The bull case assumes institutions will eventually adopt blockchain for traditional finance at massive scale. But what if they don’t? Not because the technology fails, but because the value proposition isn’t compelling enough to justify migration costs.
Traditional securities settlement works. Yes it takes T+1 or T+2. Yes fees exist. Yes intermediaries are involved. But the system processes trillions daily with acceptable risk and established legal frameworks. Instant settlement sounds great until you realize most institutional workflows aren’t bottlenecked by settlement speed.
A pension fund rebalancing quarterly doesn’t care if settlement takes two days versus two seconds. An insurance company holding bonds to maturity doesn’t need secondary market liquidity that instant settlement enables. Corporate treasurers managing cash don’t face problems that blockchain solves.
The use cases blockchain clearly improves involve either currently impossible activities or highly inefficient processes. Fractional ownership of expensive assets like real estate genuinely benefits from tokenization. 24/7 trading of securities enables new strategies. Cross-border settlement without correspondent banking reduces friction.
But these improvements are marginal not revolutionary for most institutional workflows. Blockchain advocates constantly promise massive disruption while traditional finance keeps working adequately without it. Inertia is powerful when existing systems function reasonably well.
Regulatory uncertainty adds costs that might exceed efficiency gains. Implementing blockchain infrastructure requires legal review, compliance overhauls, staff training, integration with legacy systems. These costs are certain and upfront. Benefits are speculative and long-term.
Institutions might rationally conclude that traditional rails work well enough and blockchain migration isn’t worth the effort. A few adventurous institutions experiment, some pilot programs show modest benefits, but mass adoption never happens because the value isn’t sufficient.
Dusk could build perfect institutional infrastructure and still fail if institutions simply don’t want to migrate. Technology quality doesn’t guarantee adoption when switching costs are high and incumbent solutions are acceptable.
The €300M NPEX securities tokenization tests this theory. If it works smoothly and demonstrates clear benefits, maybe adoption accelerates. If it launches successfully but institutions collectively shrug because traditional methods work fine, the entire thesis collapses.
Crypto tends toward technological determinism—assuming better technology inevitably wins. Traditional finance operates on institutional inertia—assuming existing solutions persist unless forced change becomes necessary. Which force prevails determines whether Dusk’s market is huge or permanently niche.