Is Blockchain Going To Succeed?
Why Blockchain Innovation Has Stalled and What We Can Learn from AI’s Explosive Growth
By Arno Deffuant
I'm increasingly concerned about whether blockchain technology will truly fulfill the original vision we all shared. Today's industry practices seem to actively prevent our most talented builders from innovating freely, and the truth is, blockchain’s growth feels painfully slow—especially when compared to the explosive adoption of AI.
Blockchain’s Original Promise and Current Obstacles
Blockchain technology holds incredible promise. It could protect digital rights, enhance freedom, and revolutionize digital ownership. However, the very mechanism that once seemed brilliant—aligning incentives through economic tokens—has now become a significant obstacle.
Think about it: people discovering blockchain usually fall into two categories. They either genuinely believe in blockchain's revolutionary potential or are drawn by speculative opportunities. Regardless of intention, once we hold tokens in a blockchain, our decisions become biased. Human nature pushes us to justify our financial bets, often at the expense of innovation.
The Fragmentation Problem
This has led to a fragmented blockchain ecosystem. Rather than collaborating, numerous isolated chains are continuously reinventing the same wheel—building identical tools, fighting over the same small group of developers, liquidity, and users. Innovation suffers dramatically under these conditions.
Here's the harsh reality: at its peak, blockchain sees roughly 7 million daily active users—at best. This is minuscule compared to AI’s explosive growth. For context, ChatGPT alone amassed 100 million users within two months of launch and was handling over a billion interactions daily by late 2024. This dwarfs blockchain's activity by orders of magnitude.
Lessons from AI’s Rapid Innovation
Why the stark contrast? AI applications follow a traditional Web2 approach, competing on quality, user experience, and innovation without financially trapping users. Users freely migrate to better technologies, fostering rapid growth and continuous improvement.
This freedom has fueled massive investments in AI. In 2024 alone, AI startups attracted more than $130 billion in funding. Blockchain startups, conversely, saw a significant drop, raising only around $8 billion.
Moreover, AI companies actively promote interoperability through shared standards, such as Anthropic’s MCP, creating seamless user experiences and accelerating market growth. Blockchain, plagued by tribalism and fragmentation, restricts innovation within isolated communities, limiting overall progress. We're not just experiencing minor setbacks—we’re facing a potential multi-trillion-dollar failure.
The UX Problem
Ask yourself honestly: how often do we persist with outdated wallets, cumbersome protocols, or inconvenient interfaces because we’re financially committed? Talented blockchain teams producing genuinely innovative solutions often face little adoption since users feel economically obligated elsewhere. As a result, these teams either abandon blockchain or reluctantly support obsolete technologies.
AI, by contrast, swiftly embraces superior products, continuously propelling innovation forward. Within a year, generative AI transitioned from experimental novelty to an indispensable tool for millions globally. Blockchain innovations, unfortunately, remain incremental, debated endlessly, and adopted slowly, if at all.
Saving The Vision
I genuinely fear the original vision of blockchain—open, decentralized, seamless—is slipping away. While blockchain remains mired in economic entanglements and tribal loyalties, AI reshapes technology interactions seamlessly and swiftly. Blockchain risks becoming irrelevant, missing its opportunity to redefine digital ownership and privacy fundamentally.
As a daily user of both technologies, my experience highlights this stark contrast. With AI, I freely choose the best available product. In blockchain, using superior technologies often feels contrary to my economic interests, though it clearly benefits me as a user.
The blockchain industry must break this cycle of stagnation. If we don’t, we risk watching the revolutionary promise of blockchain fade into irrelevance.
The original article was published by Arno Deffuant via X on March 20, 2025.
