Social scalability refers to a system's ability to allow more people to participate and achieve a win-win situation. This is also the main reason why the cryptocurrency market has become a $2.9 trillion asset class today. In this article, I will explain what it is and why it is important.
In 2017, cryptography expert Nick Szabo published an article titled "Money, Blockchains, and Social Scalability," describing Bitcoin as a social breakthrough, which has now become required reading. Most people consider cryptocurrencies purely technological and focus on technical scalability. However, I agree with Szabo's view that while technical scalability plays a role in social scalability, it is not the primary factor. The biggest winners will be cryptocurrencies that achieve social scalability through credible neutrality and provide the greatest utility.
Bitcoin's Social Scalability
Bitcoin is the first credibly neutral, internet-native value storage tool that is useful to people in the United States, China, Russia, Brazil, and hundreds of other countries worldwide. By "credibly neutral," I mean fair, unbiased, and not influenced by a minority group. Credible neutrality is a social construct typically rooted in technology but ultimately based on various dynamic factors that affect human trust.
Credible neutrality is acquired over time but was initially initiated by humans. Bitcoin was launched as open-source software that anyone can read, run, write, and own in a fair competitive environment. Its launch was fair. There were no private transactions, and it was not attached to celebrities, companies, or countries. The rules were clearly established from the beginning and remained unchanged. The community discussed everything openly on forums like Bitcoin talk. To understand its spirit, one can read early articles by Hal Finney.
Bitcoin's credible neutrality and utility are the main reasons for the development of the crypto industry to date. Initially, it was a grassroots movement initiated by the pseudonymous founder Satoshi Nakamoto, belonging to no individual and not governed by any region, providing a new product usable by anyone worldwide. Today, it has developed into a $1.7 trillion asset, with some of the world's largest governments and companies actively using it as a value storage tool. The difficulty of changing Bitcoin's system rules is one of the key reasons for its continued adoption.
Bitcoin's growth has been remarkable, but the community's early cultural decisions—focusing solely on currency—limited the development of new Bitcoin developers and companies using it for purposes beyond currency. Despite extremists emphasizing Bitcoin's orthodoxy for the past 15 years, decentralized systems still have enormous opportunities to bring more freedom and progress to the world beyond money.
Is Social Scalability Really Important?
Social scalability is an important factor in Bitcoin's success, but its importance may be questioned in 2025. Today, 4 out of the top 9 cryptocurrencies by total market cap are essentially company tokens (XRP, BNB, SOL, TRON). The total market cap of these 4 tokens exceeds $312 billion.
These tokens have strong narratives but have not yet achieved reliable neutrality. Small teams from well-known jurisdictions (Silicon Valley, USA, and China) launched these tokens, allocating over 50% to insiders (founding teams and/or venture capital firms). They have highly coordinated marketing campaigns, insider government lobbying activities, and participate in numerous corporate, top-down activities. These protocols have not yet proven resilience, security, and resistance to single points of failure. They have made radical trade-offs for performance at the expense of decentralization.
We can discuss their utility—some would say these 4 protocols are useful, but they have not enabled new use cases or broader adoption. In any case, the approach taken by these 4 protocols has been very effective. One could also say they have been successful in capturing value and have little to do with so-called social scalability.
But in the long term, social scalability is very important and will bring $20 trillion in value growth over the next decade. This is why we persist here. Time will tell the truth, and things will change. If you indeed agree that social scalability is crucial and look at the facts, it is clear that only two cryptocurrencies have both reliable neutrality and utility for long-term social scalability: BTC and ETH.
BTC holds the throne, but ETH may also prove to be more socially scalable than BTC. Here's why:
ETH's Credible Neutrality
Similar to Bitcoin, Ethereum's credible neutrality existed from the beginning. Although Ethereum did not have Bitcoin's "fair issuance," only 9.9% of the supply was allocated to insiders, and anyone worldwide could easily own ETH by sending BTC to the ICO address. There were no insider transactions with VCs, and no celebrities, companies, or countries were involved.
Ethereum also initially started as a Proof of Work (PoW) chain and remained PoW for the first 7 years to ensure a more balanced distribution before transitioning to Proof of Stake (PoS). You did not need to own or purchase ETH to participate in consensus and receive rewards at the start, only contributing computational resources. Early native PoS chain token holders dominated token rewards, but the PoW to PoS transition was unique and underestimated. It helped Ethereum reach a large, diverse set of stakeholders early on and enabled a broader group to participate in consensus and receive ETH rewards today.
Ethereum's founder is Vitalik Buterin. Some opponents might question Vitalik's leadership and argue that the fact a known founder has significant power undermines credible neutrality. However, Vitalik's leadership is transparent and genuine, and he established Ethereum's cultural foundation by emphasizing credible neutrality.
You won't see Vitalik selling investment stories and chasing money, attention, and power like many major figures in the crypto space. For over a decade, he has been the most capable of doing so but refuses. Instead, he does things his way, emphasizing values like censorship resistance, inclusivity, and transparency, primarily focusing on setting the best technical architecture and values for builders in the long term.
In fact, Bitcoin and Ethereum's governance is the same. Changing the protocol requires a rough consensus among miners, users, and developers, so Ethereum's changes are much slower than many VC-type expectations. But in the long run, this helps achieve more reliable neutrality, a trade-off consciously made by Ethereum's leadership.
The Ethereum mainnet currently has 4 execution clients (Geth, Nethermind, Besu, and Erigon) and 5 consensus clients (Prysm, Lighthouse, Teku, Nimbus, and Lodestar) actively maintaining it. Client diversity and avoiding single points of failure have always been a focus. Additionally, the mainnet and L2 EVM environment have become the most trusted development environment for developers and companies.
Today, Michael Saylor's entity-owned BTC supply is much larger than Vitalik and the Ethereum Foundation's ETH supply. Bitcoin leaders are more quickly aligning with governments by supporting politicians and lobbying. This might be a result of Bitcoin going further and attracting a broader set of stakeholders, which may seem to benefit Bitcoin.
However, the risk of Michael Saylor and government lobbying damaging credible neutrality is real, in contrast to Vitalik and EF resisting the impulse to react to market conditions by chasing investment narratives. Ethereum's leadership focuses on builders, and Ethereum is now much larger than any individual or team. The most important people for Ethereum's future may be these unsung builders.
Ethereum's Utility
Since Bitcoin introduced a trusted neutral, internet-native value storage tool to the world, Ethereum has been dominating developers' attention and has been the birthplace of every major new crypto use case beyond currency, significantly drawing new people into the crypto field. Ethereum is the home of specific use cases such as decentralized finance (DeFi), Non-Fungible Token (NFT), prediction markets, decentralized social networks, decentralized identity, real-world assets (RWA), stablecoins, etc. All these new use cases provide Ethereum's trusted neutral, value storage characteristics by distributing EVM wallets and ETH.
Some of these use cases began on the Ethereum mainnet and are now gradually moving to L2 chains built on top of Ethereum. Developers prefer a trusted development environment that provides them with more control and better economic benefits than L1, which is exactly what the Ethereum L2 architecture offers. Developers building on L2 or L3 not only gain more engagement but also enjoy Ethereum's security, EVM's network effects, and expand the consensus of ETH as a trusted neutral, internet-native value storage tool. Some use case developers might prefer to stay on the mainnet, given its liquidity advantages that L2 cannot provide. Both outcomes are beneficial for ETH.
There have been many debates about whether L2 adds value to ETH or damages ETH's value by cannibalizing mainnet fees. Standard Chartered recently lowered ETH's price target from $10,000 to $4,000 based on Coinbase's L2 Base cannibalizing mainnet fees. This perspective overlooks the bigger picture.
The main benefit of L2 is not contributing fees to the mainnet, but expanding the consensus of Ethereum as a trusted neutral, internet-native value storage tool by distributing EVM wallets and ETH. ETH supply can be reduced based on the usage of the Ethereum ecosystem (including mainnet and L2), a feature that has already made ETH more deflationary than BTC, which is a good characteristic. However, fees are not the primary advantage of applications and L2.
Ethereum is now the primary ecosystem for new developers and large companies like JPMorgan, BlackRock, Coinbase, and Robinhood to tokenize assets. Its ecosystem is increasingly expanding from crypto-native assets like NFTs and Tokens to areas such as US dollars, government bonds, stocks, bonds, private credit, and real estate. Whether these activities occur on the mainnet or L2, and how much fees L2 ultimately pays to the mainnet, will affect the scale of ETH burning. But even if all these activities happen on L2 with minimal fees paid to the mainnet, the adoption of these use cases will still expand the consensus of ETH as a trusted neutral, internet-native value storage tool.
Opportunity Over $100 Trillion
A trusted neutral, internet-native value storage tool is the largest market opportunity in today's world. The total market value of gold is about $20 trillion, and global M2 (broad money supply) is about $100 trillion, so it can be said that this is a market opportunity of over $100 trillion.
Cryptocurrencies that achieve social scalability through trusted neutrality and utility are most capable of seizing this opportunity. Currently, the narrative around this is not strong, but I have learned in life and the crypto field that often the stronger the narrative, the further from the truth (and vice versa). Those who remain focused and are not tempted by chasing trends will be rewarded.
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