The Evolving Blockchain Dilemma: A Shift from Technology to Market Dynamics
In the world of blockchain, the focus is shifting from technological challenges to balancing market demands, products, and regulatory obligations, as discussed by EY's Paul Brody.
The previous blockchain trilemma suggested that users had to make trade-offs among decentralization, scalability, and security, often settling for just two out of three. Today's focus has shifted towards the balance of products, customer relations, and achieving regulatory approval, as indicated by EY's Paul Brody.
Brody states:
"The original blockchain trilemma said builders had to choose between decentralization, scalability and security. The new one is a choice between products, customers and regulatory approval."
(This means users might now choose any two of these aspects.)
While Ethereum was known for its strong decentralization and robust security, it faced limitations in capacity. However, advances have made it quite competent across all these areas, ensuring users find them satisfactory.
The Change Catalyst
A pivotal moment came with the approval of Bitcoin and Ethereum ETFs in the U.S., alongside new regulatory frameworks like MiCA in Europe, triggering a significant market transition.
Many leading companies in digital assets can offer products and have customers, but they often lack regulatory approval, which poses challenges.
The article elaborates on three categories of firms:
- Firms with products but no customers, seeking regulatory approvals.
- Firms with regulatory approval but no established customer base.
- Major financial institutions that have customers but lack digital assets.
Regulatory distinctions remain a key hurdle as they differentiate appropriate offerings for various customer segments, emphasizing the inherent risks in crypto.
As the market matures, ideal solutions are expected to emerge, enabling safer access to digital assets for various customer profiles.
