more on-and-off ramps for cryptocurrency purchase and storage, as well as for staking services. The user experience for interacting with blockchain will be improved to a point where blockchain will reach mass adoption, equivalent to the traditional apps we use today.
While it is impossible to foresee which blockchain native companies and services will emerge victorious in the decades to come (just as it would have been impossible to pick winning internet companies of today in the late 1990s’), it’s likely that institutions will begin adding blockchain related products and services for existing customers. Cell phones could come preloaded with cryptocurrency wallets. Social media providers could have their own native token. Real estate companies transact most of their sales through non-fungible token sales. Rather than building a customer base from scratch, many existing institutions will begin integrating blockchain protocols for payments and services. While governments such as El Salvador have recognized the original use-case of blockchain as a means of exchange by recognizing Bitcoin as legal tender, this is just the beginning in terms of real world adoption of blockchains by governments and institutions.
History shows us that institutional adoption of open-source protocols has been a net positive for society and the technology involved in the past. A key benefit has been the lowering of barriers to the access and dissemination of information. If we apply the same outlook towards blockchain, we see that blockchain adoption would be complementary to what the movement originally started by Satoshi Nakamoto is trying to achieve, while preserving its original ethos of greater financial inclusion and economic self-sovereignty. This is because the fundamental idea of democratic financial governance is in the DNA of many public blockchains.