The foundational “cypherpunk” values that initially inspired the development of smart contract platforms are likely to diminish over the next decade, according to Jesse Walden, managing partner of Variant Fund. In a blog post published on September 30, Walden discussed how institutional adoption is driving a shift in focus towards speed and compliance at the expense of the original ideals.
Walden elaborated on how the first decade of blockchain development drew heavily from Bitcoin’s core cypherpunk principles, which include:
- Censorship Resistance: Ensuring that transactions and communications remain free from government or corporate interference.
- Open Source: Promoting transparency and accessibility in code, enabling anyone to inspect, use, or improve upon it.
- Permissionlessness: Allowing users to engage with the network without needing authorization from any central authority.
- Democratic and Equitable Internet: Building a fair online ecosystem based on decentralized technology.
However, Walden notes that smart contract platforms are now increasingly influenced by values centered on performance, cost, profitability, and legal compliance. The noble ideals that once guided development have taken a backseat to the pressing demands of institutional users.
Shifts in Use Cases and Priorities
Walden highlights that many of the most prevalent applications of smart contract platforms—such as stablecoins, real-world asset (RWA) tokenization, and decentralized physical infrastructure networks (DePIN)—do not require decentralization or permissionlessness. Instead, these applications primarily need to leverage the decentralized nature of the underlying blockchain for:
- Openness: Facilitating access to information and services.
- Interoperability: Enabling different systems and platforms to work together seamlessly.
- Settlement: Providing a reliable framework for executing and finalizing transactions.
The cypherpunk movement originated in the 1980s, driven by growing concerns over government surveillance, censorship, and restrictions on free speech amid the rise of the internet. Some view Bitcoin’s creator, Satoshi Nakamoto, as a cypherpunk or at least closely aligned with cypherpunk principles due to Bitcoin’s uncensorable and permissionless architecture.
Walden acknowledges that while this trend does not signal the demise of cypherpunk blockchains, it may mark “the end of the beginning” for their influence. The commercialization of crypto technologies comes with inherent compromises, particularly regarding the strictness of decentralization.
The Commercialization of Crypto
According to Walden, as crypto becomes more commercialized, it faces unavoidable compromises. For instance, a degree of decentralization may be sacrificed to accelerate the availability of crypto wallets and applications for users.
However, he emphasizes that this shift is not entirely negative. Drawing parallels to the evolution of mainstream music, which often becomes “corny” and repackaged for commercial consumption, Walden points out that there are still pioneering artists who successfully balance their core principles with marketability.
“That mix of determination and pragmatism was admirable, because it has the most reach, and thereby, the most impact in taking culture one step forward at the largest possible scale,” he commented.
Embracing the Future
Walden encourages those feeling disillusioned by the dilution of cypherpunk values to reconsider the broader implications of this commercialization. He suggests that, in terms of impact, the transition to a more mainstream crypto market represents a significant opportunity that is just beginning to unfold.
Jesse Walden’s insights on the evolving landscape of smart contract platforms underscore a significant shift away from the original cypherpunk values that inspired their creation. As institutional adoption rises, the focus is moving towards optimizing for performance and compliance, often at the cost of decentralization and permissionlessness.
While some may view this transition as a dilution of core ideals, it also opens new avenues for widespread adoption and impact. The commercialization of crypto technologies may pave the way for increased accessibility and usability, fostering a more inclusive environment for newcomers.
As the crypto landscape continues to evolve, it will be essential for developers, investors, and enthusiasts to balance the original cypherpunk principles with the practicalities of a growing market. This evolving dynamic may ultimately lead to more substantial advancements and opportunities in the blockchain space.
