Crypto adoption: tools of necessity
AI adoption has seen a meteoric rise in adoption the last two years. AI is a discovery of abundance, or perhaps best phraseed as an automation of work.
Crypto adoption is, and always has been, different. Crypto is a tool of necessity.
Crypto: tools of necessity
I posit that crypto adoption will hinge on what it has always hinged on: defensive necessity.
Historical examples of crypto adoption:
- The Germans adopting the Enigma to encrypt messages from the Allies
- E-commerce sites adopting encryption (DES, AES, SSL and finally TLS) to avoid people getting their payment information stolen
- PGP development to avoid government surveillance & export controls
Crypto, and the adoption of crypto, advances when it needs to - when people have no other alternative. Mostly as an act of defense against an opposing or oppressive force. Goverments are often the culprit.
Let’s look at some more modern examples.
Adoption: Bitcoin
Today, we are all victims of inflation. Some countries more than others. However, no one person or Senator or President (or even the chairmen of the US federal reserve) can truly stop it.
Collectively the incentives of our time (gov’t spending out of control, lobbying capture of policy making, and short-term thinking from politicians) make the inertia of inflation unstoppable.
While Satoshi’s intended use case for Bitcoin was P2P cash-like payments, true adoption is (I would argue) a peaceful, defensive, but forced move – an escape hatch for the oppression of inflation and poor goverment control of the money supply.
Adoption: Memecoins
Even memecoins are a symptom of government controls over gambling online. It’s nearly impossible to play games of chance online. And if you do, it’s very possible the site gets shut down and you lose all your money. (I’m still waiting on PokerStars to give me my money back from my high school days.)
Yes, gambling isn’t a necessity like food and water, but let’s not pretend gambling isn’t deeply a human vice that people will always pursue one way or another.
There’s also an argument for gambling / speculation / memecoins blowing up for a generation that feels like it needs to take radical chances to secure the American Dream. Inflation and the US bungling housing policy has left younger Americans with a generational malaise and hopelesslness towards achieving the same level of wealth as their parents.
Short-sighted policies and NIMPYism (kept in place by a voting gerontocracy of the aging boomer-class) led to a number of bad things for those under 50 today:
- High real estate prices and cost of rent
- Healthcare costs rising in a broken system
- Social security going bankrupt
The young no longer feel like a single W2 alone can cut it. Millentials and Gen-Z are desperately trying to find a way to achieve the outsized gains they need to live the American dream of buying a house and living debt free.
The investing behaviors of young ‘degens’ is far less irrational than you might think… (and why It matters in 2025) pic.twitter.com/rZE70ZV5Tz
— sam lessin 🏴☠️ (@lessin) January 4, 2025
Adoption: Stablecoins
Low-cost and faster cross-border remittances have been a start here, but I’d argue these barely scratch the surface of what smart contracting chains can enable.
We’ve seen promising developments, but Ethereum (and other smart contracting chains) are still far from being a true tool of necessity.
But to me, I think it is only a matter of time, perhaps with some other kinds of events…
What events might necessitate more crypto adoption?
There are many kinds of changes that might spur adoption of more sophisticated crypto usecases:
- Gov’t regulations around the proliferation of AI models
- Potential catalyst event
- The EU, China, or Middle Eastern theocracies banning certain models or outputs for the “greater good” or “safety” of their citizens
- Resulting crypto solution
- Anonymous P2P markets and payments for model training, inference, and downloads
- P2P, incentivized file hosting
- Potential catalyst event
- Criminalization of free speech
- Potential catalyst event
- Resulting crypto solution
- Distributed, anonymous social networks
- Orwellian social credit scoring and/or banking controls
- Potential catalyst event
- The UK decides to cut off bank accounts for social media posts
- Resulting crypto solution
- Private payments
- New private, ZK-based distributed risk scoring
- Potential catalyst event
- Massive political debanking of large or important group
- Potential catalyst event
- US federal gov’t (or Texas) debanking Planned Parenthood or abortion clinics
- Resulting crypto solution
- Private payments
- Bank account-like smart contracts with organizational logic for managing companies or non-profits
- Potential catalyst event
- Restricting or hamstringing prediction markets
- Potential catalyst event
- Resulting crypto solution
- Distributed, unstoppable prediction markets
- Massive censorship of the internet
- Potential catalyst event
- US states ban porn sites
- US Section 230 is repealed, and social media companies are forced to censor and remove vast amounts of content and viewpoints
- Resulting crypto solution
- Distributed, anonymous VPN tools
- Distributed social networks
- Potential catalyst event
Basically if a government messes something up or lets something continue to be broken for too long, crypto will be around to be a tool of necessity, by the people, and for the people.
I argue that many of the above events are starting to happen. Soon many will hit their breaking points, and we’ll see crypto-based solutions and escape hatches.
What about technological advancements?
It is of course true that the tech and scaling of distributed systems, protocols, and ledgers will enable adoption once a burning need arises.
Higher TPS, lower fees, better wallets, etc are all important. Necessary, not sufficient.
But tech alone isn’t the catalyst. Catalysts are events that force people to find a way out of a bad situation. Crypto is a tool they can reach for.
Summary
Crypto is a tool of necessity by the people and for the people.
In a perfect world without dysfunction, oppression, or landscapes of different countries, states, and laws we wouldn’t need the international glue of crypto to protect us and our sovereignty.
But we don’t live in that world. Perhaps not now, and perhaps not ever.