The Future of Cryptocurrency: From Speculative Asset to the Underlying Layer of the Internet

Original Article Title: Crypto is going mainstream—just not in the way you might think
Original Article Author: @binafisch
Translation: Peggy, BlockBeats

Editor's Note:

Cryptocurrency is heading towards mainstream adoption, but in a way that may be completely different from what you imagine. It will not appear in the form of Bitcoin, Ethereum, or Solana, nor will it be dominated by NFT art or meme coins. Instead, it is quietly integrating into the infrastructure of digital finance and the internet, becoming a secure communication layer between applications, much like the transition from HTTP to HTTPS.

Today, stablecoin transaction volumes are approaching those of Visa and PayPal, and Web3 is "stealthily" entering daily life. The future Layer 1 will no longer be the "world computer" but the "world database," providing a trusted shared data source for millions of applications.

This article takes you deep into the logic of this transformation: Why is interoperability key? Why will business models be restructured due to the fusion of AI and blockchain? And why is the future of frictionless finance not a single giant chain but a universal base layer.

Below is the original article:

Cryptocurrency is heading towards mainstream adoption, just not in the way you might imagine.

It will not be like Bitcoin, Ethereum, or Solana. It will not be dominated by NFT art or meme coins, and it is less likely to be the EVM (Ethereum Virtual Machine) or SVM (Solana Virtual Machine). Blockchain will quietly integrate into the network, becoming a secure communication layer between applications, much like the transition from HTTP to HTTPS. The impact will be profound, but the experience for users and developers will hardly change. This transformation is already underway.

Stablecoins, essentially fiat balances on the blockchain, currently process an annual adjusted transaction volume of around $90 trillion, comparable to Visa and PayPal. Stablecoins are not fundamentally different from PayPal dollars; the difference lies in the blockchain providing a more secure and interoperable transport layer. After more than a decade, ETH has not been widely used as a currency and is easily replaced by stablecoins. The value of ETH comes from the demand for Ethereum block space and the cash flow brought by staking incentives. On Hyperliquid, the highest trading asset is the synthetic representation of traditional stocks and indices, not native crypto tokens.

The primary reason for integrating blockchain into existing financial networks is interoperability. Today, a PayPal user cannot easily pay a LINE Pay user. If PayPal and LINE Pay were to run as chains like Base and Arbitrum, then market makers such as Across, Relay, Eco, or deBridge could facilitate these transfers instantly. PayPal users do not need to have a LINE account, and LINE users do not need to have a PayPal account. Blockchain enables interoperability and permissionless integration between such applications.

The recent discussions around Monad as the next major EVM ecosystem highlight that the crypto space is still clinging to outdated mental models. While Monad boasts a well-designed consensus system and strong performance, these features are no longer unique. Rapid finality is now just a basic requirement. The idea of developers massively migrating and locking into a new singular ecosystem is not supported by the experiences of the past decade. EVM applications can easily migrate across chains, while the broader internet will not re-architect itself within a single virtual machine.

The Future Role of Decentralized Layer 1: World Database, Not World Computer

Or in crypto terms: the base layer of Layer 2 chains.

Modern digital applications are inherently modular. Globally, there are millions of web and mobile apps, each using its own development framework, programming language, and server architecture, and maintaining a transaction-ordered list defining its state.

In crypto terms, each app is already an app-chain. The issue is that these app-chains lack a secure, shared, trusted source. Querying the app state requires trusting centralized servers that are susceptible to failure or attack. Ethereum initially attempted to solve this problem through the world computer model: in this model, each app is a smart contract within a single virtual machine, validators re-execute every transaction, compute the global state, and run a consensus protocol to reach agreement. Ethereum updates the state approximately every 15 minutes, at which point transactions are considered confirmed.

This approach has two main issues: it is not scalable and does not provide enough customization for real-world applications. The key realization is that apps should not run on a single global virtual machine but should continue to run independently using their own servers and architecture while publishing their ordered transactions to a decentralized Layer 1 database. Layer 2 clients can read this ordered log and independently compute the app state.

This new model is both scalable and flexible, capable of supporting large platforms like PayPal, Zelle, Alipay, Robinhood, Fidelity, or Coinbase with moderate adjustments to their infrastructure. These apps do not need to rewrite to the EVM or SVM; they just need to publish transactions to a shared, secure database. If privacy is crucial, they can publish encrypted transactions and distribute decryption keys to specific clients.

Underlying Principles: How the World Database Scales

Scaling the world database is much easier than scaling the world computer. The world computer requires validators to download, validate, and execute every transaction generated by every application worldwide, which is costly in terms of computation and bandwidth. The bottleneck is that every validator must fully execute the global state transition function.

In the world database, validators only need to ensure data availability, block order consistency, and irreversibility once finality is reached. They do not need to execute any application logic, only store and propagate data in a way that ensures honest nodes can reconstruct the entire dataset. Therefore, validators do not even need to receive a full copy of every transaction block.

Erasure Coding makes this possible. For example, suppose a 1MB block is split into 10 pieces using erasure coding and distributed to 10 validators, each validator receives about one-tenth of the data, but any 7 validators can reconstruct the entire block. This means that as the number of applications increases, the number of validators can also increase, while the data load on each validator remains constant. With 10 applications generating a 1MB block, there are 100 validators, with each validator processing only about 10KB of data; with 100 applications and 1000 validators, each validator still processes the same amount of data.

Validators still need to run a consensus protocol, but only need to agree on the order of block hashes, which is much easier than achieving consensus on global execution results. As a result, the capacity of the world database can scale with the number of validators and applications without overburdening any validator with global execution.

Interoperability of Shared World Databases

This architecture brings a new problem: interoperability between Layer 2 chains. Applications in the same virtual machine can communicate synchronously, while applications running on different L2s cannot. For example, with ERC20, if I have USDC on Ethereum and you have JPYC, I can exchange USDC for JPYC in a single transaction using Uniswap and send it to you because USDC, JPYC, and the Uniswap contract coordinate within the same virtual machine.

If PayPal, LINE, and Uniswap each operate as independent Layer 2 chains, we need a secure cross-chain communication method. To pay a LINE user from a PayPal account, Uniswap (on its independent chain) needs to validate the PayPal transaction, perform multiple swaps, initiate the LINE transaction, verify completion, and send the final confirmation back to PayPal. This is where Layer 2 cross-chain message passing comes in.

In order to accomplish this process in real time and securely, two elements are required:

The target chain must have the latest hash of the source chain's ordered transactions, usually a Merkle root or similar fingerprint published to the Layer 1 database.

The target chain must be able to verify the integrity of the message without re-executing the entire source chain program. This can be achieved through succinct proofs or Trust Execution Environments (TEEs).

Real-time cross-chain transactions require a Layer 1 that provides fast finality and combines real-time proof generation or TEE authentication.

Towards Unified Liquidity and Frictionless Finance

This brings us back to a grander vision. Today, digital finance is fragmented by closed systems, forcing users and liquidity to concentrate on a few dominant platforms. This centralization restricts innovation, hindering new financial applications from competing on a level playing field. We envision a world where all digital asset apps are connected through a shared foundational layer, enabling liquidity to flow freely across chains, seamless payments, and real-time secure interactions between applications.

The Layer 2 paradigm enables any application to become a Web3 chain, with a high-speed Layer 1 serving solely as a world database, allowing these chains to communicate in real time and interoperate naturally like smart contracts on a single chain. This is how frictionless finance is born—not by relying on a single monolithic blockchain trying to do everything, but through a common base layer enabling secure, real-time cross-chain communication.

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