Wall Street Invests in Crypto's Potential, But Remains Skeptical of Its Technology

The appetite for cryptocurrency among Wall Street investors is at an all-time high, with BlackRock's Bitcoin ETF breaking records and other major players like Fidelity and VanEck launching new products. However, despite this momentum, the majority of trading, settlement, and market-making activities still take place off-chain, on private servers and traditional infrastructure. The reason for this is that current blockchain technology does not yet meet the performance standards required by institutional investors, who demand predictable speed, reliable data access, and operational resilience. Until blockchains can deliver these capabilities, the largest players will continue to trade off-chain, limiting transparency, liquidity, and innovation in the crypto market. This is because institutions require both speed and reliability, and current blockchains often struggle with the latter, experiencing congestion and unpredictable transaction failures under peak stress. Furthermore, institutions need to ensure that trades settle correctly, even in high-pressure situations, which some blockchains are not yet equipped to handle. To attract institutional trading, blockchains must surpass the speeds of traditional markets, which is a significant challenge given the current latency of blockchain technology. To address these issues, institutions are seeking custom-built blockchains that meet the same performance, reliability, and accountability standards as traditional markets. Key optimizations include instruction-level parallelism with deterministic conflict resolution, elimination of I/O bottlenecks, and support for VM-agnostic, plug-in connectivity. By publishing performance data and demonstrating real-world capabilities, blockchains can alleviate institutional concerns and incentivize on-chain trading. The benefits of on-chain trading are clear, including increased transparency, liquidity, and innovation, and once a few firms demonstrate the advantages of on-chain trading, the rest of the market is likely to follow. In the long term, crypto technology is expected to become an integral part of global markets, enabling faster, more transparent, and more reliable transactions.