When Crypto Rebuilt the Middle Man — and Then Nearly Repeated Its Mistakes

How a bold promise turned into a messy, real-world change

A few years back the loudest pitch in crypto was simple: remove the middle man. Use code and open networks so people trade, borrow, lend and store value without banks, brokers or other gatekeepers. That idea was exciting because it promised cheaper, faster services and fewer single points of failure.

What we have now is a mixed result. In many cases crypto has indeed rebuilt core services in software: decentralized exchanges, staking systems, and open lending markets all do jobs that used to belong to institutions. But those services have not eliminated intermediaries so much as replatformed them. New middlemen have appeared — validators, protocol treasuries, token distribution schemes, smart contract owners and powerful wallets that extract fees, priority or influence in ways that often look familiar and sometimes worse than the old system.

The real-world impact is plain. Ordinary users can access services once reserved for banks, but they also face new points of failure and new ways for value to be taken from them. That matters because many people who adopt crypto expect a fairer system. Instead, some are finding a different sort of rent being collected from their activity.

How the middle man used to work — and what crypto changed

Historically, middlemen were physical or legal firms: banks cleared payments, brokers matched buyers and sellers, and exchanges held customer funds. They made systems run, but they also charged fees, controlled access, and sometimes failed or abused power.

Crypto rewired those roles. Smart contracts can match orders without a central matching engine. Proof-of-stake networks can secure ledgers with validator nodes instead of central banks. Token incentives can replace salaries and fees, paying participants to operate platforms. That replatforming is powerful: it created permissionless markets and opened access to people who were previously shut out.

But the technical reshuffle didn’t erase incentives. It shifted them. Where a bank once profited from spread and lending books, a modern protocol can reward a tiny set of insiders with token allocations, let miners or bots capture execution profits, or embed high fees that flow to a protocol fund. In short, crypto replaced well-known intermediaries with new actors who perform similar economic functions — and sometimes worse governance structures.

Why critics call the culture ‘short-sighted, selfish and greedy’ — and why that critique sticks

Some of the loudest complaints about crypto are about behavior, not technology. Critics point to token launches that reward insiders, liquidity schemes that favor whales, clever trading bots that skim value, and projects that prioritize growth over security or users. Those are not abstract faults: they are patterns that repeatedly produce losses for ordinary users.

Take token distribution. When a huge share of a token goes to founders, early backers or a multisig wallet, those stakeholders have outsized power. They can sell into liquidity, influence governance votes, or simply sit on a supply that can be released suddenly. That creates an incentive to chase short-term price moves instead of building long-term utility.

Then there’s extraction at the protocol level. Maximal extractable value — the profit validators or block proposers can take by reordering or inserting transactions — turns ordinary users into revenue sources. Flash loans, sandwich attacks and high gas fees on busy chains are not small nuisances for average users; they regularly convert intended gains into losses for everyone except the extractors.

Layer on scams, bad code and governance capture, and the tone of the criticism becomes understandable. People see technology presented as liberating, and then watch value diverted to a few actors who benefit from complexity and opacity. That’s what makes the charge of selfishness land: the system often rewards cleverness that harms ordinary participants.

What this shift means for projects, users and trust in the ecosystem

The rise of these new middlemen matters for three broad reasons. First, it changes where risk sits. In old finance risk often lived with regulated firms; today much of it lives inside smart contracts and token economies. If a contract is buggy or governance is capture-able, users bear the cost.

Second, it affects growth. Projects that reward insiders more than users may grow fast but struggle to build lasting networks. Communities and markets that depend on fair, predictable incentives are fragile when a few actors can move prices or block changes.

Third, it raises political and regulatory stakes. When visible extractive behavior and repeated losses hit everyday people, lawmakers and regulators pay attention. That can lead to heavy-handed rules that harm innovation. The industry’s future depends on whether it can show it is maturing rather than just repeating old mistakes in a new shell.

Practical, constructive steps the industry should take now

Fixing this doesn’t require abandoning crypto’s core ideas. It means designing systems with clearer, fairer incentives and more transparent power. Practical steps include tighter token vesting and allocation rules so insiders can’t dump supply quickly; stronger on-chain accountability for treasury spending; and improved tooling to reduce transaction-level extraction like sandwich attacks.

Projects should also make governance real: meaningful participation, checks on concentrated power, and clearer upgrade paths. Auditing smart contracts remains important, but governance and economic design deserve equal attention. For advocates, the task is to show scalable models that reward users and builders, not just early backers. For critics, the task is pushing for standards that prevent repeat harm without choking genuine innovation.

In short, crypto did reinvent the middle man — and that reinvention can be better. The industry’s next chapter should be about turning new technical power into systems that treat ordinary users fairly, rather than simply moving rent-seeking into a new codebase.

Photo: Karola G / Pexels

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