From Deterministic Optimism to Deterministic Pessimism, the real opportunity lies hidden behind disillusionment

Original Article Title: The Crypto Arc
Original Author: Matti
Original Translation: zhouzhou, BlockBeats

Editor's Note: This article outlines the evolution path of the crypto industry from early idealism to realism, pointing out that we are currently at a crucial turning point post-disillusionment. Despite most projects tending towards imitation and conservatism, true opportunities still lurk on the edge of "deterministic pessimism."

The following is the original content (slightly reorganized for better readability):

Here I bring another mash-up article inspired by Peter Thiel. As a self-proclaimed "Thielian," I often think about the future through the lens of his classic work "Zero to One." Thiel's analytical framework is flexible and can be used to dissect various ideas, trends, and movements. However, sometimes it is more like Wittgenstein's ruler—it heavily depends on the observer's standpoint and does not always provide a clear and consistent view.

As a crypto investor, I often better understand potential opportunities by analyzing narratives. At this industry inflection point—where we are at a crucial moment of narrowing the arbitrage space of the emerging technology market—I am also pondering how to discover and inspire higher-quality ideas and products.

Through Thiel's perspective, I see the timeline of the crypto world as an evolution: from Bitcoin's early days of "deterministic optimism," to the "nondeterministic optimism" under the grand vision of Web3—where finance was ultimately seen as a killer app; then to the "nondeterministic pessimism" of the meme coin casino era; and now, in the current phase where regulation is becoming clearer, we seem to be strategically embracing a "deterministic pessimism."

This is a journey that starts from cypherpunk idealism, goes through the frenzy of startups, slides into a decadent quagmire, and finally moves towards standardization.

Is this trajectory generally present in various trends? A revolutionary idea, after being partially validated, is often mythologized as a panacea; when it fails to meet those lofty expectations, it is cursed, and eventually gradually assimilates into the status quo. The revolution is never truly completed, yet we are still in the closed loop of Gartner's hype cycle, repeatedly enacting a (satisfactory for some) cycle.

In the crypto field, this grand hype cycle is often overshadowed by price volatility. Each crypto cycle—from Bitcoin, the ICO frenzy promising to build a "world computer," DeFi, meme coins, to the current regulatory integration and alignment with traditional finance—all appear to be fractals of a larger pattern. Currently, we are in a "disillusionment trough." According to Carlota Perez's technology surge framework, this is a crucial inflection point.

Web3 once promised to "on-chain" Web2's profit model, decentralize, and tokenize it. However, Web2 or Web3 is not a place, nor is it a clearly distinguishable "thing." As I said a few years ago, it is more like a "user preference"; and today, this preference still belongs to a niche. If you always need to rely on old-world language to explain new things, then you are not actually creating something truly new.

The cryptocurrency industry is no longer a frontier market, but at the edge of this established field, opportunities still exist. In this stage of maturation, where does the biggest wins come from? Intuitively, it is from those players in their growth phase or with a latecomer advantage.

It is also worth mentioning that those centralized exchanges that once held high the flag of "certainty optimism" and drove cryptocurrency adoption have now turned into pessimists, focusing more on defending their existing market share rather than driving on-chain adoption.

In the past, exchanges and Layer 1 blockchains brought the most generous returns to investors. Ironically, in the most fiercely competitive, optimistic retreat, and pragmatic entry space, the biggest winners have emerged.

Does this mean that we have no more "secrets" to uncover? I don't think so. Today's "secrets" are precisely yesterday's lessons. Have we truly built many innovative and valuable companies or networks?

The low-hanging fruits have all been picked—the majority of projects today are either mimicking predecessors or slightly repackaging with a collage to pretend to be original. Many "solutions" are chasing after problems that fundamentally do not exist, while others are simply trying to transplant traditional finance onto the blockchain.

Crypto was originally a force inherently imbued with revisionist intentions but failed to complete a true revolution. Today, it is plagued by a core (perhaps a false proposition) question: "Are you trying to do the right thing or are you trying to make money?" In other words, are you willing to "sell out" yourself at the price the old system is willing to pay? Those revolutionaries who are tired of crying in the meme coin casino are increasingly accepting this deal.

Building vague products that developers think users "should want" (no, people don't actually want to own their data) and the evident success of centralized service providers have together propelled the industry into the current deadlock. Today, in the crypto world, true "certainty optimists" are almost nowhere to be found. But it is precisely in this "almost impossible" where the opportunity for cutting-edge investment lies.

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