Most people still see crypto as speculation, but over the past 15 years something much bigger has been quietly forming. A new financial infrastructure - tokenized assets, programmable money, decentralized settlement layers and a digital reserve asset that does not belong to any state
This research explores how blockchain, the crypto industry and Bitcoin may fit into the structure of the current and future global system
This is a long-form research post. Estimated reading time: ~10 minutes
🔘 Content Plan
- The inevitability of blockchain adoption
- Who will drive this adoption
- Who to watch in order to stay at the cutting edge
- Bitcoin - the foundation of a future system or a high-risk asset
- Key characteristics and distinctions of Bitcoin
- A framework for evaluating assets (and more)
🔘 First, let us briefly clarify several terms. What exactly are blockchain, smart contracts, tokenization and RWA?
Blockchain is a digital ledger (record book) that cannot be forged. Its key characteristics are decentralization, immutability and transparency
Decentralization means that there is no central server or controlling company. Databases are stored across thousands of nodes around the world, and in order to modify the ledger the majority of participants in the network must agree (a consensus mechanism)
Immutability means records cannot be deleted or changed retroactively
Transparency means that all transactions are publicly visible, although the identities behind them are not always known. Imagine a Google spreadsheet whose copies are stored by 10000 people. It synchronizes automatically, and it can only be changed with the approval of the majority. No one can secretly modify or delete a record
A smart contract is a program on the blockchain that automatically verifies and executes the conditions of an agreement. Instead of a traditional credit contract - a smart contract. Instead of collectors - automated penalties. If a loan payment is missed, the smart contract can automatically seize a percentage of a tokenized apartment, garage or business
Tokenization is the process of transforming a real-world asset (real estate, stocks, gold) into a digital token
RWA (Real World Assets) are physical assets represented in the blockchain as tokens - for example land, commodities or works of art
The implementation of blockchain essentially means a transition toward code and structured systems. Therefore the first sectors to move to blockchain are those where the underlying structure is already discrete - meaning it can be broken into clearly defined states. In many cases this even approaches binary logic: yes/no, 0/1, confirmed/not confirmed
Because of automation, speed, transparency and other advantages, blockchain often proves economically more efficient. That is why it is already being integrated into the infrastructure of companies and even entire governments
🔘 The crypto industry - a revolution on its own or a tool in the hands of the architects of reality?
If you believe crypto companies will independently create a revolution, this is probably an overestimation of their role. The world is shaped by states and large pools of capital - in other words, the architects of reality - entities with enormous resources that define the boundaries within which innovators operate. History shows that no technological revolution has actually destroyed existing power structures, instead, new technologies tend to integrate into them. Therefore blockchain will likely become an infrastructure layer of the system, while control largely remains in the same hands
From past technological waves we know that:
- The internet did not destroy governments - it became their tool
- Social networks began as decentralized communication but eventually turned into powerful instruments of influence for states and corporations (dispersion and redistribution of attention, polarization and intensification of emotional background, agenda setting)
- Cloud technologies promised distribution, yet the market eventually concentrated around three giants - Amazon Web Services, Microsoft Azure and Google Cloud
- Fintech did not destroy banks - it became their interface
- Blockchain will not destroy the financial system but will likely become its technological layer -an alternative infrastructure for settlements and accounting that speeds up operations, increases transparency, and reduces costs
This pattern repeats itself again and again: a technology emerges as revolutionary and decentralized (the romanticization phase), trust and resilience gradually form around it (the adoption phase), then large capital enters the space, and ultimately the technology becomes part of the infrastructure of the existing system. The logic behind this is simple: one can create a brilliant technology, an ideal product or an outstanding service, but without capital and regulatory approval it is impossible to scale it globally
Therefore attention should be focused on real centers of power, such as (the list is naturally incomplete):
BlackRock - capital, Circle (USDC) - institutional stablecoin infrastructure, Coinbase - regulated crypto gateway, JPM - systemic banking institution, NVIDIA - computational infrastructure and the United States and China - the key geopolitical competitors shaping the global landscape
🔘 Examples of blockchain adoption by institutions
BlackRock launched and continues to expand BUIDL - a tokenized MMF
Money Market Funds are investment funds that allocate capital into short-term debt instruments such as government bonds, treasury bills and interbank loans. They are commonly used by institutions as a substitute for cash in portfolios because they combine high liquidity, low risk and returns that are typically higher than traditional bank deposits
The assets under management of the BUIDL fund already exceed 1.7 billion dollars. One of its most important innovations is the possibility of using this capital as collateral for trading on both traditional exchanges and crypto exchanges. If exchanges such as Nasdaq, NYSE, ICE or CME are well understood by institutions, the crypto market historically created concerns because funds were reluctant to store capital directly on crypto exchanges. However, through structures like BUIDL institutions can keep capital with BlackRock while simultaneously trading on platforms such as Binance, OKX, Deribit, Bybit or Coinbase
Circle (USDC) is the primary institutional stablecoin used for settlements by companies such as BlackRock and Coinbase. The reason is simple: Circle is an American public company operating under full regulatory oversight and therefore provides a high level of transparency and legal reliability. USDT, in contrast, operates through an offshore structure and for a long time avoided full audits by the Big Four accounting firms (the world's four largest auditing firms). A stablecoin is a foundation that must be legally sterile, and for institutions at the level of BlackRock and JPM even 1% of doubt is unacceptable
Coinbase serves as a custodian for institutional investors - essentially a professional asset storage provider. It acts as a bridge between traditional finance and the crypto economy and functions as a gateway for fiat money entering and leaving the crypto system. Coinbase is a regulated public company fully integrated into the legal framework of the United States
J.P. Morgan developed JPM Coin - a tokenized dollar used for instant settlements between corporate clients. For example, if Microsoft deposits dollars into its account, the bank can issue tokens that are instantly transferred to another corporate client such as Amazon. This allows companies to bypass slow systems such as SWIFT, where settlements can take one to three days
BIS (Bank for International Settlements), often described as the central bank of central banks, is developing Project Agora - a global tokenized interbank settlement system. The project involves seven central banks including the Federal Reserve Bank of New York, the Bank of England, the Bank of France and the Bank of Japan, along with more than forty financial institutions collaborating with BIS As of early 2026 the project has already completed its design phase and entered prototype testing with central banks and commercial banks
However, crypto projects are also worth monitoring - but only if the project:
- Has fundamental value - it accelerates, simplifies, automates and reduces costs (settlements, tokenization, oracles, custody)
- Is integrated into the system - regulation, partnerships with banks, institutions and governments
- Has a sustainable economic model (it is not a purely speculative token)
Examples
Chainlink (LINK) - a decentralized oracle network used by companies such as BlackRock, Fidelity and others. Blockchains themselves do not have access to the external world, and an oracle is the infrastructure that solves a fundamental problem: securely delivering real-world data to smart contracts. Examples include KYC data, payment statuses or market prices. The project’s jurisdiction is the United States (California). One of the key assets of the project is CCIP (Cross Chain Interoperability Protocol) - a protocol for transmitting messages and assets between private and public banking blockchains. At the moment this protocol is undergoing institutional testing with the participation of major banks and financial organizations. In a period of geopolitical fragmentation, when states strive to build their own independent infrastructures, the value of neutral technological bridges such as CCIP, connecting these systems with each other, will likely continue to grow
Ethereum (ETH) - a decentralized platform for smart contracts and decentralized applications (dApps). It is the largest blockchain platform in the world in terms of developer activity and institutional integration. The jurisdiction of the Ethereum Foundation is Switzerland - a regulator-friendly environment, while the network itself remains decentralized. Ethereum is effectively the financial standard of the blockchain industry: most stablecoins and tokenized assets are issued on Ethereum. It is already used by companies such as BlackRock (BUIDL on Ethereum), Fidelity (tokenization, custody of digital assets and payments), JPM (its private blockchain network Onyx used for interbank settlements), and Visa/Mastercard, which support settlements in stablecoins such as USDC and integrate wallet and infrastructure solutions
Ethereum is building a multi-layer system. With the development of L2 solutions and the implementation of Proto-danksharding, Ethereum’s throughput could grow from approximately 15-30 TPS (transactions per second) to tens of thousands of TPS. This is comparable to the scale of global payment systems such as Visa/Mastercard (around ~1700 TPS on average with a claimed peak capacity of ~65000 TPS)
L2 (Layer 2) - networks built on top of the main blockchain that process transactions outside of it and later publish the result back to the main L1 network for security. In other words, L1 acts as the security layer, while L2 functions as the scaling layer. Even today, thanks to L2 solutions, Ethereum can process thousands of TPS
Proto-danksharding - an Ethereum upgrade that significantly reduces the cost of storing data for L2 networks. This in turn lowers transaction costs on the second layer, allowing the network to serve many more users. Together these improvements create the conditions for scaling the network from thousands to tens of thousands of TPS
🔘 Now let’s take a closer look at Bitcoin
Bitcoin (BTC) is a scarce asset with a maximum supply of 21 million units. It has no jurisdiction, no central authority and no mechanism that allows its supply to be expanded or its monetary policy to be altered. Unlike platforms such as Ethereum, Bitcoin does not primarily aim to provide utility through applications. Instead, it positions itself as a store of value - a reserve asset whose key properties are stability, predictability and trust. A reserve, in turn, forms the foundation of any system - gold was the foundation of the old system, the dollar of the current one, and BTC, presumably, of the future system
Trust in Bitcoin does not require trust in a specific institution because its reliability is based on mathematics and open-source code. It is a network that does not belong to any country or company and is maintained by thousands of independent participants around the world, making centralized control extremely difficult
🔘 Let’s examine the question of trust
Yes, BTC is to a large extent based on belief, and if that belief disappears, its value would effectively collapse. However:
- The same can be said about the dollar. Trust in it, or in any other currency - requires trust in the state that controls it. This leads to an interesting question: what is harder to destroy
- trust in code or trust in a state? Considering the current geopolitical situation, the answer seems fairly obvious
- BTC has, in many ways, already been accepted: ETFs have been approved, institutions buy, hold and use it, and miners continue to secure the network. Another important development is the upcoming Clarity Act - a U.S. legislative proposal that clearly defines which regulators oversee different segments of the crypto market. With a high probability, this could create the conditions for a new wave of institutionalization not only for BTC but for the entire crypto industry, as it would finally move the sector from a “gray zone” into a fully regulated environment, making it safe for any institutional participant - funds, banks, states and governments
- When regulation tightens (or trust disappears) in one country, activity can simply move to other jurisdictions. This creates competition between states for capital and crypto infrastructure. BTC benefits from fragmentation of the world and competition between jurisdictions, but loses in a fully globalized environment - a trend that appears to be weakening today
In 2023-2024, the United States saw what many called Operation “Chokepoint 2.0.” - regulators such as the SEC and FDIC effectively began pushing the crypto industry out of the country by shutting down banking access for crypto companies (Silvergate, Signature) and filing lawsuits against major exchanges such as Coinbase and Binance. However, the capital did not disappear - it simply moved to jurisdictions with clearer regulatory frameworks. The main beneficiaries were the UAE (Dubai) and Singapore. Dubai established a dedicated regulator, VARA (Virtual Assets Regulatory Authority), attracting companies such as Bybit and OKX to establish regional headquarters there, along with dozens of crypto funds. Singapore granted licenses to companies such as Crypto.com and DBS Bank. Hong Kong in 2023 officially launched a licensing regime for crypto exchanges, attempting to bring capital back to Asia. As a result, the United States temporarily lost control over a significant share of global crypto capital. Realizing this, it eventually shifted toward a more open stance - with the approval of Bitcoin ETFs in 2024 becoming the key signal
Ultimately, the probability of losing the most fundamental property required for the success of the asset - trust, appears relatively low. Bitcoin has already been “put on the rails” and the deeper its institutional integration becomes, the lower the probability of a full prohibition. Considering the current geopolitical situation and the broader trend toward deglobalization mentioned earlier, renewed regulatory pressure - for example from the United States - is, first, relatively unlikely in itself, and second, even if it does occur, it would likely affect trust in BTC far less than it might have twenty or thirty years ago, when the geopolitical position of the United States was largely unquestioned
🔘 Historical resilience of Bitcoin
Bitcoin has already survived numerous cycles of dramatic declines:
2011: -93% following the Mt. Gox hack
2013: -75% after Chinese restrictions on financial institutions working with Bitcoin
2014: -87% after the bankruptcy of Mt. Gox
2018-2019: -84% after the collapse of the ICO bubble and regulatory pressure
2020: -63% during the global COVID-19 market crash
2022: -77% following the collapse of Terra, Celsius and the FTX exchange
Current cycle: ~52% (in progress). Geopolitical uncertainty and a rotation into defensive assets. It is important to note that despite the “digital gold” narrative, BTC is still largely perceived as a high-risk asset at the moment
Despite deep drawdowns, every cycle has been accompanied by a strengthening of the ecosystem: weaker participants leaving the market, infrastructure development, and subsequent new all-time highs
I would also like to highlight an important point confirmed by history: institutions enter the game when there is already a large number of participants, liquidity, recognition, and resilience proven over time. More often than not, they do not create trust - they simply amplify it. This once again emphasizes the fact that BTC has, with a high probability, already “proven itself”
Several historical examples:
Gold. It was used as a means of payment long before the emergence of central banks and gold standards - in the Roman Empire and medieval Europe. Trust was not created - it was formalized and embedded into the system
The dollar. Before becoming the world’s reserve currency, it already dominated within the United States, which after the First World War had become the world’s largest economy with strong industrial and military power
The Internet. It became public in 1991 and began to grow rapidly, but institutionalization only began between 1995 and 2000. Key turning points included the founding of Amazon (1994), eBay (1995), and especially the IPO of Netscape in 1995, which became a critical signal for Wall Street. From 1996 onward, a strong inflow of venture capital began, scaling a demand that had already formed
E-commerce. The market for remote commerce existed long before Amazon. Sears - an American company founded in 1892 - began with mail-order watch sales and quickly became the largest catalog retailer in the country. Minitel - a French state telecommunications system launched in 1982 - allowed users to order goods and services through telephone terminals. CompuServe - an online service, opened an electronic shopping mall in 1984 that allowed users to purchase goods from different vendors. Demand for remote purchases existed long before the internet, it's simply accelerated it, while institutional capital later scaled an already existing market
🔘 What distinguishes Bitcoin from assets such as Amazon, Ethereum, traditional currencies or commodities?
Bitcoin is not a company, it has no CEO, no balance sheet, no earnings reports and no debt. It does not depend on business models or management decisions. It is simply a digital scarce asset that can be stored easily and transferred almost instantly across the globe
Of course risks exist - no system is perfect. Bitcoin depends indirectly on regulation, on market liquidity and on trust in the system. One theoretical threat is a 51% attack - a situation in which a single entity or coordinated group controls more than half of the network’s computing power. This would allow the attacker to temporarily reorganize recent blocks or prevent certain transactions from being confirmed. Theoretically, such a situation is possible. However, its cost directly depends on the network’s hash rate: the higher the hash rate, the more expensive the attack. At the same time, concentration of control in the hands of a single entity would undermine trust in the asset. For institutions that are already integrated into the ecosystem and have invested significant capital, this would be completely irrational. On the contrary, it is in their interest to do everything possible to preserve and even strengthen that very trust. Devaluing an asset they hold and monetize through taxes, fees, derivatives and infrastructure would be economically disadvantageous. The logic here is quite simple: why destroy an asset that generates stable income?
🔘 Ultimately everything comes down to probabilities and expected value
Key factors include:
- Institutional adoption: increases the probability of long-term survival
- Antifragility - the ability of the system to become stronger after stress: increases the probability of long-term survival
- Regulatory risks: a reduction in the probability of a favorable scenario, but not a critical one, since the probability of serious problems in this area is relatively low
- High profit asymmetry: this is no longer about probability, but it is a significant factor in the decision to allocate part of a portfolio to this asset, since the risk/reward ratio obviously plays a major role in investment decisions
Naturally, this is not a complete list of factors that should be evaluated from a probabilistic perspective, but the logic itself, I believe, is clear because it is quite simple: we gather and study information, evaluate each factor separately, analyze their combination, form a holistic picture and an overall assessment, and then make a well-considered decision. This algorithm can be applied not only to evaluating the investment attractiveness of an asset, but also to almost any area of our lives. I will give a few examples:
- Recovering from an injury
- Developing a new skill
- Forming an informed opinion about major global events
Many similar examples can be given, but they are all united by one common problem: it is extremely difficult, and often even impossible, to form a holistic picture or create a correct and effective framework to rely on for action or for making balanced and sound decisions without studying a large amount of data, facts, and nuances
Unfortunately, people tend to have an opinion on almost any issue without even studying it at a basic level. The situation becomes even worse when a person who is used to saying whatever comes to mind also possesses charisma. Such a combination often leads to the spread of openly superficial or erroneous ideas, because charisma and confidence begin to replace arguments and depth of analysis. As a result, the circle closes: people who are also not accustomed to deeply examining details start listening to such speakers and end up forming exactly the same superficial opinions
🔘 Conclusion
I described the basic logic and briefly reviewed several key projects not in order to turn the reader into a crypto or BTC maximalist or to encourage anyone to buy it. The goal is much simpler: to provide a basic understanding of what blockchain and the crypto industry are, and to show how significantly they increase the efficiency of various systems. Unfortunately, many people still believe that blockchain and “crypto” are synonymous with words such as SCAM and gambling, while in reality these are technologies that are changing the structure and the very foundation of our economic and technological reality
This research explores how blockchain, the crypto industry and Bitcoin may fit into the structure of the current and future global system
This is a long-form research post. Estimated reading time: ~10 minutes
🔘 Content Plan
- The inevitability of blockchain adoption
- Who will drive this adoption
- Who to watch in order to stay at the cutting edge
- Bitcoin - the foundation of a future system or a high-risk asset
- Key characteristics and distinctions of Bitcoin
- A framework for evaluating assets (and more)
🔘 First, let us briefly clarify several terms. What exactly are blockchain, smart contracts, tokenization and RWA?
Blockchain is a digital ledger (record book) that cannot be forged. Its key characteristics are decentralization, immutability and transparency
Decentralization means that there is no central server or controlling company. Databases are stored across thousands of nodes around the world, and in order to modify the ledger the majority of participants in the network must agree (a consensus mechanism)
Immutability means records cannot be deleted or changed retroactively
Transparency means that all transactions are publicly visible, although the identities behind them are not always known. Imagine a Google spreadsheet whose copies are stored by 10000 people. It synchronizes automatically, and it can only be changed with the approval of the majority. No one can secretly modify or delete a record
A smart contract is a program on the blockchain that automatically verifies and executes the conditions of an agreement. Instead of a traditional credit contract - a smart contract. Instead of collectors - automated penalties. If a loan payment is missed, the smart contract can automatically seize a percentage of a tokenized apartment, garage or business
Tokenization is the process of transforming a real-world asset (real estate, stocks, gold) into a digital token
RWA (Real World Assets) are physical assets represented in the blockchain as tokens - for example land, commodities or works of art
The implementation of blockchain essentially means a transition toward code and structured systems. Therefore the first sectors to move to blockchain are those where the underlying structure is already discrete - meaning it can be broken into clearly defined states. In many cases this even approaches binary logic: yes/no, 0/1, confirmed/not confirmed
Because of automation, speed, transparency and other advantages, blockchain often proves economically more efficient. That is why it is already being integrated into the infrastructure of companies and even entire governments
🔘 The crypto industry - a revolution on its own or a tool in the hands of the architects of reality?
If you believe crypto companies will independently create a revolution, this is probably an overestimation of their role. The world is shaped by states and large pools of capital - in other words, the architects of reality - entities with enormous resources that define the boundaries within which innovators operate. History shows that no technological revolution has actually destroyed existing power structures, instead, new technologies tend to integrate into them. Therefore blockchain will likely become an infrastructure layer of the system, while control largely remains in the same hands
From past technological waves we know that:
- The internet did not destroy governments - it became their tool
- Social networks began as decentralized communication but eventually turned into powerful instruments of influence for states and corporations (dispersion and redistribution of attention, polarization and intensification of emotional background, agenda setting)
- Cloud technologies promised distribution, yet the market eventually concentrated around three giants - Amazon Web Services, Microsoft Azure and Google Cloud
- Fintech did not destroy banks - it became their interface
- Blockchain will not destroy the financial system but will likely become its technological layer -an alternative infrastructure for settlements and accounting that speeds up operations, increases transparency, and reduces costs
This pattern repeats itself again and again: a technology emerges as revolutionary and decentralized (the romanticization phase), trust and resilience gradually form around it (the adoption phase), then large capital enters the space, and ultimately the technology becomes part of the infrastructure of the existing system. The logic behind this is simple: one can create a brilliant technology, an ideal product or an outstanding service, but without capital and regulatory approval it is impossible to scale it globally
Therefore attention should be focused on real centers of power, such as (the list is naturally incomplete):
BlackRock - capital, Circle (USDC) - institutional stablecoin infrastructure, Coinbase - regulated crypto gateway, JPM - systemic banking institution, NVIDIA - computational infrastructure and the United States and China - the key geopolitical competitors shaping the global landscape
🔘 Examples of blockchain adoption by institutions
BlackRock launched and continues to expand BUIDL - a tokenized MMF
Money Market Funds are investment funds that allocate capital into short-term debt instruments such as government bonds, treasury bills and interbank loans. They are commonly used by institutions as a substitute for cash in portfolios because they combine high liquidity, low risk and returns that are typically higher than traditional bank deposits
The assets under management of the BUIDL fund already exceed 1.7 billion dollars. One of its most important innovations is the possibility of using this capital as collateral for trading on both traditional exchanges and crypto exchanges. If exchanges such as Nasdaq, NYSE, ICE or CME are well understood by institutions, the crypto market historically created concerns because funds were reluctant to store capital directly on crypto exchanges. However, through structures like BUIDL institutions can keep capital with BlackRock while simultaneously trading on platforms such as Binance, OKX, Deribit, Bybit or Coinbase
Circle (USDC) is the primary institutional stablecoin used for settlements by companies such as BlackRock and Coinbase. The reason is simple: Circle is an American public company operating under full regulatory oversight and therefore provides a high level of transparency and legal reliability. USDT, in contrast, operates through an offshore structure and for a long time avoided full audits by the Big Four accounting firms (the world's four largest auditing firms). A stablecoin is a foundation that must be legally sterile, and for institutions at the level of BlackRock and JPM even 1% of doubt is unacceptable
Coinbase serves as a custodian for institutional investors - essentially a professional asset storage provider. It acts as a bridge between traditional finance and the crypto economy and functions as a gateway for fiat money entering and leaving the crypto system. Coinbase is a regulated public company fully integrated into the legal framework of the United States
J.P. Morgan developed JPM Coin - a tokenized dollar used for instant settlements between corporate clients. For example, if Microsoft deposits dollars into its account, the bank can issue tokens that are instantly transferred to another corporate client such as Amazon. This allows companies to bypass slow systems such as SWIFT, where settlements can take one to three days
BIS (Bank for International Settlements), often described as the central bank of central banks, is developing Project Agora - a global tokenized interbank settlement system. The project involves seven central banks including the Federal Reserve Bank of New York, the Bank of England, the Bank of France and the Bank of Japan, along with more than forty financial institutions collaborating with BIS As of early 2026 the project has already completed its design phase and entered prototype testing with central banks and commercial banks
However, crypto projects are also worth monitoring - but only if the project:
- Has fundamental value - it accelerates, simplifies, automates and reduces costs (settlements, tokenization, oracles, custody)
- Is integrated into the system - regulation, partnerships with banks, institutions and governments
- Has a sustainable economic model (it is not a purely speculative token)
Examples
Chainlink (LINK) - a decentralized oracle network used by companies such as BlackRock, Fidelity and others. Blockchains themselves do not have access to the external world, and an oracle is the infrastructure that solves a fundamental problem: securely delivering real-world data to smart contracts. Examples include KYC data, payment statuses or market prices. The project’s jurisdiction is the United States (California). One of the key assets of the project is CCIP (Cross Chain Interoperability Protocol) - a protocol for transmitting messages and assets between private and public banking blockchains. At the moment this protocol is undergoing institutional testing with the participation of major banks and financial organizations. In a period of geopolitical fragmentation, when states strive to build their own independent infrastructures, the value of neutral technological bridges such as CCIP, connecting these systems with each other, will likely continue to grow
Ethereum (ETH) - a decentralized platform for smart contracts and decentralized applications (dApps). It is the largest blockchain platform in the world in terms of developer activity and institutional integration. The jurisdiction of the Ethereum Foundation is Switzerland - a regulator-friendly environment, while the network itself remains decentralized. Ethereum is effectively the financial standard of the blockchain industry: most stablecoins and tokenized assets are issued on Ethereum. It is already used by companies such as BlackRock (BUIDL on Ethereum), Fidelity (tokenization, custody of digital assets and payments), JPM (its private blockchain network Onyx used for interbank settlements), and Visa/Mastercard, which support settlements in stablecoins such as USDC and integrate wallet and infrastructure solutions
Ethereum is building a multi-layer system. With the development of L2 solutions and the implementation of Proto-danksharding, Ethereum’s throughput could grow from approximately 15-30 TPS (transactions per second) to tens of thousands of TPS. This is comparable to the scale of global payment systems such as Visa/Mastercard (around ~1700 TPS on average with a claimed peak capacity of ~65000 TPS)
L2 (Layer 2) - networks built on top of the main blockchain that process transactions outside of it and later publish the result back to the main L1 network for security. In other words, L1 acts as the security layer, while L2 functions as the scaling layer. Even today, thanks to L2 solutions, Ethereum can process thousands of TPS
Proto-danksharding - an Ethereum upgrade that significantly reduces the cost of storing data for L2 networks. This in turn lowers transaction costs on the second layer, allowing the network to serve many more users. Together these improvements create the conditions for scaling the network from thousands to tens of thousands of TPS
🔘 Now let’s take a closer look at Bitcoin
Bitcoin (BTC) is a scarce asset with a maximum supply of 21 million units. It has no jurisdiction, no central authority and no mechanism that allows its supply to be expanded or its monetary policy to be altered. Unlike platforms such as Ethereum, Bitcoin does not primarily aim to provide utility through applications. Instead, it positions itself as a store of value - a reserve asset whose key properties are stability, predictability and trust. A reserve, in turn, forms the foundation of any system - gold was the foundation of the old system, the dollar of the current one, and BTC, presumably, of the future system
Trust in Bitcoin does not require trust in a specific institution because its reliability is based on mathematics and open-source code. It is a network that does not belong to any country or company and is maintained by thousands of independent participants around the world, making centralized control extremely difficult
🔘 Let’s examine the question of trust
Yes, BTC is to a large extent based on belief, and if that belief disappears, its value would effectively collapse. However:
- The same can be said about the dollar. Trust in it, or in any other currency - requires trust in the state that controls it. This leads to an interesting question: what is harder to destroy
- trust in code or trust in a state? Considering the current geopolitical situation, the answer seems fairly obvious
- BTC has, in many ways, already been accepted: ETFs have been approved, institutions buy, hold and use it, and miners continue to secure the network. Another important development is the upcoming Clarity Act - a U.S. legislative proposal that clearly defines which regulators oversee different segments of the crypto market. With a high probability, this could create the conditions for a new wave of institutionalization not only for BTC but for the entire crypto industry, as it would finally move the sector from a “gray zone” into a fully regulated environment, making it safe for any institutional participant - funds, banks, states and governments
- When regulation tightens (or trust disappears) in one country, activity can simply move to other jurisdictions. This creates competition between states for capital and crypto infrastructure. BTC benefits from fragmentation of the world and competition between jurisdictions, but loses in a fully globalized environment - a trend that appears to be weakening today
In 2023-2024, the United States saw what many called Operation “Chokepoint 2.0.” - regulators such as the SEC and FDIC effectively began pushing the crypto industry out of the country by shutting down banking access for crypto companies (Silvergate, Signature) and filing lawsuits against major exchanges such as Coinbase and Binance. However, the capital did not disappear - it simply moved to jurisdictions with clearer regulatory frameworks. The main beneficiaries were the UAE (Dubai) and Singapore. Dubai established a dedicated regulator, VARA (Virtual Assets Regulatory Authority), attracting companies such as Bybit and OKX to establish regional headquarters there, along with dozens of crypto funds. Singapore granted licenses to companies such as Crypto.com and DBS Bank. Hong Kong in 2023 officially launched a licensing regime for crypto exchanges, attempting to bring capital back to Asia. As a result, the United States temporarily lost control over a significant share of global crypto capital. Realizing this, it eventually shifted toward a more open stance - with the approval of Bitcoin ETFs in 2024 becoming the key signal
Ultimately, the probability of losing the most fundamental property required for the success of the asset - trust, appears relatively low. Bitcoin has already been “put on the rails” and the deeper its institutional integration becomes, the lower the probability of a full prohibition. Considering the current geopolitical situation and the broader trend toward deglobalization mentioned earlier, renewed regulatory pressure - for example from the United States - is, first, relatively unlikely in itself, and second, even if it does occur, it would likely affect trust in BTC far less than it might have twenty or thirty years ago, when the geopolitical position of the United States was largely unquestioned
🔘 Historical resilience of Bitcoin
Bitcoin has already survived numerous cycles of dramatic declines:
2011: -93% following the Mt. Gox hack
2013: -75% after Chinese restrictions on financial institutions working with Bitcoin
2014: -87% after the bankruptcy of Mt. Gox
2018-2019: -84% after the collapse of the ICO bubble and regulatory pressure
2020: -63% during the global COVID-19 market crash
2022: -77% following the collapse of Terra, Celsius and the FTX exchange
Current cycle: ~52% (in progress). Geopolitical uncertainty and a rotation into defensive assets. It is important to note that despite the “digital gold” narrative, BTC is still largely perceived as a high-risk asset at the moment
Despite deep drawdowns, every cycle has been accompanied by a strengthening of the ecosystem: weaker participants leaving the market, infrastructure development, and subsequent new all-time highs
I would also like to highlight an important point confirmed by history: institutions enter the game when there is already a large number of participants, liquidity, recognition, and resilience proven over time. More often than not, they do not create trust - they simply amplify it. This once again emphasizes the fact that BTC has, with a high probability, already “proven itself”
Several historical examples:
Gold. It was used as a means of payment long before the emergence of central banks and gold standards - in the Roman Empire and medieval Europe. Trust was not created - it was formalized and embedded into the system
The dollar. Before becoming the world’s reserve currency, it already dominated within the United States, which after the First World War had become the world’s largest economy with strong industrial and military power
The Internet. It became public in 1991 and began to grow rapidly, but institutionalization only began between 1995 and 2000. Key turning points included the founding of Amazon (1994), eBay (1995), and especially the IPO of Netscape in 1995, which became a critical signal for Wall Street. From 1996 onward, a strong inflow of venture capital began, scaling a demand that had already formed
E-commerce. The market for remote commerce existed long before Amazon. Sears - an American company founded in 1892 - began with mail-order watch sales and quickly became the largest catalog retailer in the country. Minitel - a French state telecommunications system launched in 1982 - allowed users to order goods and services through telephone terminals. CompuServe - an online service, opened an electronic shopping mall in 1984 that allowed users to purchase goods from different vendors. Demand for remote purchases existed long before the internet, it's simply accelerated it, while institutional capital later scaled an already existing market
🔘 What distinguishes Bitcoin from assets such as Amazon, Ethereum, traditional currencies or commodities?
Bitcoin is not a company, it has no CEO, no balance sheet, no earnings reports and no debt. It does not depend on business models or management decisions. It is simply a digital scarce asset that can be stored easily and transferred almost instantly across the globe
Of course risks exist - no system is perfect. Bitcoin depends indirectly on regulation, on market liquidity and on trust in the system. One theoretical threat is a 51% attack - a situation in which a single entity or coordinated group controls more than half of the network’s computing power. This would allow the attacker to temporarily reorganize recent blocks or prevent certain transactions from being confirmed. Theoretically, such a situation is possible. However, its cost directly depends on the network’s hash rate: the higher the hash rate, the more expensive the attack. At the same time, concentration of control in the hands of a single entity would undermine trust in the asset. For institutions that are already integrated into the ecosystem and have invested significant capital, this would be completely irrational. On the contrary, it is in their interest to do everything possible to preserve and even strengthen that very trust. Devaluing an asset they hold and monetize through taxes, fees, derivatives and infrastructure would be economically disadvantageous. The logic here is quite simple: why destroy an asset that generates stable income?
🔘 Ultimately everything comes down to probabilities and expected value
Key factors include:
- Institutional adoption: increases the probability of long-term survival
- Antifragility - the ability of the system to become stronger after stress: increases the probability of long-term survival
- Regulatory risks: a reduction in the probability of a favorable scenario, but not a critical one, since the probability of serious problems in this area is relatively low
- High profit asymmetry: this is no longer about probability, but it is a significant factor in the decision to allocate part of a portfolio to this asset, since the risk/reward ratio obviously plays a major role in investment decisions
Naturally, this is not a complete list of factors that should be evaluated from a probabilistic perspective, but the logic itself, I believe, is clear because it is quite simple: we gather and study information, evaluate each factor separately, analyze their combination, form a holistic picture and an overall assessment, and then make a well-considered decision. This algorithm can be applied not only to evaluating the investment attractiveness of an asset, but also to almost any area of our lives. I will give a few examples:
- Recovering from an injury
- Developing a new skill
- Forming an informed opinion about major global events
Many similar examples can be given, but they are all united by one common problem: it is extremely difficult, and often even impossible, to form a holistic picture or create a correct and effective framework to rely on for action or for making balanced and sound decisions without studying a large amount of data, facts, and nuances
Unfortunately, people tend to have an opinion on almost any issue without even studying it at a basic level. The situation becomes even worse when a person who is used to saying whatever comes to mind also possesses charisma. Such a combination often leads to the spread of openly superficial or erroneous ideas, because charisma and confidence begin to replace arguments and depth of analysis. As a result, the circle closes: people who are also not accustomed to deeply examining details start listening to such speakers and end up forming exactly the same superficial opinions
🔘 Conclusion
I described the basic logic and briefly reviewed several key projects not in order to turn the reader into a crypto or BTC maximalist or to encourage anyone to buy it. The goal is much simpler: to provide a basic understanding of what blockchain and the crypto industry are, and to show how significantly they increase the efficiency of various systems. Unfortunately, many people still believe that blockchain and “crypto” are synonymous with words such as SCAM and gambling, while in reality these are technologies that are changing the structure and the very foundation of our economic and technological reality
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.