a16z: “Crypto’s non-financial model isn’t a failure… it needs a long-term view”

“Recently, a view has been spreading in parts of the industry like a fad—that ‘non-financial use cases for cryptoassets (cryptocurrencies) are dead,’ or that the vision in my book ‘Read Write Own’ has failed. But that completely misunderstands the essence of blockchain technology and the stage we’re currently in.”

Chris Dixon, the partner leading crypto at global venture capital firm Andreessen Horowitz (a16z), pushed back in a column posted on X on the 6th (local time). He noted that while it is true the crypto industry is currently going through a “finance-led expansion phase,” that does not mean the non-financial model has failed.

Dixon defined blockchain’s core value as an “internet-scale coordination tool with ownership built in,” and emphasized that finance is the most natural area where this new primitive technology can first be proven.

“We have focused our early investments on financial infrastructure such as Coinbase, MakerDAO and Uniswap,” he said, adding that “finance is part of the broader blockchain wave, and the foundation on which all other services will be built.”

He particularly stressed the sequencing of technological development. Just as the internet saw killer apps like social media and streaming emerge only after infrastructure such as packet switching and TCP/IP was built and a mass user base formed, he argued that blockchain likewise must first bring hundreds of millions of users on-chain through financial applications.

He projected that “only after a mainstream base is established through payments, stablecoins and decentralized finance (DeFi) will meaningful adoption in non-financial areas like media, gaming and AI follow.”

Dixon also cited a collapse in trust as another reason non-financial crypto use cases have stalled. Years of fraud and attacks by regulators have fueled public distrust of the token ecosystem, he said.

As a solution, Dixon pointed to clear regulation, citing the “GENIUS Act,” enacted in July last year, as a success case.

“After the GENIUS Act passed, stablecoins’ status quickly shifted in the eyes of finance, technology and government to that of a legitimate asset,” he said, calling it “the result of policy efforts prepared over many years.” He added that the “CLARITY Act,” currently pending in Congress, “will improve market transparency, prevent rug pulls, and help put market structure on a sound footing.”

Dixon urged the industry to take a long-term view, comparing crypto to the early histories of AI and the internet.

“AI’s surge today is thanks to decades of research dating back to the 1940s, and the commercial internet was possible because of visionary policies and developers in the 1990s,” he said. “That’s also why the a16z crypto fund is managed with a long-term horizon of more than 10 years,” he added, stressing that “today’s turbulent period is a necessary process for building a future that will later be taken for granted.”