As someone who first discovered crypto in 2017 and started taking the space seriously in 2019, I often have repressed thoughts about where I envisioned crypto going versus where it actually is. It makes me think about how my mother wanted me to be a doctor, but instead I’m here — on the Delphi Digital alpha feed writing a pseudo-philosophical post about internet coins. Sometimes you just need to let go of past conceptions.

When you’ve spent enough time in crypto, it’s easy to end up on two extremes of the spectrum: disillusioned (it’s going nowhere) or deluded (2024 is the year we onboard 1 billion new users). Most principle-driven operators in the space sit somewhere in between, where disillusionment is exchanged for realism and their delusion is, in reality, the natural optimism doing new things requires.

I’d like to think I’m a reasonable person capable of seeing crypto’s potential and also being accepting of where we are right now. So I wanted to write down some of my thoughts about where we are in the “hype cycle”.

Crypto is the closest thing to a proper free market. A free market is free from central regulation. There’s good and bad to this. As a young adult discovering neolibertarian ideas and Austrian economics — as most crypto economics nerds have — it’s easy to only see the rainbow and miss the storm clouds. Free markets are great for innovation and permissionless capital allocation, but they also have detriments. Malicious actors are empowered like never before. It’s not that they don’t exist in less-free markets, but their potential to gain control of systems and exhibit prolonged bad behavior is far stronger without regulation.

There are checks and balances in free markets, as we see in crypto. War rooms filled with the brightest white hats and platforms/products taking action to limit user harm (like Tether freezing hacker funds). Self-regulation is real — it isn’t just hopium. And on the flipside, I’d argue there are government actors like Elizabeth Warren who are arguably as malicious as protocol exploiters in the way they cling to false narratives to try and kill off innovation. Now we keep saying crypto is innovative and we’re all on the forefront of a new technological paradigm, yet we still do not have that killer use case. Does that moot our point?

I honestly believe it doesn’t. To think smart contract platforms like Ethereum and Solana, or immutable money like Bitcoin is not a massive technological advance is naive. Crypto can be broadly split into two categories: infrastructure and applications. As is commonplace, we are still perfecting the core infrastructure to be able to have those killer apps. And it’s not that there are no app devs, it’s that there’s still a pretty long way to go in terms of infrastructural improvements.

That’s why all the hype right now is centered around core blockchains — integrated L1s, rollups, modular architectures, data availability layers, etc etc. The infrastructure hype cycle of 2021 was birthed out of necessity. DeFi Summer crippled Ethereum and made it clear that we needed massive changes to the way people interact with blockchains to be able to consistently support a few million users, let alone a few billion. And we’re still not out of the woods; there’s still a lot of work to be done here.

This doesn’t mean we should shake off the app layer till the infra is ready — that would be stupid. But it does mean apps today have to be built with today’s constraints in mind. There are a handful of successful applications on blockchains today. Nearly all of them revolve around speculation. Truth of the matter is blockchains are great because they enable people to jointly agree on the state of a network and come to consensus on what is valid and invalid in real-time.

And stuff like this — by virtue of minimizing trust and making verification globally viable — is an outsized improvement to money, financial services, and the financialization of products above most other things. So yes, blockchains will end up having a core value prop as an engine for financialization. The sooner we accept this, the better.

But coming back to my main point, the fact that we don’t have an on-chain app with 100 million users today does not mean we have failed so far. And I don’t want to be the guy that contrasts the early internet to today’s crypto. And I’m not going to be, because I trust you already get the point. Just because Ethereum is 10ish years old and has no killer app besides perhaps Uniswap is not enough to say its failed — especially when Ethereum has but put a dent in it’s long term vision.

If you trust that we’re building the infrastructure in the right way, you should also trust that the killer apps will come.