It’s popular now to declare that “crypto’s non-financial use cases are dead.” Some also claim that the “read, write, own” model has failed. These conclusions both misunderstand the thesis and misjudge the stage we are in.
We are clearly in the financial era of blockchain. But the core idea was never that all crypto applications would emerge simultaneously, nor that finance would be the first to appear. The core idea has always been, and still is, that blockchain introduces a new primitive: the ability to coordinate people and capital at internet scale and embed ownership directly into the system. (And increasingly used to coordinate AI agents.)
Finance is the most natural area for this primitive to prove itself, which is why we often mention finance first when listing the productive uses of tokens. Finance is not independent of the larger thesis; it is part of it. It is the foundation and testing ground for everything else.
This belief has guided our work at a16z crypto from the beginning. Many of our investments are explicitly targeted at the financial sector: Coinbase, Maker, Compound, Uniswap, and Morpho are among them.
As I wrote in the book, “Blockchain networks can transform financial infrastructure into a public good, evolving the internet from mere information transmission to value transfer.” We expected finance to play an important role early on and continue to expect other categories to develop sooner or later.
At a16z and a16z crypto, we are playing the long game: our fund structure targets cycles of 10+ years because building new industries takes time.
Order of operations matters, so why haven’t non-financial use cases taken off yet? First, the order of operations is critical. Infrastructure and distribution often precede the emergence of new application categories.
The internet did not start with social media, streaming, or online communities; it started with packet switching, TCP\/IP protocols, and basic connectivity. Only after hundreds of millions of people were online did entirely new cultural and economic categories emerge. Cryptocurrency may be no exception.
We may need to get hundreds of millions of people “on-chain” through financial applications such as payments, stablecoins, savings, and DeFi before we see meaningful adoption in media, gaming, AI, or other more distant fields. Many applications rely on wallets, identity authentication, liquidity, and trust that are already in place.
There are other factors as well. One of the core advantages of cryptocurrency is the ability to empower community ownership through tokens.
But years of scams, extraction, and regulatory crackdowns have severely eroded people’s trust in tokens. This may also be one of the reasons for the recent market downturn. In a cynical environment, it is difficult to build a true community of owners.
Policy is the missing link. That’s why we’ve spent more than 5 years pushing for a clear regulatory framework around tokens. Good policy does two things at once: it provides a clear roadmap for builders and establishes risk-based guardrails to protect consumers and build market trust.
Market structure legislation like the CLARITY Act would introduce disclosure and transparency standards to guard against “rug pulls” and proprietary trading—standards that are routine in other markets but have long been missing in the cryptocurrency space.
When it comes to emerging technologies, progress on the policy front is often slow and incremental… until suddenly there is a qualitative change. Much of our work over the years (including my book) has focused on contributing to this foundation: explaining the benefits of cryptocurrency and blockchain to policymakers and the wider audience, and providing a grounded way to think about the evolution of this technology over time.
We often hear that this framework is useful to decision-makers in Washington, D.C. Years of education, debate, and refinement can quietly accumulate in the background, and then suddenly surface when a political or institutional window opens.
The strong response to GENIUS strongly validates this theory. Almost overnight, stablecoins went from questionable to legitimate in the eyes of finance, technology, and government. This shift seems sudden, but it is the result of years of effort by builders, policymakers, and advocates coming together at the right moment.
I anticipated a positive response, but I was even surprised by the speed and scale of the technology’s adoption. This makes me optimistic about market structure legislation, which, from a macro perspective, will do for other categories of tokens what GENIUS has done for stablecoins.
What the long game looks like: Great achievements take time. The AI breakthroughs we see today are thanks to decades of hard work by talented people. (The first paper on neural networks was published in 1943.)
The internet dates back to the 1960s, and the commercial internet was made possible by visionary builders and thoughtful policy actions in the 1990s. Building new technology systems is a long game, and this is what the long game looks like in practice: long-term groundwork followed by sharp inflection points.
If you want to work in a more mature industry, that’s fine. If you want to build a new industry from scratch, it can be messy and frustrating, but it’s important work. It is those messy years that make the glory that comes later for granted.
[ChainCatcher]
Market Analysis: The Blockchain Evolution – Finance First, But Not Only
In a timely counter-narrative to the prevailing pessimism surrounding non-financial blockchain applications, a16z Crypto Founder has articulated a compelling vision for the industry’s evolution. This piece isn’t just optimistic rhetoric; it’s a sophisticated framework for understanding blockchain’s development trajectory that should fundamentally reshape how experienced investors position their portfolios.
The Financial Era as Necessary Foundation
The article’s central thesis – that we’re currently in blockchain’s “financial era” as a necessary precursor to broader adoption – provides critical context for market dynamics. This perspective explains why DeFi, stablecoins, and payment systems have dominated early blockchain development, not as a temporary aberration, but as the logical first phase of technology adoption.
For investors, this validates the continued focus on financial primitives as the primary near-term catalysts. Projects like Coinbase, Maker, Compound, Uniswap, and Morpho – all a16z portfolio companies – aren’t just financial plays; they’re the infrastructure that will enable subsequent waves of innovation. The comparison to the internet’s evolution is apt: just as social media and streaming couldn’t emerge without TCP/IP and basic connectivity, blockchain’s non-financial applications require a robust financial foundation.
The Long Game: Implications for Investment Cycles
Perhaps most valuable for sophisticated investors is the explicit acknowledgment of 10+ year cycles. This framework helps contextualize current market volatility and provides a strategic lens for portfolio construction. The article correctly identifies that blockchain development follows the same pattern as other transformative technologies: decades of groundwork followed by sudden inflection points.
This perspective has profound implications for:
- Risk Management: Understanding that we’re in the early phase means accepting higher volatility and extended periods of limited returns.
- Position Sizing: Recognizing the multi-decade arc allows for more rational capital allocation across different phases of development.
- Patience Premium: The ability to maintain positions through multiple cycles may become a more significant alpha source than short-term trading acumen.
Policy as the Critical Catalyst
The article’s focus on policy as the “missing link” is particularly astute. The GENIUS example – where stablecoins transformed from questionable to virtually overnight – demonstrates how regulatory clarity can create sudden, substantial market value shifts. This pattern is likely to repeat with other token categories as market structure legislation like the CLARITY Act progresses.
For investors, this creates several strategic opportunities:
- Regulation-First Tokens: Projects proactively building compliance frameworks (particularly in stablecoins and DeFi) may see disproportionate upside as regulatory clarity emerges.
- Policy Infrastructure: Companies providing compliance tools, audit infrastructure, and regulatory reporting capabilities may become critical enablers of the next growth phase.
- Monitoring Catalysts: Tracking regulatory developments becomes as important as tracking technical milestones, with potential for sudden revaluations based on policy shifts.
Trust as an Undervalued Asset
The acknowledgment that years of scams and extraction have eroded public trust is refreshingly honest. This trust deficit represents both a risk and an opportunity. Projects that prioritize user protection, transparent operations, and sustainable tokenomics may build competitive moats that extend far beyond technical advantages.
From an investment perspective, this suggests:
- Due Diligence Evolution: Beyond code audits and tokenomics, investors should increasingly evaluate projects’ trust-building mechanisms and community governance structures.
- Reputation Premium: Teams with demonstrated commitments to user protection and ethical operations may command valuation premiums.
- Consumer-Focused Opportunities: Projects that successfully bridge the trust gap between crypto natives and mainstream users may capture disproportionate market share.
The AI Coordination Catalyst
The brief but significant mention of blockchain increasingly being used to coordinate AI agents deserves expanded consideration. This intersection represents perhaps the most compelling long-term narrative for blockchain technology – not as a replacement for existing systems, but as a coordination layer for AI economies.
For forward-looking investors, this suggests:
- AI-Blockchain Synergies: Projects that effectively bridge AI and blockchain primitives may represent the highest-risk, highest-reward opportunities.
- Tokenized AI Models: The potential for blockchain to enable ownership and governance of AI models could create entirely new asset classes.
- Infrastructure Play: Protocols that can efficiently coordinate AI agents and their economic activities may become foundational to the next computing paradigm.
Conclusion: A Framework for Strategic Positioning
This article provides more than just optimism; it offers a sophisticated framework for understanding blockchain’s development trajectory. For experienced crypto investors, the implications are clear:
- Financial Infrastructure First: Continue prioritizing well-designed financial primitives, but with an understanding of their role as enablers rather than endpoints.
- Long-term Time Horizons: Structure portfolios with explicit multi-cycle strategies, accepting that significant value creation will take years.
- Policy Sensitivity: Develop expertise in regulatory trajectories and position for sudden inflection points when clarity emerges.
- Trust Premiums: Increasingly factor in a project’s trust-building capabilities and ethical commitments alongside traditional metrics.
- AI Coordination: Begin exploring the intersection of blockchain and AI as a potentially transformative long-term narrative.
The blockchain world that a16z envisions is not one where finance is the endpoint, but rather the foundation. For investors who understand and embrace this distinction, the current market may represent not the culmination of blockchain’s potential, but merely its prologue.