Blockchain scaling dominated crypto for years, but an analysis compiled from Billy Gao argues that the bigger barrier now is privacy. The piece says the industry spent a decade optimizing decentralization, scalability, and security, only to find that the main force keeping large pools of capital offchain sits outside that old framework.
Its starting point is blunt: a blockchain is a shared computer. It is slower, more expensive, and more cumbersome than ordinary systems, and its core advantage is narrow but important — no single party can stop access to it or quietly rewrite its state. Because that tradeoff is costly, only assets that truly need an ownerless ledger belong there. Money fits that test, the article argues, because the ledger entry is the asset itself.
Scaling improved, but major capital still has not arrived
The analysis says the industry has largely reduced the practical pressure of the classic trilemma debate. Block space is cheaper than before, throughput is higher, and Rollups are functioning in production. After years of arguments over block sizes, sharding, and Layer 2 design, scaling no longer explains why the largest allocators are still hesitant.
That gap becomes clearer when looking at who remains absent. The article points to family offices, sovereign funds, large institutions, and corporate treasuries. Their objections include regulatory uncertainty, custody risk, hacks, smart contract risk, MEV, the difficulty of secure self-custody at scale, and counterparty risk across the stack. Many of those issues can be improved through audits, insurance, regulated custodians, and time. Two of them, the piece says, are harder because they are built into the system’s structure: legality and privacy.
Transparency carries a measurable cost on public chains
The article describes onchain transparency as a tax rather than a feature. Positions, transfers, and payments are visible by default, and trades can be observed before settlement. Once an order enters the public mempool, it can be copied, front-run, sandwiched, or targeted for liquidation. By mid-2025, cumulative MEV extracted on Ethereum had exceeded about $1.8 billion, according to the analysis, with that value taken from users because their transactions were visible before final execution.
Professional trading desks and funds have already adapted. Instead of broadcasting activity into the public mempool, they increasingly route flow through private relays and order-flow auctions to hide intent before a trade lands. The article presents this as a simple market signal: sophisticated capital is already paying for privacy, while everyone else continues to absorb the cost of exposure.
That same logic, it argues, applies even more strongly to institutions. A serious allocator is not going to place its balance sheet onto infrastructure that competitors can inspect in real time. In that view, the public nature of current chains helps explain why payments and large-scale professional finance have not fully migrated onchain.
Regulatory clarity is improving, which makes the privacy gap stand out
On the policy side, the analysis says the legal picture has started to shift. It points to the GENIUS Act becoming law in July 2025, describing it as the first federal-level framework for stablecoins as a core financial payload. Market structure legislation is also moving in the same direction. The article’s conclusion is that running a compliant onchain business now looks far more like a normal commercial choice than it did two years ago.
As that legal uncertainty begins to narrow, privacy becomes harder to dismiss as a secondary concern. If public blockchains keep requiring full exposure of balances, flows, and positions, regulatory progress alone will not be enough to bring in many of the institutions the sector wants to attract.
Provable privacy is presented as the missing upgrade
The article does not frame privacy as total secrecy. Its argument is that modern cryptography makes it possible to prove a statement without revealing the underlying data. In practice, that could mean proving reserves exceed liabilities without disclosing reserve composition, proving an address passed KYC without exposing identity, or proving a position remains within risk limits without publishing the position itself.
This is the model the piece treats as the missing solution: default privacy paired with provable compliance. Under that setup, auditors, regulators, and law enforcement can still obtain the checks they need through valid disclosure paths. What disappears is the default broadcasting of everyone’s financial life to the entire network.
The article’s broader conclusion is that crypto has been focused on the wrong bottleneck. Scaling no longer sits at the center of the problem. The larger barrier to bringing trillions of dollars onchain is the combination of privacy leakage and compliance friction. If production-grade provable privacy becomes practical, the next phase of onchain finance could look very different.