Cryptocurrency should not be viewed merely as a single "industry" like quantum computing or space technology, but rather as a completely new asset class and foundational technology. Just like electricity in the last century and the internet in the past few decades, it will permeate and fundamentally change many existing business sectors while also creating entirely new industries.
For both entrepreneurs and investors, those who understand this technology and have insight into existing markets—specifically, those who comprehend how cryptocurrency technology will reshape these markets and give rise to crypto-native new giants—will have a significant advantage, regardless of whether the crypto layer will ultimately be abstracted (become invisible) on the user side.
If the internet is a protocol for transmitting information from one person to another at zero marginal cost, then cryptocurrency technology is a protocol for transmitting value from one person to another at (almost) zero marginal cost. The internet has disrupted about 20% of global GDP and created many new business models. Cryptocurrency technology has the potential to disrupt an even larger proportion of global GDP, especially in areas where transactions require the involvement of trusted third parties (such as finance, law, auditing, etc.), while also enabling new business models (such as prediction markets, DePIN, etc.).
Many of the broad discussions currently surrounding this field (and the recent views that high returns are no longer available) largely stem from semantic misunderstandings. People often use the term "Crypto" to describe three distinctly different things:
CryptoMoney
CryptoTech
CryptoApplications
1. CryptoMoney
We define this as the "hard currency/value storage" narrative, which is precisely what initially attracted many people to the BTC/Crypto space. While we do not know how much more upside there is or how long it will take, even after recent declines, we are still only about 20 times away from parity with gold's market value.
2. CryptoTech
This category mainly refers to infrastructure like Layer-1. While there is still innovation happening in this field, most application developers we engage with believe that the existing technology is already "good enough" for the products they want to build. Certain verticals may still require specific middleware, but overall, the next 1000x returns may not appear here.
3. CryptoApplications
Refers to user-facing B2C and B2B applications—adopted because crypto solutions are superior or lower cost compared to existing solutions; it also includes new business models built on CryptoTech.
Many early application builders focused more on token launches rather than building the applications themselves. Additionally, the entire "GameFi" sector has not yet met expectations. However, now—with the emergence of stablecoin businesses, prediction markets, etc.—we are indeed seeing more high-quality developers realizing that they can build truly (even arguably revenue-generating) applications on top of cryptocurrency technology.
The combination of AI and Crypto appears very promising to us. We are witnessing AI agents evolve from single agents focused solely on productivity enhancement to a network of agents participating in large-scale economic activities, thus forming an economy of agent-human collaboration. This "agent-human collaborative economy" will create a closed loop of value creation and consumption on-chain.
The recent publication of the Token Letter by Ribbit Capital paints a picture of the future: the number of tokens will experience explosive growth, and we believe these tokens will ultimately be issued and traded on-chain. Overall, we observe that builders in the Web 3 + AI space differ from the early generation of crypto application builders who primarily focused on the tokens themselves. The developer community in Asia has emerged with many new talents in AI agent applications, many of whom will create companies with tokens. Furthermore, the Market Structure Act (especially similar regulatory frameworks outside the U.S.) will act as a catalyst for developers to build on crypto infrastructure (crypto rails) under clear regulations.
Although we use the term "Crypto" for all three, it is crucial to distinguish between 1, 2, and 3 in terms of return potential.
Perhaps as an industry, we should come up with a new term; alternatively, we could specifically use the term "Web 3" to focus on the CryptoApplications category. We believe that the third category is where most of the wealth will be created in the future and where many 1000x opportunities will be built in the coming years.
We do not know how the market will perform in the short term, but it is always darkest before the dawn. The internet restructured information; cryptocurrency technology will restructure value. The entire industry will not only be changed—it will be reinvented from the ground up.
_Original link: _A Tale of Three Cryptos: Fixing the Semantics to See the Opportunity
This article is compiled from the article "A Tale of Three Cryptos" published by Panga Capital, aimed at providing information sharing and institutional viewpoints, and does not constitute any investment advice, offer, or recommendation of any product. The expressions "1000x returns," "100x opportunities," etc., mentioned in the text are the original author's personal judgments based on specific market conditions, which are highly subjective and uncertain.
Cryptocurrency assets are highly volatile, and market risks are high. Readers are urged to maintain independent thinking, strictly comply with local laws and regulations, invest rationally, and assume risks on their own. This compilation strives for accuracy, but if there are discrepancies with the original English text, please refer to the English version published by Panga Capital.
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