Original Author: Zeus; Translator: Azuma; Editor: Hao Fangzhou
Produced by Odaily
In my previous article, I explored how the cryptocurrency industry has gradually deviated from its original vision - overly emphasizing infrastructure innovation while neglecting the fundamental monetary attributes needed to achieve financial sovereignty. This deviation has led to a disconnection between the ultimately delivered technological achievements and sustainable value creation.
However, what I had not yet delved into is the fundamental misidentification of which applications are truly worth building, a misidentification that is at the core of the current dilemma in the crypto realm and hints at the direction where genuine value might emerge.
Application Layer Illusion
The narrative of the cryptocurrency industry has gone through multiple stages, but has always been underpinned by a vision of creating revolutionary applications beyond finance. Smart contract platforms boast themselves as infrastructure for a new digital economy, envisioning value flowing back from the application layer to the underlying protocol. This narrative was accelerated by the spread of the "fat protocol theory" - which argues that unlike the internet era where TCP/IP protocols had minimal value while Facebook and Google captured billions, blockchain protocols would accumulate the vast majority of value.
This formed a specific mindset: Layer 1 public chains would increase in value by cultivating diverse application ecosystems, similar to how Apple's App Store or Microsoft Windows create value through third-party software. However, the fundamental misconception is that the cryptocurrency industry attempts to impose financialization on scenarios that are neither suitable nor capable of creating real value.
Unlike how the internet could digitize existing human needs (business, social, entertainment), cryptocurrency attempts to inject financial mechanisms into scenarios that neither require nor welcome financialization. The presumed premise of this development direction is that all domains, from social media to gaming to identity management, could benefit from tokenization and financialization.
But reality is entirely different:
Tokenized social applications generally fail to achieve mainstream adoption, with user participation primarily dependent on token incentives rather than product value;
Game applications continue to face resistance from traditional gaming communities, with players believing financial mechanisms harm rather than enhance the gaming experience;
Identity and reputation systems involving token economics have never demonstrated significant advantages over traditional solutions.
These issues cannot be explained away by "we are still early". They reveal a deeper logic - the essence of finance is a resource allocation tool, not an ultimate goal. Financializing social interactions or entertainment activities fundamentally misunderstands finance's core function in society.
The Essential Difference from Game Item Markets
It needs special explanation that markets like CS:GO skins or in-game item purchase systems might seem to refute the previous points, but they actually exist with fundamental differences.
These markets are essentially optional decorative or collectible trading ecosystems on the periphery of games, not financial transformations of core gameplay. They are closer to peripheral merchandise or memorabilia markets and do not change the basic operating logic of games.
When crypto games attempt to financialize core gameplay mechanics - making playing games directly equivalent to earning money - they fundamentally alter player experience and often destroy the most basic enjoyment of the game. The critical issue is not whether markets can be built around games, but that transforming game behavior into financial activity distorts its essence.
[The translation continues in the same manner for the rest of the text, maintaining the professional and nuanced translation style.]As the industry developed, this original mission gradually faded and was ultimately abandoned by most projects. While projects like Ethereum expanded blockchain's technical capabilities, they simultaneously blurred its core positioning. This led to a bizarre fragmentation of the ecosystem.
Bitcoin remains focused on monetary positioning but lacks programmability and cannot implement functions beyond basic transfers;
Smart contract platforms provide programmability but have abandoned monetary innovation, turning towards the route of "everything on-chain";
This division might be the most severe routing error in the cryptocurrency industry. Instead of building more complex functions on Bitcoin's monetary innovation foundation, the industry turned to financializing everything — a cart-before-the-horse approach that both misdiagnosed the problem and chose the wrong solution.
The Path Forward: Returning to Monetary Essence
In my view, the industry's forward direction is to reconnect the significantly enhanced technical capabilities of blockchain with its original monetary mission. Not as a universal solution for all problems, but focused on creating better money.
Reasons why money is especially suitable for blockchain include:
Trustlessness is crucial — unlike most applications requiring external force, money can operate entirely in the digital realm, executing rules through code alone;
Native digital attributes — money doesn't need to map digital records to physical reality and can exist natively in digital environments;
Clear value proposition — removing intermediaries from monetary systems can truly enhance efficiency and autonomy;
Natural connection with existing financial applications — the most successful crypto applications (trading, lending, etc.) naturally connect to monetary innovation;
Most critically, money is fundamentally an infrastructure layer requiring minimal interaction. This is precisely where cryptocurrency got things backwards — the industry didn't create money that could seamlessly integrate with existing economic activities, but instead tried to rebuild all economic activities around blockchain.
The power of traditional currency lies exactly in this "tool layer" characteristic. Businesses accept dollars without understanding the Federal Reserve, exporters manage exchange rate risks without reconstructing their entire business, and individuals store value without becoming monetary theorists. Money facilitates economic activity without dominating it.
On-chain money should be the same — providing a simple interface for off-chain enterprises to use, just like using digital dollars without understanding the banking system. Enterprises, institutions, and individuals can remain entirely off-chain, using blockchain money only for specific advantages, just as users currently use traditional banking systems without being part of them.
Rather than building the vague "Web3" concept attempting to financialize everything, the industry should focus on creating a better monetary system — not just a speculative asset or inflation hedge, but a comprehensive monetary mechanism adaptable to different market conditions.
Global monetary landscape changes further highlight the urgency of this direction. The inherent fragility of the current system and geopolitical tensions have created a real demand for neutral alternatives.
The current ecosystem's tragedy is not just resource misallocation but missed opportunities. Incremental improvements in financial infrastructure are valuable, but pale in comparison to the transformative potential of solving fundamental monetary issues.
The next stage of cryptocurrency evolution might not lie in continuing to expand boundaries, but in returning to and fulfilling its initial mission — not a universal solution, but a reliable basic monetary infrastructure that allows other constructions without delving into its operational principles.
This is the profound innovation cryptocurrency originally promised — not financializing everything, but creating a currency worthy of being the invisible global economic infrastructure. A currency that can operate seamlessly across borders and institutions while maintaining sovereignty and stability. A foundational setup that empowers rather than dominates, serves rather than restricts, and doesn't interfere with the human activities that give it meaning during its evolution.
