Social scalability is an institution’s ability to allow the maximum number of people to have skin in the game and win. It’s the main reason crypto is a $2.9T asset class today. In this post I’m going to explain what it is and why it’s important.

In 2017, Nick Szabo made a post that describes Bitcoin as a social breakthrough called “Money, Blockchains and Social Scalability.” This is a must read. Most view crypto as purely technology and focus on tech scalability, but I agree with Szabo. Tech scalability plays a role in social scalability, but it’s not the main factor. In the long run, the biggest winners will be cryptocurrencies that achieve social scalability by being the most credibly neutral and providing the most utility.

The Social Scalability of Bitcoin

Bitcoin is the first credibly neutral, internet native store of value to be useful to people in USA, China, Russia, Brazil, and hundreds of other countries in the world. By credibly neutral I mean fair, unbiased and not influenced by a small group. Credible neutrality is a social construct that is often rooted in technology but ultimately based on many dynamics that impact human trust.

Credible neutrality was earned by the protocol over time but initiated by humans at onset. Bitcoin launched as open source software that anyone could read, run, write to and own on a level playing field. There was a fair launch. No private deals were given to insiders and no prestige individuals, companies or countries were involved. The rules were well established from the beginning and not altered. The community discussed everything in the open on forums like Bitcointalk. To grasp the ethos, read early Hal Finney.

Bitcoin’s credible neutrality and utility are the main reasons the crypto industry is what it is today. What started as a grassroots movement with a pseudonymous founder named Satoshi Nakamoto, no insider ownership, no known jurisdiction of origin, and a novel product for anyone in the world to use has turned into a $1.7T asset that some of the biggest governments and companies in the world are actively using as a store of value. The rules of the Bitcoin system remain hard to change, which is a big part of why adoption continues.

Bitcoin’s growth has been amazing, but the cultural decision made by the community early on to just focus on money has limited the growth of new Bitcoin developers and companies using it for much beyond money. Despite what maximalists have said for the past 15 years, there’s a massive opportunity for decentralized systems to bring more freedom and progress to the world beyond just money.

Does social scalability really matter?

Social scalability is a big part of Bitcoin’s success, but the question any investor must ask in 2025 is whether social scalability really matters at all? Today 4 of the top 9 cryptocurrencies by total market capitalization are effectively company coins (XRP, BNB, SOL, TRON). The aggregate total market value of the 4 exceeds $312B.

These coins have strong narratives but haven’t earned credible neutrality. Small teams launched them from known jurisdictions (Silicon Valley, USA and China) and gave 50%+ token allocations to insiders (founding teams and/or VCs). They have highly coordinated marketing campaigns, they have insiders participating in government lobbying efforts and are engaged in lots of company-type top down activity. The protocols have not proven to be resilient, secure and resistant to a single point of failure. They’ve made aggressive tradeoffs for performance at the cost of decentralization.

We can debate their utility - suffice to say some people have found the 4 protocols useful but they have not enabled new use cases or much broader adoption yet. Regardless, the approach these 4 have taken has worked incredibly well. It’s reasonable to look at their success in capturing all that value and say the social scalability I’m describing is irrelevant. If you are able to coordinate a narrative and get enough people to buy into it, that’s all that really matters.

My bet though is that in the long-run social scalability matters a lot and will lead to $20T+ in value accrual in the coming decade. It is why we are here. If you’re focused on a shorter time frame I see why you might disagree. But I encourage you to zoom out.

Time will tell and things can change. But if you do agree that social scalability is crucial and look at the facts, it’s clear that there’s only two cryptocurrencies that have both the credible neutrality and utility to achieve long-term social scalability: BTC and ETH.

BTC holds the throne, but there is also a chance that ETH will prove to be even more socially scalable than ETH. Here’s why:

The Credible Neutrality of ETH

Similar to Bitcoin, Ethereum’s credible neutrality started at onset. Ethereum does not have quite the same “fair launch” lore that Bitcoin has, but only 9.9% of the supply was allocated to insiders and anyone in the world could easily own ETH at the start by sending BTC to the ICO address. No back room deals were given to VCs and no prestige individuals, companies or countries were involved.

Ethereum also started as a Proof-of-Work (PoW) chain and was PoW for the first 7 years, ensuring a more balanced distribution before moving to Proof-of-Stake (PoS). You didn’t need to already own or buy ETH to participate in consensus and earn rewards at onset, you could just contribute computing resources. Native PoS chains struggle with large early token holders dominating token rewards and the PoW to PoS transition is unique and underrated. It helped Ethereum reach a large and diverse set of stakeholders early and also makes it possible for a broader set of people to participate in consensus and earn ETH rewards today.

The founder of Ethereum is Vitalik Buterin. Ethereum detractors will point to Vitalik’s leadership and say that the sole fact there’s a known founder who has a lot of power hurts credible neutrality. But those who’ve observed the way that Vitalik has transparently and authentically led from the beginning know that he has set the culture with an emphasis on credible neutrality.

You don’t see Vitalik on the timeline shilling investment narratives and chasing money, attention and power like so many main characters in crypto. For over a decade now, he’s been the most well positioned person in the industry to do that but he’s resisted. Instead he’s done things his way by emphasizing values like censorship resistance, inclusion, and transparency and primarily focusing on setting the optimal technical architecture and values for builders long-term.

In practice Bitcoin and Ethereum governance is the same. Rough consensus from miners, users, and developers is required to make changes to the protocol and as a result Ethereum has been much slower to change than many VC types would like. But that lends itself to more credible neutrality in the long-run and is a tradeoff Ethereum leadership has consciously made.

Ethereum mainnet now has 4 execution clients (Geth, Nethermind, Besu and Erigon) and 5 consensus clients (Prysm, Lighthouse Teku, Nimbus and Lodestar) actively maintained. Client diversity and avoiding single points of failure has been a focal point. Further, the mainnet and L2 EVM enviornment has become the most trusted environment for devs and companies to build on.

Today Michael Saylor’s entity owns a much larger percentage of BTC supply than Vitalik and the Ethereum Foundation own of ETH supply. Bitcoin leaders have been quicker to align themselves with governments by supporting politicians and lobbying. This may be a the result of Bitcoin just being further along and attracting a broader set of stakeholders than Ethereum and could even benefit Bitcoin.

But the risks of Saylor and government lobbying hurting credible neutrality are real and it’s been encouraging to see Vitalik and the EF resist the urge to react to the market environment by chasing investment narratives. Ethereum leadership is focused on builders and Ethereum is now much bigger than any one person or group. It’s likely the most important people to the future of Ethereum are unknown builders today.

The Utility of Ethereum

EVM has dominant market share and strong network effects

Since Bitcoin introduced credibly neutral, internet native store of value to the world, Ethereum has dominated developer mindshare and been the home of every major new crypto use case beyond money that’s meaningfully onboarded new people to crypto. Ethereum is the home of decentralized finance, NFTs, prediction markets, decentralized social networks, decentralized identity, RWAs, stablecoins and more. All of these new use cases distribute EVM wallets and ETH as credibly neutral, internet native store of value.

Some of these use cases started on Ethereum mainnet and are shifting to Layer 2 chains built on top of Ethereum. Many of the best companies and developers building in crypto prefer a trusted developer environment that gives them more control and better economics than they would get on an L1, and that’s what Ethereum L2 architecture offers. A builder on an L2 or L3 simply gets more skin in the game while also getting the security of Ethereum and network effect of EVM and and distributing ETH as a credibly neutral, internet native store of value. Some L2s will thrive, others may not. For some use cases, developers may realize that there’s a major liquidity benefit to being on mainnet that you don’t get as an L2. Both outcomes are great for ETH.

Much has been debated about whether L2s contribute to the value of ETH or instead cannibilize the fees from mainnet and detract from ETH. Standard Chartered recently downgraded their price target for ETH from $10,000 to $4,000 on the basis that Coinbase’s L2 Base cannibalizes mainnet fees. This view misses this forest from the trees.

The main benefit of L2s is not fees contributed to mainnet, its distributing EVM wallets to new users and ETH as credibly neutral, internet native store of value. The fact that ETH supply can be reduced based on usage of the Ethereum ecosystem (both mainnet and L2s) is a nice feature that has already made ETH more deflationary than BTC. But fees are not the the main benefit of apps and L2s.

Ethereum has dominant market share for stablecoins, RWAs, and NFTs

Ethereum is now the primary ecosystem for both new developers and large companies like JP Morgan, Blackrock, Coinbase, Robinhood and more to tokenize assets. This started with crypto native assets like fungible tokens and NFTs, but is increasingly dollars, treasuries, stocks, bonds, private credit, real estate, and more. Whether this activity happens on mainnet or L2s and how much L2s end up paying to mainnet impacts the magnitude of ETH burned. But even in a scenario where all of this activity happens on L2s and L2s pay minimal fees to mainnet, adoption of these use cases spreads ETH as credibly neutral, internet native store of value.

The $100T+ Opportunity

Credibly neutral, internet native store of value is the largest market opportunity in the world today. The total market cap of gold is ~$20T and M2 globally is ~$100T, so one could argue it’s a $100T+ market opportunity.

Cryptocurrencies that are socially scalable via credible neutrality and utility are best positioned for the opportunity. There is not a strong narrative around this now, but I’ve learned in life and crypto it’s often true that the stronger the narrative the further from the truth (and vice versa). Those that keep their eye on the ball and resist the urge to chase will be rewarded.

Disclaimer:

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