When the post-2000 generation who entered the circle in 2020 are called OG, reviewing the three cycles of the crypto industry in the past ten years.

When the post-2000 generation who entered the circle in 2020 are called OG, reviewing the three cycles of the crypto industry in the past ten years.

This issue does not specifically analyze the technology and business of the crypto industry, but expresses a sentiment – Binance has been established for six years!? Binance has only been established for six years?!

These two completely opposite thoughts came to mind at the same time. After all, last year I heard that the post-00s who entered the circle because of NFT were called OGs in 2020… So 2017 is undoubtedly a long time ago, and 2013 is even ancient times.

From 2013 to 2023, ten years is very short in the history of technology or business, but this open drama called “crypto” (or Web3, blockchain, coin circle) constantly sees people entering and leaving, performing countless stories of ups and downs about gaining financial freedom (such as becoming the richest person in the Chinese world) or losing fortunes and lives (such as dying in Bali).

As a practitioner in the crypto industry since 2018, I have experienced and heard stories that can be written in 12 issues of “Storytelling”. But I want to skip the stories and talk directly about the thoughts based on the stories.

You can think of it as an industry analysis model that took five years to build, and the parameter model is still being continuously adjusted.

About the industry map

A few days ago, I was interviewed by a Bilibili up master, and I saidthere are not many opportunities left for ordinary people in this era, but there are still opportunities in the crypto industry, not only because it is still growing rapidly, but also because there are many idiots here.

I firmly believe that the technology of crypto will reconstruct many things in the classical Internet world that make us unhappy. It has just begun, but what truly gives me courage is the contrast with my peers (likewise, this is also why I don’t go into the AI industry), they even lack basic common sense.

People who lack common sense about public chains will have a mysterious belief in “high-performance public chains”. They place the future of blockchain on various “Ethereum killers”, but all these killers can actually do is to issue tokens for high-performance distributed networks.

People who lack common sense about applications will have an obsession with “Web3 products with Web2 product experiences”. However, the solution is just to issue tokens for Web2 products.

People who lack common sense about the market will have a mysterious confidence in “crypto having an independent market”. They can only explain the fluctuations in the secondary market with “pump and dump schemes”, and cannot understand the transmission of risks and returns in complex financial markets.

Soif you want to make money in this industry that lacks common sense, it is actually very easy – just buy BTC and ETH, and you can avoid many unnecessary pitfalls and enjoy the benefits of the industry’s rapid growth. Of course, if you want to truly achieve financial freedom, you also need to combine cognition, luck, and execution. And the latter two are largely determined by cognition.

Although we are in the same industry, everyone’s industry map is completely different. Most of them are just randomly picked up pieces, and then mistakenly take the pieces as the whole, and use this to explain the entire industry, which inevitably leads to various misjudgments.

Building an industry map for a person often starts at the intersection of the time node and the track entry point when they enter the crypto industry, and then continues to follow the inertia. This is why many times you can guess from the other person’s remarks which year and which track they entered.

People who entered in 2017 and people who entered in 2020 have completely different perceptions of the industry, and the difference between entering from mining and entering from NFT or DeFi can be described as “cross-dimensional”.

So when we have a conversation (just like now), we are not discussing the same thing from the same standpoint, but standing on the partial knowledge we each have, trying to understand the partial knowledge described by the other person, and it is easy to think the other person is an idiot.

Of course, this is also the exciting part of the crypto industry—different people occupy different ecological niches and try their best to expand their living space, forming a “multidimensional space resource” nested with each other and competing with each other.

We are all just betting based on our own ecological niche and cognitive map. Time is the only criterion to test idiots. Before the answer is revealed, all we can do is to systematically expand our industry map as much as possible and iterate it continuously.

About industry influence

The crypto industry is still undergoing rapid iterations, which means that its industry map is not like the pig industry that has been thoroughly studied (to the extent that a summer intern can verify the data like solving arithmetic problems and derive a nearly accurate conclusion), and the difficulty lies in the unknown direction of iteration.

The ultimate direction of industry iteration is determined by utility (such as the utility of DEX based on AMM far exceeds that of centralized exchanges based on off-chain order books), but before the answer is revealed, the entire industry’s betting direction is actually just following the trend, such as the call of community leaders, such as the investment preferences of capital. However, the idiots who follow the trend think it is the result of their independent thinking.

Of course, I do not exclude following the trend, because following the trend is also a way to make money, but the skill of following the trend lies not in accurately predicting utility, but in a deep understanding of behavioral finance. You need to keenly capture industry signals and follow them, just ensure that you are not the last one to get involved (airdrops are the lowest-cost way to follow the trend).

But the problem is that many people can only believe in the leader unconditionally, like lambs, without knowing whether they are going to a place with lush grass or a slaughterhouse. They can only choose the direction to follow based on industry influence, and the only industry influence they can see is hot money. To put it bluntly, they can only be led by hot money, and they cannot even distinguish the difference between different hot money.

May I ask, can the hot money from rental cryptocurrency youth, the hot money from multi-level marketing landlords, the hot money from those who have just left Web2 big companies, and the hot money from a16z all form market signals (boosting a currency, even a concept) and mobilize industry resources? Are the investment preferences of the owners behind these hot money the same? And have they really bet on the correct direction of the crypto industry’s iteration?

Those who do not have an industry map at all are not aware that behind the hot money are countless different real individuals. In their view, as long as it is hot money, it possesses the “power of capital,” so they blindly follow the shouts in the market.

This is an attempt to understand the industry using the personification thinking of children (just like the ancient ancestors could only use myths to explain natural laws beyond their own understanding). Although in the words of Li Xiaolai, “stupid consensus is also consensus,” if you want to make money from stupid people, the prerequisite is that you must have a deep resonance with the stupid people.

This is like the Dubai tycoons and the Token Fund in third-tier cities, which are destined to have industry maps and investment motivations that are completely unrelated. If you don’t face them directly, you won’t be able to capture these hot money.

My attitude towards hot money is not sour grapes, but I want to emphasize that this industry is composed of many people with different demands from different fields. The influx of hot money will definitely affect the direction of the industry (after all, who doesn’t want to make money), but in the long run, it will be determined by whether it can bring real utility. So don’t be easily deceived by the shouts in the industry (last year’s typical performance was that Liang Xi became a top streamer, which is enough to illustrate the stupidity of the industry).

In the past ten years, few individuals or institutions have been able to survive more than two or three bull and bear markets without being eliminated by the crypto industry (for example, how many are left today from those who were established with Binance in 2017?). It is easy to have the idea of “someone else can take their place,” but this is absolutely not a reason to embrace all hot money, because historically, the shouts from hot money rarely last more than two or three months…

So we still need to return to establishing an industry cognitive map in order to distinguish between hot money and real utility in the industry.

About industry cycles

If it is understandable that an industry map has not been established, it is likely because one is new to the industry and has not had time to establish it. But if one is already an old “leek,” but cannot distinguish the hot money in the industry, then it is a manifestation of mediocre cognition. But there is an even worse cognition that can be described as “low” — they are not aware of the existence of industry cycles.

This is exactly the strongest driving force for me to stay in this industry. As long as there are continuous fools, there will be continuous opportunities in this industry, because they will continuously pay the market tuition fees, and these tuition fees will circulate in unexpected ways and flow to the real builders, thus accelerating the development of truly effective projects and ultimately promoting the industry’s development.

Those who are not aware of the industry cycle are like mushrooms that do not know the changing seasons. Naturally, you will also be silent like summer insects on ice. They repeatedly make low-level mistakes, until they are eliminated by the industry. But before being eliminated, these people who lack awe of the industry cycle often have a sense of superiority and feel that those who awe the industry cycle are conservative or even outdated, and are a manifestation of not keeping up with the rapid iteration of the crypto industry.

I have seen countless fools who firmly believe that the crypto market can have an independent market trend. They ignore the external financial cycle and cannot understand the technology trend. But it is the resonance between the external financial cycle and the internal technology cycle that forms one bull-bear market after another.

The two key factors that determine the financial cycle of the crypto industry are macro liquidity and Bitcoin halving, and the latter largely coincides with the rise and fall cycle of the former, so we only need to focus on macro liquidity.

Of course, macro liquidity itself is a more complex field than the crypto industry. We don’t need to be as proficient as bond or forex researchers, but we need to follow the most basic common sense (even if we step back, we need to understand which stage of macro liquidity we are currently in).

In this industry, you will often hear views that lack common sense, such as “the approval of Bitcoin ETF by the United States will bring a bull market” or “the Fed will cut interest rates next”.

The financial cycle determined by external macro liquidity is relatively clear, but the internal technology cycle of the crypto industry is very difficult to judge. However, looking back at the past decade, we can still find some patterns.

Each cycle of technology always starts with the outbreak of public chains, and then applications bloom (but not necessarily successful). This is because the narrative of public chains is grand enough to attract capital layout, and the narrative of applications is easy to understand, attracting entrepreneurs and retail investors to follow suit. However, most of these are short-lived created by hot money. When macro liquidity enters a recession, they will end up in a mess. The truly viable technology must be components reconstructed based on the logic of crypto, and they must also be components that conform to the historical process of the industry.

How to understand all of this in a popular and understandable way? It may be helpful to compare public chains to continents and applications to buildings on the continent.

Bitcoin is the first new continent on the crypto planet, and many geeks who are dissatisfied with the current order came here. Later, many people felt bored and opened up new continents. For example, some people developed side chains nearby, and some went further to develop public chains like Ethereum, and then began to settle on the new road.

Buildings on the crypto planet must be constructed in accordance with crypto logic, rather than directly using the logic of the Web2 world. Therefore, starting from Bitcoin, construction was carried out from scratch, and the most basic public chain and the most basic application layer protocol based on the public chain have been built (although not many), and construction is still ongoing from the bottom up.

Although from the perspective of the historical process of the crypto industry, buildings that have not undergone logical reconstruction based on crypto logic are destined to collapse like castles in the air, it does not prevent the most attractive narratives in the market from always being about high-performance public chains and applications, because these are the easiest for outsiders to understand.

So, what will happen in 2024 in terms of industry cycles?

About industry opportunities

In 2013, the only commercial demand in the crypto industry was trading and mining, which were the earliest industry opportunities. Pumpkin Zhang, Roast Cat, Xu Mingxing, and Li Lin were the ones who realized and captured this opportunity.

In addition, some people realized from the perspective of technology logic that blockchain actually needs a Turing-complete scripting language (which contradicts Satoshi Nakamoto’s original intention), so there are Bitcoin sidechains like RSK and Ethereum, which have become the technological driving force for the next round of industry cycles (otherwise the entire industry would simply repeat the previous bull market).

In 2017, with the industry growing by tens of times in size, the demand for trading and mining remained strong and continued to be a huge industry opportunity. While the previous mining and trading giants were thriving, Zhao Changpeng also captured this opportunity.

In addition, with Bitcoin sidechains and Ethereum supporting smarter scripts, very early applications such as NFTs, blockchain games, and DeFi were born on these new frontiers. Although now, the applications that truly fit the industry process at that time must be pure code-based DeFi.

But people were not satisfied with the performance and functionality of blockchain, so we saw the emergence of public chains like EOS, which raised $4 billion in public funding, and Filecoin, which sold billions of dollars worth of storage miners. Polkadot and Cosmos were also born at this time, but whether they can shine brightly still needs to be verified in the next bull market.

In 2020, it encountered an unprecedented flood of macro-market liquidity, flowing into various risk markets, including the crypto industry.

As usual, this hot money continued to enrich trading and mining, but at this point, these two businesses have become industry infrastructure like water, electricity, and gas. The ecological niche has been occupied by pioneers, and only a few people have seized the few opportunities available (probably three types) – mining for new public chains and withdrawing in time (very difficult, most miners lose money due to various factors), establishing trusted exchanges for Wall Street (Coinbase, which was founded in 2012, finally caught up with this curve, and the emerging FTX also became a top player in the process), and establishing DEX on major public chains.

The real growth of this industry depends on public chains and applications. Ethereum was the first to take on liquidity, with the highest quality developers and the richest underlying protocols (especially DeFi), so it exploded during the DeFi Summer when liquidity first entered.

However, Ethereum’s capacity is indeed limited, and the excess liquidity overflowed from Ethereum. At this time, EOS, which was once highly anticipated, lost its advantages. Polkadot and Cosmos were still immature at that time, so they initially flocked to TRON, which copied and modified Ethereum. The opportunity of the industry was given to Justin Sun, but he scared away the developers by trying to control the top DeFi project on TRON just two months after acquiring it.

Justin Sun’s short-term thinking gave the opportunity to Binance Smart Chain (BSC), a public chain hastily created. It can be said that this directly contributed to the wealth of the richest Chinese person, Zhao Changpeng.

The unprecedented flood of liquidity made this bull market last for a long time. NFT collectibles, blockchain games, SocialFi, and other concepts successively absorbed the excess hot money after DeFi, until the Federal Reserve’s interest rate hike halted the frenzy.

So, what opportunities will the crypto industry have in 2024?

If nothing unexpected happens, 2024 will be the transition year from macro liquidity contraction to expansion (it is very likely that interest rate cuts will start in 2025), and a new wave of hot money will flow in.

Trading and mining will still create wealth, but these two areas seem to have no room for newcomers to rise, unless they mine new coins and withdraw in time, or explore more compliant trading markets. But this has almost nothing to do with the industry professionals today because the resource allocation involved far exceeds that of all institutions in the crypto industry. We will analyze the matter of RWA in the next article.

The public chain field is worth paying attention to, especially since the performance of technical iteration has been very weak in the two cycles since 2017. However, now the technologies of Polkadot and Cosmos, the two cross-chain ecosystems, are becoming more mature, and the exploration of ZK technology in blockchain is full of imagination.

In addition, the previous batch of garbage public chains (such as Aptos and Sui) will definitely pump and then cash out and leave, just like GXC and IOST in 2020, because it is rare for a public chain like EOS to become a vegetable directly.

As for ZK public chains, it can be mentioned that many hyped ZK public chains are essentially “adding ZK verification to a distributed network and issuing a token.” It can exist but is not necessary. The real future lies in those public chains that can build advanced smart contracts based on ZK (such as StareNet).

As for the application field, in every bull market, there are a lot of idiots who blindly pursue applications that can compete with Web2 without considering the development process of industry infrastructure. Therefore, the narrative of blockchain transformation in 2017 will undoubtedly become a hot topic in the industry again in 2024.

However, I am extremely pessimistic about high-performance public chains or applications implemented with Web2 logic, because there is no need for them to be on the blockchain at all. For example, projects like Helium that primarily involve order and data transactions can even be addressed by purchasing a mini-program from Youzan for 30,000 yuan. But consensus, as foolish as it may be, is still consensus, and if it can make money, why not? This is indeed a clear (but temporary) business opportunity.

As for how to use the logic of crypto to build derivatives, social products, and other applications from the bottom up, “The Harsh Whistle” will continue to track and write articles to analyze.


Overall, whether in the crypto industry as an entrepreneur or an investor, it is important to build your own industry analysis model as much as possible, focusing on the following three dimensions:

1. Expand your industry knowledge. Each person occupies their own position in their respective industry ecosystem and should strive to expand their living space. This means that the starting point of entering the industry is just the entry point, and one must continue to absorb knowledge from new fields. It may be the best strategy to become a level-eight machinist in a state-owned enterprise, but it does not apply to the constantly changing crypto industry.

2. Differentiate industry influence. Industry influence is like the shouting in the market. If you lack knowledge in an unfamiliar field, it is easy to follow the shouting in the market. While it is possible to make money by following the trend, you must be able to distinguish the groups behind the different shouts and understand them; otherwise, you may become the one left holding the bag.

3. Understand industry cycles. The resonance between external financial cycles and internal technological cycles creates one bull-bear market after another. By knowing what to do at each stage, you can avoid the fate of most “leeks.” First, do not have the idea of fighting against the financial cycle. Second, believe in the internal technological progress of crypto (currently, the logic of crypto is only reconstructing the application layer protocol, so do not expect applications on par with Web2).

When you have established your own industry knowledge, have the ability to differentiate industry influence, and understand and respect industry cycles, it becomes much easier to capture opportunities. Whether it is to anticipate future technological trends or to capture hot money and follow the trend, you will know clearly what you are doing and not be misled by the market’s shouting.

Finally, returning to the sentiment expressed at the beginning of this article-“Binance has been established for six years!?” “Binance has only been established for six years?!” Opportunities for ordinary people in this era are limited, but the crypto industry still has them. I believe that for most people entering the industry, it is like the left-behind children in Daliang Mountain choosing to fight in an octagonal cage. This is one of the few opportunities that can change their lives.

Actually, keeping up with the growth rate of this industry does not require extraordinary judgment. As long as you try to embrace common sense and accumulate first-hand experience, you will not be abandoned by the industry. “The piercing Whistle” itself is a stepping stone, looking forward to experiencing the ups and downs of the story with you.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!


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