Blockchain Networks are Pools of Capital

Most financial services companies are looking at blockchain networks through the wrong lens

Instead of trying to sell using blockchain, businesses should sell-to blockchain networks

There are two ways to look at a blockchain network: either as a means to an end or as an end in itself.

For the past decade or so, enterprises - particularly financial services and consulting firms - have predominantly viewed blockchain networks as a means to various ends, such as improving capital efficiency, operational efficiency, or collateral mobility.

In this framework, companies have been asking, “What can blockchain do for us?” They see blockchain as a tool - like a hammer in search of a nail. In fact, many financial services executives have explicitly described it to me as such. This analogy captures perfectly how blockchain has been perceived: a utility looking to find its purpose.

This perspective isn’t surprising though. Historically, the financial services industry has approached every technological innovation through this same lens.

But this time, it’s different.

What if blockchain networks aren’t tools at all? What if most of the industry has been looking through the wrong lens from the start?

Perhaps the right questions to ask are these:

1. What can we do for blockchain networks?

2. What can we sell to the builders and users of blockchain networks?

3. What can we build on blockchain networks?

To illustrate the distinction, consider planning a trip to New York City. You’ll likely buy airline tickets, book a hotel, and plan your activities in the city.

In this analogy, the airline company and the hotel are tools - means to an end. New York City, however, is the end in itself. You don’t ask, “What can New York do for me?” Instead, you ask, “What can I do in New York?”

This difference is subtle but critical, and it’s exactly the kind of shift that’s needed when thinking about blockchain networks.

Here’s why it matters:

Despite significant regulatory and legal challenges, blockchain networks have emerged as vibrant pools of capital. While the nature of capital on these networks is far from sticky - it’s highly fluid and impatient - it is definitely growing.

This presents an extraordinary opportunity, particularly for issuers of financial products, such as asset managers.

The real question now becomes: What financial products can we put on blockchain networks that the users, builders, token investors, traders, and other participants in the ecosystem need today and will want in the next 12 to 24 months?

This is the lens I’ve been using to evaluate blockchain related use cases. It’s a perspective shift that I believe could unlock immense potential while also preventing the waste of resources on use cases that look great on paper but have little chance of near-term success.

I’d love to hear your thoughts on this approach.