Coding protocols: A courier goes about his business in Seoul. A Zurich University professor of blockchain and distributed ledger technologies visiting Seoul says blockchain’s future will depend less on code than on the systems of trust. — Bloomberg
SEOUL: The blockchain industry, once driven by speculative manias and technological zeal, is entering a more sober phase.
From Switzerland’s Crypto Valley to Seoul’s policy committees, regulators and developers are converging on one conclusion: Blockchain’s future will depend less on code than on the systems of trust, incentives and education behind it.
“Blockchain systems are socioeconomic in nature,” said Claudio J. Tessone, professor of blockchain and distributed ledger technologies at the University of Zurich, during a interview in Seoul.
“Designing them is not just about coding protocols, it’s about aligning the incentives of everyone involved.”
Tessone, who leads the university’s Blockchain Centre and advises networks such as Cardano and Polkadot, argues that the industry’s deepest flaw is economic, not technical.
“We still don’t know how to design proper incentives,” he said. “That’s why concentration of wealth and power keeps re-emerging, even in systems meant to decentralise it.”
After more than a decade of experimentation, Tessone said the industry must face a hard truth: decentralisation has largely failed.
“The most-used blockchains are centralised by construction, and users tolerate it – just as they tolerate inequality in traditional finance,” he said.
The problem, he argues, isn’t the technology but in its economic design. “Blockchain can decentralise trust, but most systems have poorly designed incentives, which lead to power concentration.”
He likens blockchain governance to managing a small economy. “Designers should see blockchains as socioeconomic systems and adapt rules to how people use them – like societies do, enabling healthier evolution.”
One path forward, Tessone said, lies in tools that bridge digital and real economies.
Stablecoins, for instance, offer a pragmatic link between blockchain and finance.
“I’m from Argentina, a country plagued by inflation for decades,” he said. “For many people, saving in foreign currencies and accessing them is crucial to protect savings.
“Blockchains enable this and allow instant remittances.”
While stablecoins can boost efficiency, he warned that widespread use could weaken fragile currencies.
“If everyone shifts to US dollars or euros, some countries may lose monetary autonomy.”
For South Korea, which is exploring a won-based stablecoin, he suggested prioritising payments and circulation over savings. “It doesn’t need massive supply, just constant movement.”
For Tessone, blockchain’s next stage isn’t about chasing price cycles but building systems that last.
“Full decentralisation may not be achievable. And that’s not necessarily bad. Some structure improves performance,” he said.
“We need smart integration of regulation and innovation to make them work.”
Yet he believes rules alone aren’t enough. Blockchains enable far more sophisticated financial products, Tessone warned.
This includes flash borrowing and instant repayment via code, large leveraged positions in automated markets with near-zero lender risk, and rapid, deterministic execution combining assets and rewards.
“Investing in ‘next blockchains’ with untested, poorly understood consensus claims has fueled bubbles.
“Without understanding, blockchain becomes a black box – like a slot machine,” he said. “Financial education is essential to prevent people from falling for fraudulent schemes.”
While building such educational foundations is urgent for all countries, Tessone said the need is even greater in emerging economies, where blockchain lowers entry barriers but also heightens exposure to risk.
Promoting international education and understanding, he noted, has therefore become a core mission for him and the University of Zurich’s Blockchain Centre.
“That’s why our center maintains collaborations with multiple protocols and has built capacity to study blockchains from an international perspective,” he said.
“Understanding how design choices shape long-term outcomes is fundamental for the healthy growth of the ecosystem.” — The Korea Herald/ANN
