The future of cryptocurrency, from speculative asset to the underlying layer of the internet

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

Editor’s Note:

Cryptocurrency is going mainstream, but the way it does so 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 will quietly integrate into digital finance and the underlying internet, becoming a secure communication layer between applications, much like the transition from HTTP to HTTPS.

Today, the trading volume of stablecoins is approaching that of Visa and PayPal, while Web3 is “invisibly” entering daily life. The future Layer 1 will no longer be a “world computer,” but rather a “world database,” providing a trusted shared data source for millions of applications.

This article takes you deep into understanding the logic behind this transition: why interoperability is key, why business models will be restructured due to the fusion of AI and blockchain, and why the future of frictionless finance is not a single giant chain, but a universal foundational layer.

Here is the original text:

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

It will not be like Bitcoin, Ethereum, or Solana, nor will it be dominated by NFT art or meme coins, and it is even less likely to be EVM (Ethereum Virtual Machine) or SVM (Solana Virtual Machine). Blockchain will quietly integrate into the web, becoming 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 hardly change. This transition is already underway.

Stablecoins, essentially fiat currency balances on the blockchain, currently process about $9 trillion in adjusted annual transaction volume, comparable to Visa and PayPal. There is no essential difference between stablecoins and PayPal dollars; the difference lies in the fact that blockchain provides a more secure and interoperable transmission layer. After more than a decade, ETH is still not widely used as currency and can easily be replaced by stablecoins. The value of ETH comes from the demand for Ethereum block space and the cash flow generated by staking incentives. On Hyperliquid, the assets with the highest trading volume are synthetic representations of traditional stocks and indices, rather than 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 were to operate as chains like Base and Arbitrum, then market makers like Across, Relay, Eco, or deBridge could facilitate these transfers instantly. PayPal users would not need to have a LINE account, and LINE users would not need to have a PayPal account. Blockchain allows for this interoperability and permissionless integration between applications.

The recent discussions around Monad as the next major EVM ecosystem show that the crypto space still clings to outdated mindsets. Monad has a well-designed consensus system and strong performance, but these features are no longer unique. Fast finality is now just a basic requirement. The idea of developers migrating en masse and locking into a new single ecosystem is not supported by the experiences of the past decade. EVM applications can easily migrate between chains, and the broader internet will not be restructured within a single virtual machine.

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

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

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

In crypto terms, each application is already an app-chain. The problem is that these app-chains lack a secure, shared, trusted source. Querying application states requires trusting centralized servers that may fail or be attacked. Ethereum initially tried to solve this problem with the world computer model: in this model, each application is a smart contract within a single virtual machine, where validators re-execute each transaction, compute the entire global state, and run consensus protocols to reach agreement. Ethereum updates its state approximately every 15 minutes, at which point transactions are considered confirmed.

This approach has two main problems: it is not scalable and does not provide enough customization for real applications. The key realization is that applications should not run in a single global virtual machine but should 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 application states.

This new model is both scalable and flexible, capable of supporting large platforms like PayPal, Zelle, Alipay, Robinhood, Fidelity, or Coinbase with only moderate adjustments to their infrastructure. These applications do not need to be rewritten to EVM or SVM; they simply publish transactions to a shared, secure database. If privacy is important, 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, verify, and execute every transaction generated by every application globally, which is costly in terms of computation and bandwidth, with the bottleneck being that each validator must fully execute the global state transition function.

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

Erasure coding makes this possible. For example, suppose a 1MB block is split into 10 parts distributed to 10 validators, with each validator receiving about one-tenth of the data, but any 7 validators can combine to reconstruct the entire block. This means that as the number of applications increases, the number of validators can also increase, while each validator’s data load remains constant. When 10 applications generate a 1MB block with 100 validators, each validator only processes about 10KB of data; when there are 100 applications and 1000 validators, each validator still processes the same amount of data.

Validators still need to run consensus protocols, but they only need to reach agreement on the order of block hashes, which is much easier than reaching consensus on global execution results. The result is that the capacity of the world database can scale with the number of validators and applications without overloading any validator due to global execution.

Interoperability Between Layer 2 Chains in a Shared World Database

This architecture brings up a new problem: interoperability between Layer 2 chains. Applications within 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 swap 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 verify the PayPal transaction, execute multiple exchanges, initiate the LINE transaction, verify completion, and send the final confirmation back to PayPal. This is cross-chain messaging for Layer 2.

To complete this process securely in real-time, two elements are required:

The target chain must have the latest hash of the ordered transactions from the source chain, typically the Merkle root or a similar fingerprint published on the Layer 1 database.

The target chain must be able to verify the correctness of the message without re-executing the entire source chain program. This can be achieved through succinct proofs or trusted execution environments (TEE).

Real-time cross-chain transactions require a Layer 1 that has 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 concentration limits innovation and hinders new financial applications from competing in a fair environment. We envision a world where all digital asset applications are connected through a shared foundational layer, allowing liquidity to flow freely between chains, payments to be seamless, and applications to interact securely in real-time.

The Layer 2 paradigm makes it possible for any application to become a Web3 chain, while a high-speed Layer 1 that serves merely as a 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 relying on a single giant blockchain that tries to do it all, but through a universal foundational layer that achieves secure, real-time communication across chains.