Is Blockchain Becoming the Next Visa? Aztec Labs CEO Warns of a ‘Hollow Future’

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• Blockchain’s shift toward institutional adoption risks sidelining its decentralized ethos.
  
• Early governance failures like The DAO exposed the challenges of decentralized coordination.
  
• Zero-knowledge cryptography may offer a solution to preserve privacy and user autonomy while meeting institutional needs.

Blockchain technology, once heralded as the alternative to traditional financial systems, now faces a crucial dilemma. As the industry increasingly caters to institutional products, the decentralized ethos that fueled its early rise is being challenged. Leaders like Zac Williamson, CEO of Aztec Labs, are calling attention to the risks of blockchain evolving into nothing more than a settlement layer for institutions like Visa or Mastercard.

In an exclusive interview with Cointelegraph, Williamson emphasized how the blockchain’s shift toward institutional adoption might dilute its core principles. “If we lose the social coordination side of this, then the entire point of the technology gets hollowed out,” he warned. With decentralized governance models already stumbling in the early days, blockchain’s future trajectory remains uncertain.

The Governance Struggle: A Split in Blockchain’s Purpose

Blockchain’s early promise as a tool for decentralized coordination faced its first major test with the collapse of The DAO in 2016. This decentralized autonomous organization (DAO) allowed users to pool funds and attempt governance on-chain, but a major exploit drained 3.6 million ETH, leading to a split in the Ethereum network.

Williamson pointed out that the DAO hack revealed the vulnerabilities in blockchain’s early governance models. “The DAO governance model was either an autocracy or an oligarchy,” he said. The failure of such experiments led to a pivot towards blockchain’s use as a monetary system—one focused on trading digital assets, generating yield, and integrating with traditional markets.

So @cryptomanran has been among several high-profile voices getting behind the Zcash movement.@rkbaggs and I continue to unpack this narrative – because it has an undeniable head of steam.

Why is privacy in vogue? Why has Zcash emerged as the privacy protocol of choice? 🤔👇… pic.twitter.com/7Q31RtqAsW

— Gareth Jenkinson (@gazza_jenks) November 5, 2025

As the industry increasingly focuses on institutional applications, the original vision of decentralized community governance risks fading into the background. Blockchain may end up as an efficient, yet impersonal, tool for financial transactions rather than a means for collective action.

Privacy Tech: A Solution for Blockchain’s Governance Crisis

One of the key factors in enabling blockchain to meet the needs of both institutions and decentralized communities is privacy. Current public blockchains expose every transaction and vote in real time, a scenario unworkable for most organizations. As Williamson explained, real-world organizations don’t operate in such transparency, which makes effective coordination challenging.

Zero-knowledge cryptography (ZKPs) is the key to bridging this gap. ZKPs allow systems to confirm that an action—whether it’s a vote or a payment—follows the rules, without revealing the identities or actions of participants. This privacy layer not only protects user autonomy but also makes it possible for institutions, such as banks and asset managers, to participate in blockchain ecosystems without compromising sensitive data.

Also Read: Europe Explores Blockchain Settlements: XRP Could Become Key Liquidity Rail

Can Blockchain Maintain Its Decentralized Vision?

For blockchain to fulfill its original promise, it must find a way to balance institutional needs with its foundational ideals. Williamson believes that privacy technology can enable blockchain to serve both worlds without compromising either. “We need some understanding of identity and belonging,” he stated, emphasizing that privacy is essential for preserving autonomy while meeting institutional standards.

The blockchain industry stands at a crossroads. It can either lean fully into serving institutional finance or return to its roots of enabling decentralized coordination. However, with the right technological advancements, particularly in privacy, blockchain has the potential to achieve both.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.