The Evolution of Blockchain and Crypto

An interesting topic has resurfaced in many of my recent discussions with more traditional institutional investors: the delineation between “blockchain” as a disruptive technology and “crypto” tokens as an asset. This point of discussion is both telling and indicative of the current market environment. I believe we are at a key fulcrum of institutional adoption. We are seeing positive regulatory headlines and exponential growth in the number of assets being tokenized, but we are also seeing retail capitulation, which isn’t great for token prices in a historically retail-driven market. 

This dynamic presents an interesting question: 

How does one differentiate between crypto and blockchain?

I actually think that we’ve seen this playbook before, though it was in the 1990s and before many crypto market participants were even born. The "internet” was both a revolutionary technology and an investable sector. It was seen as a speculative and high-risk sector; a standalone category for early adopters. There were fund managers that solely focused on internet investing, in both public and private markets, that had no real overlap with other market verticals such as consumer staples, financials, energy, or healthcare. There are many parallels between “dotcom” stocks and crypto, but also between the internet and blockchain as highly disruptive technologies. Fast forward to today, no one "invests in the internet"; it is simply the inherent plumbing of nearly every successful business on the planet. That said, between the dotcom bubble and today, there has been no shortage of massive wealth creation opportunities for these early-adopting, internet-focused investors.  

From "Investable Sector" to "Global Infrastructure"

We are currently witnessing that same transition with blockchain. What was the technology solely supporting a standalone new asset class, crypto, is now evolving into the fundamental infrastructure layer for global financial services. While significant in its own right, blockchain is also expanding the definition of financial services. One of the core benefits of blockchain as a trustless peer-to-peer transfer agent is the allowance for enhanced asset productivity.

A major theme that has resurfaced over the past year is the tokenization of ‘Real World Assets’ (RWAs). This is simply taking traditional financial assets and securities and replicating them in a tokenized form. One major benefit is the potential for enhanced liquidity which comes from reducing the friction associated with traditional financial counterparties. Further, via DeFi integrations one has far more potential cost-effective options to leverage their assets as collateral to either borrow against them, or to potentially to lend out and earn additional passive yield.

 Institutionalization isn't about BTC ETFs or the price of a specific token based on an expanding buyer base; it’s about the migration of financial rails. The largest and most critical financial firms aren't just looking at the "crypto" sector; they are looking at how to move their own internal plumbing—settlement, custody, and issuance—onto a more efficient ledger. Just as the internet became the baseline for communication & commerce, blockchain is becoming the baseline for asset value creation, custody, and transfer. The below table is a telling representation of the movement of traditional financial firms towards a blockchain-based financial future.

Unlocking the "Quasi-Financial" Economy

In addition to blockchain offering enhanced productivity of existing financial assets, it is also serving to broaden the definition of what a financial asset truly is. Today, there are a number of assets that hold financial value, but because they are largely captive and either nontransferable or very difficult to transfer, their financial utility is heavily muted. Blockchain rails offer the potential to introduce a new breed of financial assets that could add significant financial flexibility to consumers, operators, and investors. These assets include: airline miles, reward points, gift cards, coupons, and even collectibles. The tokenization of these assets are in the earlier stages of transition, but they are already starting to establish a new potential for retail wealth creation and financial flexibility.

Looking further into the example of customer loyalty programs, these have always been "quasi-financial" in nature, holding real value but restricted by archaic, proprietary systems. By moving these onto blockchain rails, the assets can be transformed into productive financial instruments that serve to align the incentives of the consumer, the business, and even the passive investor. These assets would have the potential to evolve from “use it or lose it” to a potential dynamic of being instantly tradable, collateralizable, and interoperable.

The Bottom Line

For the sophisticated investor, the current "retail capitulation" in token prices appears to be merely short-term noise when compared to the long-term opportunity created by the "institutional acceleration" of the technology. We are moving away from the era of "investing in crypto" and toward an era where we invest in the companies and protocols that power, and expand, the world’s financial infrastructure.

In 1995, you didn't need to believe in every dotcom startup to realize the internet was going to change how the world worked. In 2026, you don't need to be a "crypto believer" to see that the world’s financial rails are being rebuilt in real-time.

Peter Hans, Partner @ Hack VC

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