A decade ago, half a dozen mavericks assembled in a Swiss house to launch Ethereum — a piece of the crypto ecosystem that acts as a distributed computing platform, using the ether token.
It initially looked likely to fail: the founding tribe imploded after bitter internal fights; Ethereum suffered a massive cyber hack; scandals erupted and, like bitcoin, ether’s price became crazily volatile, surging from nothing to $5,000, before collapsing.
But this week something striking occurred: just as the White House was issuing a report about the “Golden Age of Crypto”, the Nasdaq exchange celebrated Ethereum’s tenth birthday. “Ethereum has demonstrated itself . . . as the definition of antifragile,” enthused Joe Lubin, one former inhabitant of that founding house, who presents the platform as “a reliable trust layer for our fast-growing digital world”.
Cynics will undoubtedly wince in horror, while enthusiasts will cheer. No wonder: crypto is arguably the single most divisive issue in finance today. However, I would suggest that this anniversary should spark a more realistic — and subtle — judgment. For the past decade has revealed at least five key points about crypto that investors should ponder.
First, and most obviously, digital assets are not homogenous (even if detractors hate them all). Bitcoin is a one-dimensional phenomenon that fans liken to “digital gold”, while Ethereum is a multi-faceted infrastructure. Memecoins (like $TRUMP) only float on crazy hype, but stablecoins are supposed to be backed by assets, like Treasuries. This matters.
Second, we need to move beyond black-and-white thinking with crypto. The evangelists who declared a decade ago that distributed finance would transform the world were wrong — thus far digital assets are still too clunky, costly and energy-guzzling to displace most mainstream payment options, and too volatile to be a reliable store of value. Criminality has been rife. Just think of the saga of Sam Bankman-Fried, or regulatory censure of the tether stablecoin.
But doomsayers who predicted crypto’s demise were equally wrong. Digital asset prices have just soared (again), pushing Ethereum and bitcoin’s market capitalisation up to $455bn and $2.3tn respectively. And the $270bn-odd worth of stablecoins in circulation are supported as many transactions as the Visa credit card network in the last year, as Glenn Hutchins, a longtime tech investor, tells me.
Why? Greed (or speculation) is one factor. But crypto is founded on an interesting innovation (blockchain) that can sometimes be useful (say, for some cross-border payments). Moreover, some key players and regulators are raising standards in response to past scandals and networks like Ethereum are slashing energy usage.
Third, mainstream finance is moving in. This is ironic, given that early crypto evangelists promised that distributed finance would depose incumbents. But it is driving the current boom. Consider the fact that a top BlackRock executive has just joined an Ethereum investment group; or that traditional asset managers like Fidelity, BlackRock and Vanguard are launching crypto funds; or how mainstream investors are increasingly using crypto as a diversification play, while banks such as JPMorgan are running their own blockchains and launching stablecoins.
Fourth, the geopolitics of crypto are shifting — fast. In the past decade, most innovation occurred outside America, in places such as Hong Kong. But this week Paul Atkins, Securities and Exchange chair, said he wants to pull it onshore. Why? One reason is that the Trump family itself is invested in crypto. Another is grubby politics: crypto groups were such big Trump donors in 2024 that luminaries tell me they they won the election for him.
But geofinance matters too. Treasury secretary Scott Bessent hopes that dollar-based stablecoins will create a new source of demand for Treasuries, and promote more dollar-usage around the world. Consider this a new policy twist on Bretton Woods in the Silicon Valley age.
Finally, crypto’s second-order effects could turn out to be even more striking than the digital assets themselves. For what the innovation does is enable us to imagine alternatives to the financial and geopolitical status quo — for instance, by asking if we need to rely on the Swift payment system, or dollar dominance.
Don’t get me wrong: by making these five points, I am not downplaying the risks. The Trump administration’s conflicts of interest with crypto are shameful. The potential for consumer harm is real. There are financial stability risks due to crypto’s growing links with mainstream finance, and the use of Treasuries to back stablecoins. Criminality and grift exists.
But it is possible to worry about these risks — and want better regulation — but at the same time to recognise that the underlying technology can be useful as a geopolitical and financial diversification tool.
For these reasons, Ethereum’s “birthday” should prompt enthusiasts and doomsayers alike to realise that neither of them is entirely right. Life is rarely black and white — in finance or anywhere else. That will not change even if (or when) Ethereum turns 20.