How Cryptocurrency Has Strayed from Its Original Vision, Prioritizing Infrastructure Innovation While Ignoring the Monetary Foundation Needed to Fulfill Its Financial Sovereignty Commitment?
Written by: Zeus
Translated by: Block unicorn
Introduction
In a recent article, I explored how cryptocurrency has strayed from its original vision, prioritizing infrastructure innovation while neglecting the monetary foundation needed to fulfill its financial sovereignty commitment. I traced how this deviation has led to a disconnect between technological achievements and sustainable value creation.
What I have not fully explored is how the industry has fundamentally misjudged which applications are truly worth developing. This misjudgment is at the core of cryptocurrency's current predicament and points to the direction where true value may ultimately emerge.
The Illusion of the Application Layer
The narrative of cryptocurrency has gone through several phases, but a consistent theme has been the promise of revolutionary applications beyond finance. Smart contract platforms are positioned as the foundation of a new digital economy, with value flowing from the application layer back to the infrastructure. This narrative accelerated with the "Fat Protocol Theory," which posits that unlike the internet's TCP/IP capturing little value while Facebook and Google capture billions, blockchain protocols will accumulate most of the value.
This has formed a specific mental model: a Layer 1 blockchain gains value by supporting a diverse application ecosystem, much like Apple's App Store or Microsoft's Windows creates value through third-party software.
However, there is a fundamental misjudgment here: cryptocurrency attempts to impose financialization on areas where it is not naturally applicable, and these areas have little real value gain.
Unlike the internet, which digitized existing human activities (business, communication, entertainment), cryptocurrency attempts to inject financial mechanisms into activities that do not need or want them. The assumption is that everything from social media to gaming to identity management will benefit from financialization and being "on-chain."
The reality is starkly different:
Tokenized social applications have largely failed to achieve mainstream adoption, with user engagement primarily driven by token incentives rather than underlying utility.
Gaming applications continue to face resistance from traditional gaming communities, who believe that financialization undermines rather than enhances the gaming experience.
Identity and reputation systems struggle to demonstrate clear advantages over traditional methods when involving token economics.
This is not merely a matter of "we are still early." It reflects a deeper truth: the purpose of finance is to serve as a tool for resource allocation, not an end in itself. Financializing activities like social interaction or entertainment misunderstands the core role of finance in society.
The Distinction in the Gaming Market
It is worth discussing some seemingly counterexample cases, such as the CS:GO skin market or microtransaction systems in popular games. These successful markets appear to contradict the argument for gaming financialization, but they highlight an important distinction:
These markets represent closed ecosystems of optional cosmetics or collectibles that coexist with gameplay, rather than attempting to financialize the core gameplay itself. They are more akin to commodity or memorabilia markets, rather than fundamentally changing how games operate.
When crypto games attempt to financialize actual game mechanics—making playing games explicitly about making money—they fundamentally alter the player experience, often undermining the essence of what makes games appealing. The key insight is not that games cannot have markets; rather, turning gameplay itself into a financial activity changes its fundamental nature.
Blockchain Technology and Trustlessness
A key distinction often overlooked in crypto discussions is the difference between blockchain technology itself and the property of trustlessness. The two are not synonymous:
Blockchain technology is a set of technical capabilities for creating distributed, append-only ledgers with consensus mechanisms.
Trustlessness is a specific property that allows transactions to be executed without relying on trusted third parties.
Trustlessness incurs tangible costs—in terms of efficiency, complexity, and resource requirements. These costs need to be justified explicitly and exist only in specific use cases.
When entities like Dubai use distributed ledger technology to manage property records, they primarily leverage the technology to enhance efficiency and transparency, rather than pursuing trustlessness. The land department remains a trusted authority, with blockchain serving merely as a more efficient database. This distinction is crucial as it reveals where the true value lies in these systems.
The key insight is that trustlessness has real value only in a few areas. From property records to identity verification to supply chain management, most activities fundamentally require trusted entities for real-world execution or verification. Migrating ledgers to blockchain does not change this reality—it merely changes the technology used to manage records.
Cost-Benefit Analysis
This brings a direct cost-benefit analysis for each platform:
Does the platform genuinely benefit from removing trusted intermediaries?
Does this benefit outweigh the efficiency costs of achieving trustlessness?
For most non-financial applications, at least one of these questions will have a "no" answer. Either they do not genuinely benefit from trustlessness (as external enforcement remains necessary), or the benefits do not offset the costs.
This explains why institutional adoption of blockchain technology is primarily focused on efficiency gains rather than trustlessness. When traditional financial institutions tokenize assets on Ethereum (a situation that is becoming more common), they leverage the network for operational advantages or market entry while maintaining traditional trust models. Blockchain serves as improved infrastructure rather than a mechanism to replace trust.
From an investment perspective, this creates a challenging dynamic: the most valuable part of blockchain (the technology itself) can be adopted without necessarily bringing value to a specific chain or token. Traditional institutions can implement private chains or use existing public chains as infrastructure while retaining control over the most valuable layers—assets and monetary policy.
The Path to Adaptation
As this reality becomes clearer, we see a natural adaptation process unfolding:
Non-tokenized economic technology adoption: Traditional institutions adopt blockchain technology while bypassing speculative token economies, using it as a better "pipeline" for existing financial activities.
Efficiency over revolution: The focus shifts from replacing existing systems to making them gradually more efficient.
Value migration: Value primarily flows to specific applications with clear utility rather than underlying infrastructure tokens.
Narrative evolution: The industry gradually readjusts its expression of value creation to align with technological realities.
This is actually a good thing: why should an activity driver siphon off all value from value creators? This rent-seeking behavior is, in fact, far removed from the capitalist ideals that most believe underpin the entire movement. If the primary means of value capture were TCP/IP rather than the applications built on it (as the "Fat Protocol Theory" suggests), the internet would look very different (almost certainly worse!). The industry is not in decline—it is finally confronting reality. The technology itself is valuable and likely to continue evolving and integrating with existing systems. However, the distribution of value within the ecosystem may differ significantly from early narratives.
The Root of the Problem: Abandoned Intent
To understand how we got here, we must return to the origins of cryptocurrency. Bitcoin did not emerge as a universal computing platform or a foundation for the tokenization of everything. It emerged explicitly as money—a response to the 2008 financial crisis and the failures of centralized monetary policy.
Its fundamental insight was not "everything should be on-chain," but rather "money should not rely on trusted intermediaries."
As the industry evolved, this intent has been diluted or even abandoned by an increasing number of projects. Projects like Ethereum expanded the technical capabilities of blockchain but simultaneously diluted its focus.
This has created a strange disconnect in the ecosystem:
Bitcoin retains its monetary centrality but lacks programmability beyond basic transfer functions.
Smart contract platforms offer programmability but abandon monetary innovation in favor of supporting the idea of "blockchain for everything."
This divergence may be the industry's most severe misdirection. The industry did not build more complex capabilities on the foundation of Bitcoin's monetary innovation but instead turned to financializing everything else—this regressive approach misjudged both the problem and the solution.
The Path Forward: Returning to Money
In my view, the path forward is to reconnect the significantly improved technical capabilities of blockchain with its original monetary goals. Not as a universal solution to all problems, but by focusing on creating better money.
Money fits perfectly with blockchain for the following reasons:
Trustlessness is crucial: Unlike most other applications that require external enforcement, money can operate entirely within the digital realm, enforcing rules solely through code.
Native digital operation: Money does not need to map digital records to physical reality; it can exist natively in a digital environment.
Clear value proposition: Removing intermediaries from monetary systems can bring real efficiency and sovereignty advantages.
Natural connection to existing financial applications: The most successful crypto applications (such as trading, lending, etc.) are inherently linked to monetary innovation.
Perhaps most importantly, money is essentially an infrastructure layer upon which everything else is built, without needing to engage deeply with how it operates. Yet cryptocurrency has disrupted this natural relationship. The industry has not created a seamless integration of existing economic activities with money but has attempted to reconstruct all economic activities around blockchain.
The power of traditional money is reflected in this practical layer approach. Businesses accept dollars without needing to understand the Federal Reserve. Exporters manage currency risk without needing to rebuild their entire business around monetary policy. Individuals store value without needing to become experts in monetary theory. Money facilitates economic activity rather than dominating it.
On-chain money should operate in the same way—available to off-chain businesses through simple interfaces, just as digital dollars can be used without understanding banking infrastructure. Businesses, entities, and individuals can remain entirely off-chain while leveraging the specific advantages of blockchain-based money—just as they use traditional banking infrastructure today without becoming part of it.
Rather than attempting to build "Web3"—a vague concept that seeks to financialize everything—the industry will find more sustainable value by focusing on building better money. Not merely as a speculative asset or inflation hedge, but as a complete monetary system equipped with mechanisms that allow it to operate reliably under different market conditions.
As we consider the global monetary landscape, this focus becomes even more compelling. The evolution of the global monetary system faces unprecedented coordination challenges. The inherent instability of the current system, coupled with escalating geopolitical tensions, creates a genuine need for neutral alternatives.
The tragedy of the current landscape lies not only in the misallocation of resources but also in the missed opportunities. While incremental improvements to financial infrastructure are indeed valuable, they pale in comparison to the transformative potential of addressing the fundamental challenges of money itself.
The next stage of cryptocurrency's evolution may not come from further broadening its scope but from returning to and realizing its original goals. Not as a universal solution to all problems, but as a reliable monetary infrastructure that provides a solid foundation for everything else—without needing to deeply consider how it operates.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
