The identity dilemma in crypto: When do entry barriers stop mattering?

The crypto industry is going through a paradoxical moment where its own actors question its fundamental value. Recently, the ecosystem was shaken by a controversial valuation of the defensive mechanisms of public blockchains, catalyzing an ideological confrontation that exposes the sector’s structural contradictions.

The trigger was straightforward: a numerical rating claiming that public chains have only a 3/10 barrier to entry, significantly lower than tech giants like Microsoft (10/10), Apple (9/10), or traditional payment services like Visa and Mastercard. This statement was not a throwaway comment but a declaration that revealed philosophical cracks within the crypto community.

The two sides of crypto ambition

Here lies the true paradox: the industry oscillates between two irreconcilable aspirations. On one hand, there is a desire to preserve the original decentralized spirit, the promise of financial sovereignty that Satoshi Nakamoto planted decades ago. On the other, there is an implicit wish to be recognized as a legitimate financial sector, as robust and defensible as Wall Street.

This tension creates a double-edged arrogance. Participants feel bold for challenging established systems but simultaneously vulnerable due to the small scale of the crypto market—around 3-4 trillion dollars compared to the trillions managed by traditional finance. It’s the anxiety of an adolescent sector wanting to be taken seriously but internally doubting its legitimacy.

The liquidity debate: real defense or mirage?

The conversation escalated when it was questioned whether liquidity truly constitutes a barrier to entry. A Paradigm researcher called it the “biggest lie of the crypto devil”: convincing the industry that liquidity is a real moat.

This provocation divided opinions. Some traditional VCs responded skeptically: isn’t it true that Bitcoin lacks the superior user experience of modern finance, yet it dominates? Isn’t USDT the worst-designed stablecoin but the most used? Liquidity, then, would seem a secondary factor compared to more powerful forces.

But others countered with uncomfortable facts: on centralized exchanges, liquidity depth determines user experience. In DeFi, protocols like Uniswap revolutionized trading precisely by solving the liquidity problem for long-tail assets through liquidity providers. On public chains, Ethereum maintains its dominance after a decade of failed attempts to displace it because its DeFi liquidity and developer ecosystem are virtually irreplaceable.

Redefine what truly sustains a public blockchain

The real barrier to entry for a blockchain is not monolithic but multifaceted. Focusing solely on the financial factor oversimplifies a more complex reality.

First element: technological philosophy. As long as distrust persists toward centralized systems and fiat currencies, demand for truly decentralized networks will continue. This is not a factor that can be replicated with capital.

Second: founding charisma. Satoshi Nakamoto disappeared without touching his bitcoins; Vitalik embodies the decentralized gospel; the founders of Solana came from U.S. tech elites. Authentic leadership cannot be reproduced through funding.

Third: the network of developers and users. The Metcalfe effect and the Lindy effect are dynamics that favor the longevity of established networks. Developers act as the most committed users, creating a virtuous cycle of innovation.

Fourth: the application ecosystem. Ethereum and Solana survived crypto winters precisely because their internal ecosystems generated autonomous value. A public chain without relevant applications is a protocol without purpose.

Fifth: token capitalization. Perception is reality in speculative markets. If a token “seems valuable,” it attracts more capital, validating the initial perception.

Sixth: external interoperability. Blockchains must connect with traditional systems—finance, payments, logistics. Isolation is slow death.

Seventh: the long-term roadmap. A sustainable barrier requires constant renewal. Ethereum thrives because its multi-year planning keeps innovation moving.

The real problem today

Compared to that, Moore Threads—the “Nvidia of China”—reached a valuation of 40 billion dollars in days, while Ethereum took a decade to accumulate 30 billion. This is not an argument in favor of high barriers but evidence of the relative immaturity of the crypto market.

The industry is not facing a crisis of barriers to entry that are too low. The real bottleneck is the lack of users, insufficient capital, and limited penetration into real sectors. It is not the time to optimize defensive strategies for an elite of protocols but to expand practical utility for the majority.

Arrogance lies in debating sophisticatedly about barriers to entry when the goal of conquering the mass market is still missing.