The future of cryptocurrency: from speculative asset to the foundation of the internet

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

Editor’s Note:

Cryptocurrency is going mainstream, but in a way that might be completely different from what you imagine. It won’t appear in the form of Bitcoin, Ethereum, or Solana, nor will it be dominated by NFT art or meme coins. Instead, it will quietly integrate into the foundations of digital finance and the internet, becoming the secure communication layer between applications—much like the shift from HTTP to HTTPS.

Today, stablecoin transaction volumes are approaching those of Visa and PayPal, and Web3 is “invisibly” entering daily life. In 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 behind this transformation: Why is interoperability the key? Why will business models be restructured by the fusion of AI and blockchain? And why is the future of frictionless finance not a single mega-chain, but a universal foundational layer?

The following is the original text:

Cryptocurrency is going mainstream, just not in the way you might think.

It won’t look like Bitcoin, Ethereum, or Solana. It won’t be dominated by NFT art or meme coins. It’s also unlikely to be EVM (Ethereum Virtual Machine) or SVM (Solana Virtual Machine). Blockchain will quietly integrate into the internet as a secure communication layer between applications, much like the transition from HTTP to HTTPS. The impact will be profound, but for users and developers, the experience will change little. This transition is already underway.

Stablecoins, essentially fiat balances on blockchain, currently process about $9 trillion in adjusted annual transaction volume, on par with Visa and PayPal. Stablecoins are essentially no different from PayPal dollars, except that blockchain provides a more secure and interoperable transport layer. Even after more than a decade, ETH has not been widely used as a currency and is easily supplanted by stablecoins. The value of ETH comes from demand for Ethereum blockspace and the cash flow generated by staking incentives. On Hyperliquid, the highest-volume assets are synthetic representations of traditional stocks and indices, not crypto-native tokens.

The main reason existing financial networks integrate blockchain as a secure communication layer is interoperability. Today, a PayPal user cannot easily pay a LINE Pay user. If PayPal and LINE Pay operated as chains like Base and Arbitrum, market makers like Across, Relay, Eco, or deBridge could facilitate these transfers instantly. PayPal users wouldn’t need a LINE account, and LINE users wouldn’t need a PayPal account. Blockchain enables this kind of interoperability and permissionless integration between applications.

The recent hype around Monad as the next major EVM ecosystem shows that crypto is still stuck in outdated mindsets. Monad has a well-designed consensus system and strong performance, but these features are no longer unique. Fast finality is now table stakes. The idea that developers would migrate en masse and lock themselves into a new, single ecosystem is not supported by the past decade’s experience. EVM applications are very portable between chains, and the broader internet will not restructure itself into a single virtual machine.

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

Or in crypto terms: the foundational layer for Layer 2 chains.

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

In crypto terms, each app is already an app-chain. The problem is that these app-chains lack a secure, shared, trusted source. Querying an app’s state requires trusting a centralized server that can fail or be attacked. Ethereum initially tried to solve this with the world computer model: in this model, every app is a smart contract in a single virtual machine, validators re-execute every transaction, compute the global state, and run a consensus protocol to agree. Ethereum updates state roughly every 15 minutes, at which point transactions are considered confirmed.

This approach has two major problems: it’s unscalable and doesn’t provide enough customization for real-world applications. The key insight is that applications should not run in a single global virtual machine, but continue to operate independently, using their own servers and architectures, while publishing their ordered transactions to a decentralized Layer 1 database. Layer 2 clients can read this ordered log and independently compute the application state.

This new model is both scalable and flexible, able to support large platforms like PayPal, Zelle, Alipay, Robinhood, Fidelity, or Coinbase with only moderate changes to their infrastructure. These applications don’t need to be rewritten for EVM or SVM; they just need to publish transactions to a shared, secure database. If privacy is important, they can publish encrypted transactions and distribute decryption keys to specific clients.

Underlying Principle: How the World Database Scales

Scaling a world database is much easier than scaling a world computer. A world computer requires validators to download, verify, and execute every transaction generated by every app globally, which is computationally and bandwidth intensive; the bottleneck is that each validator must fully execute the global state transition function.

In a world database, validators only need to ensure data availability, enforce block ordering, and once finality is reached, guarantee the order is irreversible. They don’t need to execute any application logic—just store and propagate data in a way that guarantees honest nodes can reconstruct the complete dataset. Validators don’t even need to receive full copies of every transaction block.

Erasure coding makes this possible. For example, suppose a 1MB block is divided by erasure coding into 10 parts and distributed to 10 validators, each gets about a tenth of the data, but any 7 validators can combine to reconstruct the entire block. This means as the number of applications increases, the number of validators can increase, but each validator’s data load remains constant. If 10 apps generate a 1MB block and 100 validators participate, each validator handles about 10KB of data; with 100 apps and 1,000 validators, each validator still handles the same data amount.

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

Interoperability Between Chains on a Shared World Database

This architecture introduces a new problem: interoperability between Layer 2 chains. Applications in the same virtual machine can communicate synchronously, but those running on different L2s cannot. For example, with ERC20, if I have USDC on Ethereum and you have JPYC, I can swap USDC for JPYC in a single transaction using Uniswap and send it to you, because USDC, JPYC, and Uniswap contracts are coordinated in the same virtual machine.

If PayPal, LINE, and Uniswap each run as independent Layer 2 chains, we need a secure method for cross-chain communication. To send money from a PayPal account to a LINE user, Uniswap (on its own chain) must verify the PayPal transaction, perform multiple swaps, initiate a LINE transaction, verify completion, and send final confirmation back to PayPal. This is Layer 2 cross-chain messaging.

To make this process secure and real-time, two elements are required:

The destination chain must have the latest hash of the source chain’s ordered transactions, usually published on the Layer 1 database as a Merkle root or similar fingerprint.

The destination chain must be able to verify the correctness of the message without re-executing the entire source chain program. This can be achieved with succinct proofs or Trusted Execution Environments (TEE).

Real-time cross-chain transactions require a Layer 1 with fast finality and real-time proof generation or TEE attestation.

Moving Toward Unified Liquidity and Frictionless Finance

This brings us back to the grander vision. Today, digital finance is fragmented by walled gardens, forcing users and liquidity to concentrate on a handful of dominant platforms. This concentration limits innovation and hinders new financial applications from competing on a level playing field. We imagine a world where all digital asset applications are connected through a shared foundational layer, allowing liquidity to flow freely across chains, payments to be seamless, and applications to interact securely and in real time.

The Layer 2 paradigm makes it possible for any application to become a Web3 chain, and a high-speed Layer 1 serving only as the world database enables these chains to communicate in real time and interoperate as naturally as smart contracts within a single chain. This is how frictionless finance is born—not through a single, all-encompassing mega-blockchain, but via a universal foundational layer enabling secure, real-time cross-chain communication.

Source: BlockBeats