Cardano Founder Claims TradFi Is Coming for Crypto, Undermining Core Principles

By Aaron Feuerstein February 15, 2024 In Bitcoin, Cardano, Cryptocurrency, ETF
  • Spot Bitcoin ETFs have experienced record inflows, drawing some concern that this may be contrary to Satoshi Nakamoto’s vision of a decentralised system.
  • Charles Hoskinson warns that the dominance of a few institutions and centralised exchanges risks pushing the crypto industry towards the centralisation it originally sought to escape.
  • He also advocates for algorithmic stablecoins over asset-backed ones, highlighting their superiority due to the impossibility of the latter being fully decentralised.

The Spot Bitcoin ETFs have seen a huge inflow, breaking many records and attracting media and investor attention. But not everyone is happy with this sort of publicity—or rather the intertwining of crypto and the traditional financial sector (TradFi), something Satoshi Nakamoto surely did not intend.

After all, the creator of Bitcoin wanted to create a decentralised, peer-to-peer and trustless system. Cardano founder Charles Hoskinson has now criticised the latest pouring in of billions of dollars into crypto from centralised asset managers.

Hoskinson: Is That the Revolution We Signed Up for?

In a recent YouTube video, Hoskinson raised concerns about the increasing influence of a few large institutions and centralised entities in the crypto space. He believes the entrance of the Wall Street asset managers is contrasting sharply with the industry’s founding principles of decentralisation and autonomy.

Source: Charles Hoskinson/ YouTube

He warns that the concentration of power and control among these entities, including traditional financial firms and centralised exchanges, risks steering the industry towards centralisation, mirroring the very legacy financial systems crypto aimed to disrupt.


So, hang on a second here. How many big exchanges do we have in crypto? The top three control the vast majority of our transactions and trade by dollar value. Small group of ETF holders, small group of centralized exchanges, 2 big asset backed stable coins which constitutes 70% of value transfers. Sum that up, 10 legacy regulated institutions control the vast majority of your value flow and also get to decide the future of all of these projects.

Charles Hoskinson

Hoskinson also criticised the community’s preoccupation with short-term financial gains (number go up mentality) at the expense of core values like egalitarianism, transparency, and freedom from censorship.

Hoskinson calls for a re-evaluation of the industry’s direction, urging the community to reflect on the foundational goals of crypto and to resist the encroachment of centralised power, ensuring the revolutionary potential of crypto remains intact.

Algorithmic Stablecoins Better Than Asset Backed

The founder of Cardano and co-founder of Ethereum also emphasised the importance of embracing algorithmic stablecoins over asset-backed stablecoins. He pointed out that stablecoins like USDT and USDC, which dominate transaction volumes, are fundamentally at odds with the decentralised ethos of crypto due to their centralised issuance and regulatory compliance. According to Hoskinson, this is a potential risk posed by asset-backed stablecoins.

Source: Charles Hoskinson/ YouTube

He advocates for algorithmic stablecoins as the only type fully compatible with the core principles of crypto, offering a solution that allows for democratic decision-making and adapts seamlessly to changes within the blockchain environment.

They’re [stablecoin issuers] a business like a bank or anything else responding to regulation. And I’m not diminishing or saying they’re bad actors and that they’re evil people or something. I’m just saying that they exist within a jurisdiction, they’re subject to regulation. Crypto does not. Crypto is a global asset.

Charles Hoskinson

Aaron Feuerstein

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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