As a professional translator, I will translate this news article into English in a rigorous style, ensuring accuracy and coherence. I will also retain proper nouns and include the images 
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But first, we need to take a step back and look at the bigger picture. The United States possesses technological talent, financial markets, and regulatory policies to win the global cryptocurrency market, ensuring that the US remains a financial and technological powerhouse in the 21st century. However, I believe that this time we do not have enough crypto punks to save us.
The past 30 years have not only been a period of growth for our millennial generation, but they have also provided clues and background for the crypto policies we may expect in the short and medium term. Among the most influential events and changes in the cryptocurrency over the past few decades, one historical analogy and two major trends are particularly important for our attention:
1. The initial cryptocurrency war of the 1990s involved a struggle against the stubbornness of the US National Security Agency, the literal installation of government chips in all your devices with legislation for on-demand unlocking, and a popular grassroots rebellion led by developers against government overreach. This is the origin of the term “cypherpunks writing code.” You should read this book on the crypto wars or at least read this paper.
It accelerated the history of encryption. It is a story of the underdogs fighting back, although due to deep cultural changes in the US, this victory seems unlikely to be repeated in our crypto.
2. Complacency and the awakening spell: Unfortunately, the X generation (born between 1964 and 1980) has grown older, and since then, the X generation has joined forces with the baby boomers to do some quite terrible and unconstitutional things. Today, “encryption” poses a significant threat to the “surveillance and control” of the national order. When we look at our young protagonists, namely the millennial and Z generations (born between 1995 and 2009), the question is whether they may not care about the fight at all. They are accustomed to eroding civil liberties after the Patriot Act and the COVID-19 era. After experiencing 20 years of a $70 trillion global military disaster, they have never lived in a national security apparatus that looks inward. Many of them are even indifferent to the Twitter document and the censorship industrial complex of big tech companies. Peter Thiel and David Sacks wrote a predictive article in the early 1990s about the dangers of campus cultural conformity, and SBF is just a reminder of what we already know, that such conformity may be performative but is now harmful.
3. The end of US hegemony: When you combine #1 and #2, what you really need to understand is that there is a large part of government officials who really believe that the tech policies of the 1990s were a mistake, that the miracle of the open internet and the economic growth it brought have had a net negative impact on American society. Technology has become a scapegoat.
While our concerns about deindustrialization and an overfinancialized economy have some merit, many envy the closed internet in China and only see “missed opportunities to curb misinformation,” which is a bit scary. We are no longer the only superpower, as bureaucratic institutions of competitors like China seem to be playing a role in some areas, and our leaders also seek more control.
Our culture has gradually weakened, and the domestic elderly ruling group suffers from delusions, and this time we have a powerful opponent. We must play a different game, focusing on “Moneyball” elections (Moneyball, an American film about how a small team competes against wealthy powerhouses in professional leagues). There is good news in this regard: we will win. (Chapter 5 will discuss more on how this will happen) (I know you may think these trends are completely unrelated or at most have some connection to cryptocurrencies, but that’s what Pepe Silvia said. We are engaged in a life-or-death information war.)
Despite the cryptocurrency market being deep in decline for the past two years, with declining trading volumes and heavy regulatory resistance, the activities of cryptocurrency developers have still performed well this year. Mid-year, Alchemy discovered that the number of smart contracts deployed on the EVM chain increased by 300% on a quarterly basis, while the installation volume of crypto wallets reached a historical high.
Electric Capital found that as of October, the number of active developers contributing to open-source projects had sharply declined compared to the previous year. However, this can be attributed to various factors: the regulatory coldness towards the open-source ecosystem after the Ooki DAO ruling this year, more innovation and development in the application and infrastructure layers, and a more cautious attitude towards competitive threats during the bear market.
a16z’s Crypto Market Status Index may be the best indicator to observe the overall market health. It also highlighted a decline of 30% in the number of developers, but it recorded some positive data for the market: record-high developer library downloads in the third quarter, and historically low levels of active addresses and mobile wallet activities. Could this be the spark that ignites the explosion of crypto applications in 2024? If I could blindly invest in cryptocurrencies based on a single chart, it would be this one:
The true market turnaround will only happen when AI developers realize that cryptocurrencies are another battlefield for them.
1.8 AI & Cryptocurrencies
In this era marked by abundant AI and GC, providing reliable, global, mathematically guaranteed sources and digital scarcity is crucial.
Take deepfakes as an example: cryptocurrencies are crucial in terms of timestamping, verification devices, and data. Without cryptocurrencies, it is difficult to verify whether certain images or texts come from AI or non-AI, or from Washington or Beijing. Additionally, without the cost associated with public chains, preventing generative DDoS attacks would also be a significant challenge.
The rise of AI is seen as a “threat” to cryptocurrencies, just as mobile technology was seen as a threat to the internet, which is clearly absurd. The progress of AI will only increase the demand for cryptocurrency solutions. While we may debate whether AI is good or bad for humanity (just as we debate whether iPhones are good or bad…but we still know they are obviously beneficial), AI is great for cryptocurrencies.
I personally welcome our machine overlords and their perfect machine currency: Bitcoin.
There is no need to overthink this, but Arthur Hayes, the founder of BitMEX, wrote an article on this topic during the summer that is worth noting. For any AI, the two crucial elements are data and computing power. Therefore, it seems reasonable that “AI will trade a currency that maintains its purchasing power over time with energy,” which perfectly describes Bitcoin.
Some criticize this view as oversimplified, especially considering two potential AI application scenarios – micro-payments and smart contract execution – that have not significantly developed on Bitcoin. Some argue that AI agents would choose the blockchain with the lowest cost, not necessarily Bitcoin, due to the transaction friction in Bitcoin’s proof-of-work mechanism.
Dustin, a researcher at Messari, believes that the idea of an “energy-measuring currency” might be the opposite: AI agents may be more inclined to directly purchase Gas tokens (related computational resources).
1.9 DePIN, DeSoc, DeSci
I have a permanently bullish view on decentralized finance (DeFi), but I do not necessarily “overweight” it because I believe that other market segments will perform better in the coming year.
I do believe that some top DeFi protocols, especially in the decentralized exchange space, will experience a rebound after a year of stable trading volumes. However, I am unsure if the unit economics and product-market fit of DeFi are sufficient to offset the upcoming harsh regulations.
Furthermore, the asset types driving DeFi trading volumes are also a question. This year’s peak trading was primarily driven by meme coins rather than breakthroughs in new applications. Perhaps I have considered too many doomsday scenarios for DeFi in Washington (more on this in Chapter 8).
My attention turns to several key non-financial sectors in the crypto space. I like DePIN (Physical Infrastructure Network), DeSoc (Social Media), and DeSci (yes, Science!), as they seem to be driven less by rampant hype and more by critical solutions that go beyond the financial realm of our industry.
Last year, Sami, a researcher at Messari, helped popularize the term DePIN, and no one is better at depicting the landscape of these hardware networks or explaining how these networks can compete with big tech companies.
Cloud infrastructure services are a $50 trillion market in traditional markets, while DePIN only accounts for 0.1% of it. Even if we assume that 0% (note: it probably should be 1%) of online services adopt DePIN as their primary stack, the demand for decentralized redundancy alone could lead to a significant increase in demand. A 1% “insurance fee” to eliminate the risks of big tech platforms would result in a 10x increase in DePIN utilization. It doesn’t take much to change the status quo, especially when it comes to AI-driven demand for GPUs and computational resources.
Similar opportunities exist in social media, where the major players in this field generated $230 billion in revenue last year (half of which came from Meta companies), while only a tiny fraction of creators can earn enough money through content creation.
We have already seen this changing (the continued growth of YouTube, Elon’s revenue sharing), and we have seen potential breakthrough DeSoc applications (Farcaster, friend.tech, and Lens). It is more like the beginning of an almost imperceptible J-curve, rather than a false start.
Friend.tech shared $50 million with its creators within months of its launch, which is one way to attract users. I believe that DeSoc in 2024 will follow the “DeFi summer” frenzy of 2020.
Lastly, there is decentralized science. 50% of the DeSci projects we track were established within the past year. The best OG crypto investors I know have already devoted 100% of their time to this field.
In this market, the incentive mechanisms of cryptocurrencies make sense: people’s trust in our scientific institutions may be at an all-time low, and the current system is filled with bureaucratic inefficiencies, flawed data methodologies, and poor incentive mechanisms (relying on peer-reviewed papers for tenure), while cryptocurrencies have already demonstrated their ability to fund scientific experiments.
To scale up, token sales and DAOs aim to fundamentally change the way we conduct research, and there is enough interest in longevity, rare disease treatment, and space exploration to drive the development of this field.
You can invest directly in DePIN, start using DeSoc applications now. However, I don’t know of any way to lazily express the investment thesis for DeSci. (VitaDAO, perhaps?)
If you think of anything, feel free to DM me.
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