Most people misunderstand blockchain. They think it's a technology, like artificial intelligence, cloud computing, and big data—something that businesses can buy, governments can promote, and it can be included in PowerPoint presentations as "new infrastructure." But in fact, blockchain has never been a technology. It's a cross-cutting product of cryptography, distributed systems, and game theory, but these are merely means. If we must define blockchain, it's closer to an idea—its means are decentralization, and its purpose is freedom. For participants, it's a belief; from a historical perspective, it's a hardcore liberal experiment. Moreover, blockchain is inherently financial. This point is often intentionally or unintentionally overlooked. Decentralization is not a free lunch—quite the opposite, it's extremely expensive and inefficient. To achieve consensus among thousands of nodes across the network, the same data must be redundantly stored and repeatedly verified, reducing throughput to single digits per second and increasing transaction costs by orders of magnitude compared to traditional databases. What can such a slow and expensive system do? The answer is: it can only record transactions. You won't use it to store videos, run AI, or create social media—those scenarios are extremely sensitive to efficiency and cost, and the costs of decentralization far outweigh the benefits. The only field willing to pay such a high cost for decentralization is finance. Because the core of finance is trust, and the cost of trust is far higher than computing power. The Bitcoin white paper's title clearly states: A peer-to-peer electronic cash system. From its inception, blockchain has been about money. Those who try to use blockchain for traceability, notarization, or supply chain management likely haven't truly grasped the core of this technology. Understanding this makes everything else make sense. The essence of blockchain is an experiment. The core assumption of libertarianism—that individuals can self-organize, self-govern, and self-responsible without a Leviathan—is being tested on a large scale in the financial field for the first time. This experiment has no laboratory, no ethics committee approval. Its control group is the traditional financial system that has been operating for hundreds of years; its subjects are real people; the stakes are real money; and the results are irreversible. Cryptocurrencies didn't spring from the ground up. Their ideological foundation predates Satoshi Nakamoto's white paper by far. Humans have used gold as currency for over three thousand years. Gold was chosen not because of its beauty, but because it met the most stringent requirements of currency: scarcity, durability, divisibility, and difficulty in counterfeiting—most importantly, no king, government, or institution could create it out of thin air. Gold is a hard constraint imposed by nature on human power. Under the gold standard, governments had to possess gold before they could spend it, and they had to face the physical limits of the gold treasury before they could expand credit. This constraint was brutal and inefficient, but it had one advantage that no other institutional design could replace: it did not require you to trust anyone. On August 15, 1971, Nixon announced the decoupling of the dollar from gold. The Bretton Woods system collapsed. From that moment on, global currency entered a purely credit-based era—governments gained the ability to print unlimited money, while the wealth of ordinary people could only be passively diluted. The dollar was no longer pegged to any physical commodity; its value depended entirely on your trust in the US government. This arrangement worked well most of the time, but it dismantled that hard constraint—from then on, inflation was no longer an accident, but an inevitable consequence of the system. The 21 million Bitcoin supply cap is essentially a digital replication of the gold standard spirit: replacing physical laws with mathematics, and the earth's crustal composition with protocols, rebuilding the hard constraint that Nixon dismantled. Understanding this explains why Bitcoin was later called "digital gold"—this isn't a marketing slogan, but its deepest ideological DNA. Fifty years have passed between gold and Bitcoin, but the question remains the same: Is there a currency that doesn't require you to trust anyone? The second pillar is Hayek. In his 1976 book, *The Denationalization of Money*, the Austrian economist proposed a radical idea: currency doesn't need to be monopolized by the state; market competition can produce better currencies. Private banks should be allowed to issue their own currencies, and the market should determine which currency is most trustworthy. This book was virtually ignored when it was published—in an era when Keynesianism dominated academia, saying that governments shouldn't regulate currency was as absurd as saying that hospitals shouldn't manage patients. But forty years later, cryptocurrency became the first large-scale practical application of this theory. Bitcoin, Ethereum, thousands of competing currencies—the competitive market of currencies Hayek envisioned appeared in a form he never anticipated. The third pillar is the cypherpunk movement. This was an underground movement that lasted for twenty years. From David Chaum's eCash in 1983—the first attempt to achieve anonymous electronic payments using cryptography—to Adam Back's Hashcash in 1997—which later became the direct precursor to Bitcoin's proof-of-work mechanism—to Wei Dai's b-money and Hal Finney's RPOW (Reusable Proof-of-Work) in 1998, a group of cryptographers and programmers spent twenty years trying to achieve personal privacy and financial freedom through technology. Each of them solved a part of the problem, but no one put all the pieces together. Bitcoin is not a groundbreaking invention that appeared out of nowhere, but rather a culmination of work built upon the foundations laid by predecessors. The catalyst was the 2008 global financial crisis. The collapse of Lehman Brothers, the global credit freeze, and the frantic bailouts by central banks worldwide—all of this led some to completely lose trust in the centralized financial system. Satoshi Nakamoto embedded the famous Times headline in the Bitcoin genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"—the Chancellor of the Exchequer was preparing for a second round of emergency bailouts for banks. This was not a technical statement, but a political declaration. The nostalgia for the gold standard, Hayek's theory of monetary competition, the technical accumulation of cypherpunks, and the collapse of trust due to the financial crisis—these four threads converged in the hands of the same person (or the same group of people) in 2008. They ultimately coalesced into a testable proposition: replace trust with cryptography, replace institutions with protocols, replace laws with code—and see what happens. The Freedom Benefits of Blockchain: The freedom that blockchain brings to individuals is real and unprecedented. Censorship Resistance—No one can freeze or block your transactions. Anonymity—Transactions do not require revealing your real identity. Permissionless—No approval from banks, governments, or third parties is needed; anyone globally can participate 24/7. Code is Law—Smart contracts execute automatically, and rules, once deployed, cannot be unilaterally modified. These are not empty words. In the decade or so since the birth of blockchain, these freedoms have been validated time and again—each validation accompanied by a cost, but it is precisely because the cost is real that the freedom is real. The Silk Road was the earliest real-world test of this experiment. In 2011, a young man named Ross Ulbricht created Silk Road—an anonymous marketplace operating on the dark web—using Bitcoin. Here, users could buy anything with Bitcoin, without identity verification, without bank intermediaries, and without anyone's permission. Silk Road proved one thing: resistance to censorship is not just empty talk in a white paper; it can work in the real world. The US government exhausted its law enforcement resources to shut down the website, and the FBI arrested Ulbricht. In 2015, he was sentenced to two life sentences plus 40 years—a person with no violent crime record received a heavier sentence than most murderers. But Bitcoin itself was not shut down, nor could it be shut down. Shutting down a website is easy; shutting down a protocol is impossible. On January 21, 2025, Donald Trump signed a full pardon for Ulbricht on his second day in office—"for the liberal movement." Eleven years from imprisonment to pardon. The Silk Road is the earliest observational data of this experiment: freedom is real, and so are the costs. In 2010, WikiLeaks faced a comprehensive financial blockade by the US government for publishing US diplomatic cables. Visa, Mastercard, PayPal, Bank of America, Western Union—almost all major payment channels cut off WikiLeaks' funding under government pressure. An organization, without a court conviction, without any legal proceedings, was deprived of its ability to receive donations simply for publishing information that embarrassed the government. Bitcoin became the only donation channel that could not be blocked. This is the first shining moment of blockchain's "censorship resistance"—when Leviathan wanted to cut off an individual's economic lifeline, Bitcoin provided an unstoppable lifeline. You may not like WikiLeaks, but you should fear a system that can freeze anyone's funds without legal proceedings. If Bitcoin is the validation of an idea, stablecoins are the validation of demand. USDT (Tether) has consistently had a higher daily trading volume than Bitcoin itself, making it the de facto offshore dollar of the crypto world. Its users are spread globally, but its use cases are highly concentrated: for an Argentinian family, holding USDT is the most convenient way to hedge against peso devaluation—faster, cheaper, and without limits than queuing at a bank to exchange for dollars; for a merchant in a sanctioned country, USDT is the only channel to access global trade settlement; for a Chinese cross-border e-commerce business, USDT is the most efficient tool to bypass foreign exchange controls. Stablecoins don't require users to believe in the ideal of decentralization—they only require users to need US dollars. This is the only product in the blockchain world that has truly achieved mass adoption, and it's the most pragmatic embodiment of the "free conduit." However, this hides a subtle paradox: the success of stablecoins is precisely built on their lack of decentralization. USDT is centrally issued by Tether, pegged to the US dollar, and can be frozen. It runs on the blockchain, but it is not decentralized itself. In other words, the most successful product of this libertarian experiment is a compromise to the experimental assumption—users don't want decentralization; they want a conduit not controlled by their own governments. Whether the other end of the conduit is centralized or not is irrelevant to them. And this conduit is 24/7 and permissionless. It requires no bank account, no government approval, and no third party. For the middle class in developed countries, this means almost nothing—their banks are sufficient. But for Venezuelans using USDT to settle daily necessities in supermarkets, Nigerian freelancers using it to receive payments from overseas clients, and Afghan women using it to save money their husbands can't see—for these people, the significance of this door needs no explanation. Freedom is real. The next question is: what is the price of freedom? The world of blockchain is a dark forest—no police, no courts, no insurance companies, no consumer protection laws. You have complete autonomy, and you bear the full consequences. The first lesson of this world is: lost private keys are lost forever. There is no customer service, no password retrieval, no "Forgot your password? Click here" option. You are your own bank, and if the bank fails, no one will compensate you. The second lesson of this world is even crueler: your opponent could be a nation. In terms of hacking alone, the crypto industry has broken its theft record for three consecutive years: $2 billion in 2023, $2.2 billion in 2024, and over $3.4 billion in 2025. In February 2025, the Dubai exchange Bybit suffered a single theft of $1.5 billion—this is not petty theft, but one of the largest single thefts in human financial history, second only to the theft of the Central Bank of Iraq. The attackers were the North Korean state-owned hacking group Lazarus Group. North Korea alone stole over $2 billion in crypto assets in 2025, accounting for 76% of all server-side thefts, with a cumulative historical total of $6.75 billion—this money was used to fund nuclear weapons and missile programs. Personal wallet theft incidents surged to 158,000 in 2025, with over 80,000 victims. No police, no insurance, no recourse. That's the cost of operating a free market. Promises of high returns are the most efficient harvesting tool in this market. Every bull market sees a surge of Ponzi schemes masquerading as "innovative," but none are more exemplary than LUNA/UST. Terraform Labs' Anchor protocol promises users a 19.5% annualized return. In the traditional financial world, US Treasury yields are less than 4%, and bank deposit rates are less than 1%—what does 19.5% mean? It means your money doubles every three and a half years. This return doesn't come from any real economic activity—no lending spreads, no investment returns, no business profits. What sustains it? It sustains it through token issuance and new investor funds: newly deposited money is used to pay interest to existing depositors, whose "returns" are essentially the principal of new depositors. This is the classic structure of a Ponzi scheme—what Charles Ponzi did with postage stamps in 1920, Do Kwon replicated in 2021 with an algorithm. The only difference is that it's packaged in the technological guise of "algorithmic stablecoins" and "decentralized protocols," making it believable even to educated people. When the inflow of new funds can't keep up with the promised 19.5%, collapse is only a matter of time. On May 7, 2022, several large redemptions triggered UST de-pegging. The algorithm design required the issuance of new LUNA to absorb the selling pressure on UST, but the selling pressure far exceeded the algorithm's capacity; the issuance of new LUNA actually accelerated its own devaluation—a classic death spiral. Within three days, LUNA plummeted from $119 to zero, and UST from $1 to zero, wiping out $40 billion. This speed surpassed even the collapse of Lehman Brothers. Hundreds of victims later described in court how their life savings were wiped out, their families were torn apart, and some even contemplated suicide. Some lost their retirement funds, some had their children unable to attend college, and some had wives who filed for divorce. Founder Do Kwon was arrested in Montenegro after two years on the run and sentenced to 15 years in prison in a New York federal court in December 2025. The judge stated during sentencing, "This was an epic, generational fraud. Few frauds in federal prosecution history have caused such widespread damage." And LUNA was not an isolated case. In 2024 alone, US users lost approximately $10 billion in cryptocurrency investment scams. The oldest scar in this industry is Mt. Gox. In 2014, this Japanese exchange, which once handled 70% of global Bitcoin transactions, declared bankruptcy, with 850,000 Bitcoins disappearing, worth approximately $450 million at the time. This was the first major exchange trust crisis in crypto history. CEO Mark Karpelès claimed to have been hacked and was later found guilty by a Japanese court of misappropriating user funds. Users believed they were using decentralized Bitcoin, but in reality, they were simply depositing their money in an unregulated bank. Eight years later, history repeated itself on a much larger scale. The collapse of LUNA was not an isolated incident; it triggered the most devastating chain reaction in crypto history. After LUNA went to zero in May 2022, hedge fund Three Arrows Capital suffered losses exceeding $3.5 billion due to its heavy investment in LUNA and related assets being liquidated. The defaults of Three Arrows were like a bomb dropped into the crypto lending market—Celsius froze user withdrawals in June and subsequently filed for bankruptcy; Voyager Digital also declared bankruptcy that same month. Panic spread from the lending market to the trading market, ultimately triggering the collapse of FTX in November. Users discovered that Sam Bankman-Fried, the founder of the world's second-largest exchange, had been misappropriating client assets—not just millions, but billions—to cover losses at his affiliated trading firm, Alameda Research. Within six months, from algorithmic stablecoins to hedge funds to lending platforms to exchanges, dominoes fell one after another. This chain of collapses proved a harsh reality: the so-called "decentralized" industry is actually highly interconnected, highly centralized, and highly vulnerable. DeFi protocols are decentralized, yet users store their money in centralized exchanges and lending platforms; the code is open source, but the flow of funds is opaque; on-chain records are public, but you have no idea what your counterparties do with your money. In a world without a regulatory safety net, freedom not only means no one protects you, but also that collapse is cascading. SBF was sentenced to 25 years. Do Kwon was sentenced to 15 years. Celsius founder Alex Mashinsky was sentenced to 12 years. Some of the industry's most prominent founders are writing a footnote to the price of "freedom" through their collective imprisonment. There is also an even more ingenious paradox worth mentioning—the transparent black box. The most prized feature of blockchain is transparency: every transaction on the chain is publicly verifiable and auditable by anyone. However, this transparency is one-dimensional—you can see which address the money was transferred from, but you don't know who is behind those addresses, what the project team is doing, where the raised funds went, or whether the smart contracts have backdoors. The transparency of on-chain data, ironically, gives opaque project operations a "seemingly transparent" disguise. When you're in a dark forest, unable to see the direction, distinguish friend from foe, or discern truth from falsehood, what do you do? Most people choose to find a seemingly trustworthy authority and entrust their judgment to them. The door to freedom is opened, but most people who enter first seek a new authority. To understand why a de-authoritarian system spontaneously generates religion, a psychological framework needs to be introduced. Robert Kegan, a developmental psychologist at Harvard University, proposed a stage model of adult mental development. This model is not about IQ or knowledge, but about how a person constructs meaning—specifically, what drives their decisions. Stage 2 (Instrumental, approximately 10% of adults): Purely self-serving traders. Rules are only followed when it benefits them. Stage 3 (Socialized, approximately 80% of adults): Slaves to external evaluation. Their self-identity comes from group belonging—if others buy, I buy; if a KOL says it will rise, it will rise. It's not because they are stupid, but because their meaning-making system is anchored to social consensus. Making judgments independently of the group is not a "choice not to do," but rather a "cannot do." Stage 4 (Self-Shaping, approximately 10% of adults): They come with their own operating system. They make decisions based on internal principles and can remain independent amidst group frenzy—not because they oppose the group, but because they have an internal evaluation standard that does not depend on it. Stage 5 (Self-Transformation, less than 1%): They understand that all systems—including their own—are constructed and can freely switch between multiple frameworks. This framework explains a perplexing phenomenon: why does a system designed to "not require trusting anyone" generate more fanatical faith in practice than traditional finance? Satoshi Nakamoto's design is Stage 5. Starting from first principles, he created a protocol that required trust in no one—no banks, no governments, no developers, not even Satoshi Nakamoto himself. Then he did something only Stage 5 would do: disappear. No CEO, no company, no office, no roadmap, no quarterly reports. The protocol was the rule, the code was the law. It was a completely de-authoritarian design. But when the Stage 3 crowd—who made up 80% of the population—rushed in, the first thing they did was rebuild the authority structure. Because Stage 3's meaning-building system needed external anchors, they couldn't operate in an environment without authority. Without authority, they created one. Thus, Bitcoin became a religion. Not a metaphor, but a structural isomorphism: Satoshi Nakamoto became an anonymous prophet. He created the protocol and then disappeared into history; no one knows who he was. This state of "ownerlessness" has ironically become the most powerful narrative—no one can kill a movement without a leader, no one can question a person who doesn't exist. If Satoshi Nakamoto were still alive, he would be a target, make mistakes, and be controversial. It is precisely because he is gone that he has become an unquestionable entity. The white paper has become the Bible. It's only nine pages long, but the community uses it in the same way religious believers use scripture—interpreting it verse by verse, selectively quoting, and using the original text to judge all disputes. When two factions argued fiercely over block size, both sides claimed their interpretation was "faithful to the original meaning of the white paper." May 22nd, Pizza Day, has become Genesis Day—in 2010, programmer Laszlo Hanyecz bought two pizzas with 10,000 Bitcoins, marking the first time Bitcoin was used for a physical transaction. This date is permanently commemorated by the community, its ritualistic significance no less than any religious holiday. The hard forks of BCH and BSV represent a sectarian split—a fierce debate over "what Bitcoin should be," as intense as the doctrinal wars of the Reformation. The full story of this conflict will be detailed later. This is not a betrayal of Satoshi Nakamoto's design; it's an inevitable outcome of Stage 3. They cannot operate without external authority—give them a godless system, and they will immediately create one. The overriding of centralized beliefs by decentralized protocols is not accidental; it's an inevitable result of the human mindset. The speed at which consensus expands rivals any religious spread in human history. Along this timeline of expansion, Leviathan's attitude towards this experiment underwent a complete evolution from neglect to suppression to co-optation: In 2011, only a few thousand people in the geek community were involved—cryptography enthusiasts and technology pioneers, mostly driven by curiosity and idealism. In 2013, programmers and Silicon Valley VCs began to enter the market. Bitcoin broke $1,000 for the first time, making headlines in mainstream media. In 2017, the ICO bubble led even taxi drivers to discuss blockchain. This marked the first wave of large-scale retail investor entry. In 2021, Tesla bought Bitcoin, NFTs fetched astronomical prices, and institutions began to take it seriously. In the same year, China imposed a complete ban on cryptocurrency mining and trading—Leviathan chose to suppress it. Over 65% of the world's computing power was declared illegal overnight, mining farms were shut down, mining machines were dismantled, and miners went overseas—millions of ASIC mining machines were loaded into containers and shipped across the ocean to Kazakhstan, Texas, and Siberia. Bitcoin's computing power was redistributed from China to various parts of the world within a few months. A country's complete ban did not kill the network, nor even bring it to a standstill for a single day. This in itself is the most powerful proof of the resilience of this experiment. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF—Leviathan chose to incorporate it. Traditional financial giants such as BlackRock, Fidelity, and Invesco entered the fray. This was a landmark moment when consensus moved from the public to the system, but it may also be a turning point for the spirit of libertarianism: Bitcoin being incorporated into the regulatory framework of the traditional financial system means that Leviathan was not there to destroy it, but to tame it. When your Bitcoin is housed in an ETF, held by traditional brokerages, and traded on the New York Stock Exchange, do you truly still possess the freedom to "not trust anyone"? In 2025, the power struggle at the sovereign level will begin. China's suppression and the US's co-opting—two paths leading to the same destination: Leviathan will not allow an uncontrolled financial system to remain forever outside the system. But neither path has killed the network. Each new layer of believers enters not because they understand decentralization, but because "everyone else is buying." From geeks to sovereignty, fourteen years have traversed a path that traditional religions took millennia to complete. The most important ritual in the Bitcoin religion is the halving. But to understand halving, you must first understand miners. The security of the Bitcoin network isn't guaranteed by cryptography alone; it requires real physical investment. Miners use electricity to power specialized chips to perform massive hash calculations, competing for the right to record each block. The winner receives the block reward—newly minted Bitcoins. This is essentially an investment: investing in electricity and hardware costs, betting that the produced Bitcoins will sell for enough to cover costs and generate a profit. This investment has fueled a fifteen-year-long arms race in computing power. Early miners used laptop CPUs to mine Bitcoin, which was quickly replaced by GPUs, then FPGAs, and finally specially designed ASIC chips—each generation of hardware had hundreds or thousands of times more computing power than the previous one, rendering the previous generation of hardware instantly obsolete. Around this chain of computing power competition, a capital-intensive industry sprang up: mining machine manufacturers (Bitmain, Canaan Creative), mining farm operators, and mining pool service providers. Mining farms chased the world's cheapest electricity—from hydropower during the rainy season in southwest China and thermal power in Inner Mongolia, to natural gas in North America, geothermal energy in Iceland, and surplus power in Central Asia. Mining pools aggregated computing power scattered globally, reducing the income fluctuations of individual miners; essentially, they were funds for computing power. Before the Chinese ban in 2021, China controlled more than 65% of the world's Bitcoin computing power. Understanding the miner's economic model—income equals block rewards plus transaction fees, and costs equal electricity costs plus hardware depreciation—is essential to understanding what the halving means. Satoshi Nakamoto wrote an unchangeable rule into the protocol: every 210,000 blocks (approximately four years), the block reward for miners halves. It was 50 coins in 2009, 25 in 2012, 12.5 in 2016, 6.25 in 2020, and 3.125 in 2024. This is a deflationary curve hard-coded into the code, which no one can modify—unless you can convince a majority of nodes on the network to agree to change the rule, which is politically virtually impossible. Technically, halving is the core mechanism of Bitcoin's monetary policy. It ensures that the total supply limit of 21 million coins is eventually approached but never exceeded. The rate of Bitcoin issuance is predetermined, completely transparent, and not subject to anyone's will—this is the fundamental difference between it and fiat currency. Sociologically speaking, however, halving has become a pilgrimage cycle for believers. Before each halving, a wave of narratives about a "halving rally" emerges in the community—reduced supply inevitably leads to price increases, and a new bull market is on the horizon. History seems to validate this: after the 2012 halving, Bitcoin rose from $12 to $1100; after the 2016 halving, from $650 to $20,000; and after the 2020 halving, from $9000 to $69,000. What about after the 2024 halving? From $64,000 to $126,000—an increase of approximately 100%, which sounds like a lot, but compared to the previous three halvings that saw increases of tens of times, the amplitude is visibly compressed. This data is the most powerful evangelistic tool for the Bitcoin faith. But believers spread this data not because they understood the mechanism by which supply contraction affects prices in monetary economics, but for a simpler reason: "Prices went up after the last halving." Stage 3 logic doesn't need causality; it only needs the appearance of historical patterns. Halving turns technical parameters into prophecies and protocol rules into dogma. But the other side of halving is dangerous. This will be discussed in detail later. The Cycle of Narratives A bull market is like igniting a pile of firewood. The total amount of firewood is limited—it corresponds to a pool of potential new buyers. Each piece of firewood lit represents someone being drawn into the market by the group's consensus. The size of a fire doesn't depend on the fire itself, but on how many unburnt pieces of wood remain. The moment the flames are at their fiercest—the day with the highest trading volume—is precisely when the last batch of wood has just been ignited and the remaining fuel has been exhausted. Therefore, the moment the fire is at its strongest is the moment it's about to go out. Why is the peak of a bull market always marked by the highest trading volume? The answer isn't in finance, but in psychology. Why are all the pieces of wood ignited? Because Stage 3 individuals cannot help but be ignited—group consensus is their oxygen. When everyone around them is making money, their social media feeds are filled with reports of profits, and the headlines are all about record highs, the Stage 3 brain doesn't analyze fundamentals; it sends an irresistible signal: I should be there too. The halving here acts as an igniter. The supply contraction narrative that occurs every four years provides the first spark for a new round of firewood. But what truly determines the size of the fire is not the halving itself, but how many unburnt pieces of wood remain. The history of the crypto world is a history of narrative iteration. The Bitcoin craze laid the foundation of faith for the entire industry, but faith needs constant renewal—each new narrative essentially seeks new points of excitement within the consensus framework pioneered by Bitcoin. And each narrative doesn't appear out of thin air: they each address a real problem and create a new illusion. The Altcoin Era (2011–2014): Copying is Innovation. Bitcoin proved the feasibility of decentralized currency, but its code was open source—meaning anyone could copy it, change a few parameters, and start a new chain. Litecoin changed the block time from 10 minutes to 2.5 minutes, and Dogecoin removed the total supply limit and replaced it with a Shiba Inu icon. These "innovations" seem absurd today, but at the time they addressed a real problem: Bitcoin was too expensive and too slow; the market needed alternatives. The illusion lies in the fact that changing parameters does not equal improvement, and copying code does not equal copying consensus. The vast majority of altcoins ultimately go to zero because they copied Bitcoin's code but failed to replicate Bitcoin's network effects and first-mover advantage. Ethereum (2015): A Leap in Infrastructure. If Bitcoin proved the feasibility of "decentralized ledgerkeeping," Ethereum upgraded the blockchain from a ledger to a platform. A Russian-Canadian teenager named Vitalik Buterin wrote the Ethereum white paper at the age of 19, proposing a seemingly simple idea: what if the blockchain could not only record "who transferred how much money to whom," but also record and execute arbitrary program logic? This is smart contracts. Ethereum, with its Turing-complete Virtual Machine (EVM), transformed "code is law" from a slogan into infrastructure. From then on, the blockchain was not just a ledger, but a globally shared, unstoppable computer. The emergence of Ethereum made all subsequent narratives—ICOs, DeFi, NFTs, MEMEs—technically possible. It's not part of a narrative iteration, but the foundation of all subsequent narratives. However, "code is law" faced its ultimate test in 2016. A smart contract called The DAO was hacked, resulting in the theft of 3.6 million ETH. The Ethereum community voted to hard fork and roll back the transactions, thus creating Ethereum Classic (ETC). This event essentially acknowledged the fact that code is not law; consensus is. The ICO era (2017): White papers equal fundraising. Ethereum's smart contracts lowered the barrier to entry for issuing tokens from "knowing how to write blockchain underlying code" to "knowing how to write a white paper." The ERC-20 standard allowed anyone to create a token in minutes, making ICOs (Initial Coin Offerings) the most efficient fundraising machine in history. It addressed a real problem: traditional venture capital had too long a cycle and too high a barrier to entry, leading to the monopolization of excellent projects by capital. ICOs democratized investment rights—anyone could participate in early-stage projects using ETH. The illusion lies in the fact that lowering the threshold for fundraising also lowers the threshold for scams. A single PowerPoint presentation can raise tens of millions of dollars, and even taxi drivers are discussing blockchain. The vast majority of ICO projects never deliver any product after receiving funding. The 2018 crash was inevitable: when fundraising has no constraints, money will flow to those who are best storytellers, not those who are best at doing the work. The DeFi Era (2020): Rebuilding Wall Street on the Chain. DeFi (Decentralized Finance) attempts to answer a deeper question: since blockchain is inherently financial, why do financial activities still rely on centralized exchanges and lending platforms? Protocols like Uniswap, Compound, and MakerDAO replace financial intermediaries with smart contracts, enabling permissionless lending, trading, and stablecoin issuance. These are genuine innovations. The illusion lies in "yield." The essence of liquidity mining is subsidizing users with token inflation; annualized returns of hundreds or even thousands of percentage points do not come from real economic activity, but from the dilution of funds and tokens from later entrants. When subsidies stopped and users withdrew, the TVL (Total Value Locked) of most DeFi protocols plummeted by over 90%. DeFi proved the feasibility of on-chain finance, but it also proved that returns without real demand were merely a variation of Ponzi schemes. The NFT Era (2021): Everything Can Be On-Chain. NFTs (Non-Fungible Tokens) allowed non-financial users to understand blockchain for the first time. Previously, the blockchain narrative revolved around "money"—currency, payments, and finance. NFTs expanded the narrative to "ownership"—a picture, a piece of music, a game item—all could be registered and traded on-chain. Bored Ape and CryptoPunks turned avatars into identity symbols, allowing artists to bypass galleries and directly reach buyers for the first time. It addressed a real problem: the long-standing lack of ownership of digital content, and the severe exploitation of creators in the platform economy. The illusion lies in the fact that the blockchain only records a correspondence between an ID and an address. What that ID represents—a picture, a piece of music, or nothing at all—is not recorded on the chain, nor is it guaranteed. Ownership does not equal value. You own a JPG image with an on-chain identifier, but anyone can right-click and save the same image. When speculation recedes, the shelf life of social currencies is much shorter than imagined. RWA Narrative (2023–): Back to Reality. After experiencing the altcoin bubble, the ICO fundraising scams, the DeFi yield illusion, and the NFT ownership illusion, the crypto world seems to be starting to "sense." RWA (Real-World Assets) attempts to move traditional assets such as government bonds, real estate, and equity onto the blockchain, using blockchain infrastructure as a distribution channel for traditional finance. On-chain assets finally have real cash flow backing—but at the cost of returning value anchoring to off-chain. You buy a tokenized US Treasury bond on the chain, but the underlying compliance, custody, and redemption all rely on centralized intermediaries. Is this a "victory for decentralization" or a "return to centralization"? The answer is probably the latter. The MEME Era (2024–): No More Pretense. Each previous narrative disguised itself to varying degrees as "technological innovation" or a "paradigm revolution." MEME coin is the first narrative to completely tear off the disguise. There's no technology, no product, no roadmap, and not even any pretense of "doing things." An animal icon, inexplicably popular, with a market capitalization of billions. But MEME coin is the most honest—those who buy it aren't buying assets, but a sense of participation, belonging, and the emotional experience of "I was there too." Emotional value outweighs practical value; this is the true product. Looking back at this evolutionary chain, a disturbing trend emerges: the technological content of each narrative is decreasing, the speculative purity is increasing, and the cycle is shortening. Altcoins at least require compiling a blockchain, ICOs require writing a white paper, DeFi requires deploying smart contracts, and NFTs require creating a set of diagrams—but with MEME, none of that is needed. An ICO project that could be popular for months in 2017 might only have a lifespan of a few hours in 2024. What does this curve point to as the end result? Perhaps the crypto world is honestly demonstrating its unchanging nature: it's a speculative market where consensus pricing dictates the price, and narratives are merely the entry ticket to each bull market. So what is a bear market? It's waiting for new fuel to grow. A new generation grows up, accumulating enough capital, but hasn't yet experienced the lessons of a crash. The cycle won't disappear, but the amplitude will compress—after the old fuel has burned once, some people will no longer be ignited by the same narrative (a few people have completed the leap from Stage 3 to Stage 4 through losses), while the total amount of new fuel is diminishing at the margin. The previous chapter chronologically covered seven narratives. Now, let's step back and examine the structure behind the timeline. There's a fact the blockchain world is reluctant to face: aside from Bitcoin, Ethereum, and a few leading platform coins, the operating logic of the vast majority of crypto assets is no different from that of internet celebrities—their popularity is inexplicable, lacking logic and fundamentals, purely attention-driven. An animal icon, a market capitalization of billions—you can't explain it using any rational framework. MEME coin simply pierced this veil. But in fact, most altcoins, most ICO tokens, and most DeFi governance tokens share the same underlying logic: attention equals market capitalization, and narrative equals fundamentals. Cryptocurrencies aren't a category, they're a framework—almost all crypto assets, except for a very few with real cash flow or non-fungible network effects, can be understood using this framework. This reveals a fundamental nature of the crypto market: traditional value investing frameworks fail here. The three pillars of value investing—intrinsic value, margin of safety, and long-termism—each require cash flow as a foundation. To assess a company's worth, you need to predict its future free cash flow and then discount it back to today (DCF). To find a margin of safety, you need to know how much something worth one dollar is worth and then buy it at half price. To be a long-term investor, you need to be confident that time is on your side—good companies accumulate value over time, and bad companies are eliminated by time. But crypto assets lack cash flow. Bitcoin doesn't generate profit, Ethereum's gas fees go to miners and validators, not token holders, and most tokens don't even generate revenue. Without cash flow, there's no intrinsic value to calculate; without intrinsic value, there's no margin of safety to measure; without a margin of safety, long-term holding isn't "value investing," but merely another form of faith. Without a foundation, all the analytical frameworks above are castles in the air. So, in a market where value investing fails, what determines the price? First, the attention economy. In a market without cash flow, profit, or verifiable fundamentals, attention is the only scarce resource. A project's core competitiveness isn't technology or product, but the ability to acquire and maintain attention. KOL endorsements, community operations, airdrop incentives, meme dissemination—these aren't marketing tactics; they are the product itself. People buying influencer-endorsed coins aren't buying assets, but a sense of participation, belonging, and the emotional experience of "I was there too." Emotional value outweighs practical value. Secondly, the illusion of liquidity. The seemingly booming market capitalization and trading volume of trending cryptocurrencies are built on extremely fragile liquidity. A token with a nominal market capitalization of $1 billion may only have a few million in actual buying pressure—the actual liquidation depth of most tokens is far lower than their nominal market capitalization. When holders sell off in a concentrated manner, the price can drop to zero within minutes. This is not an anomaly in the market; it is the norm. The "value" of most assets in the crypto world has never truly existed; it is merely an illusion briefly reached between buyers and sellers. Understanding trending cryptocurrencies means understanding the true nature of the crypto market: it is an attention-driven market where consensus pricing prevails, and narratives are merely the entry ticket to each bull market. This is itself an observation of an experiment—when you give the market complete freedom and remove all regulatory constraints, the equilibrium state that the market ultimately converges to is not rational pricing, but an attention casino. Will Bitcoin Collapse? This is a dangerous judgment, but I feel it's necessary to say it. Let's go back to the early days of Bitcoin. In the early days of Bitcoin, Satoshi Nakamoto wrote a 1MB block size limit to prevent spam attacks. This was a temporary solution and was never intended to be permanent. However, a protracted civil war erupted in the Bitcoin community over this line of code. The scaling proponents argued that Bitcoin should become a global payment system and that the block size must be increased—the white paper's title clearly states that it's a "peer-to-peer electronic cash system." Conservatives argued for prioritizing decentralization, even at the expense of performance—larger blocks raised the barrier to entry for running full nodes, ultimately limiting transaction verification to large institutions and rendering decentralization meaningless. The technical debate quickly morphed into a battle of beliefs, with both sides claiming to be the true "faithful to Satoshi Nakamoto's original intent." Ultimately, the Bitcoin Core development team seized control of the code repository merging process, effectively hijacking Bitcoin's technological path under the guise of decentralization. The small-block approach prevailed. The cost was that Bitcoin's TPS (transactions per second) cap was permanently locked in single digits. The consequences of this decision were far-reaching. Early on, major companies like Microsoft, Dell, Newegg, and Steam integrated Bitcoin payments, marking the closest Bitcoin came to realizing its vision of "electronic cash." But as on-chain congestion worsened, transaction fees soared, and confirmation times lengthened, users voted with their feet, and one company after another abandoned Bitcoin payments. The Lightning Network was highly anticipated, but years later, it has yet to become a mainstream payment solution—it solved the on-chain congestion problem but introduced new complexities and user experience issues. On August 1, 2017, the scaling proponents finally opted for a hard fork, creating Bitcoin Cash (BCH). This wasn't a technical upgrade, but a formal split within the community—a doctrinal war about "what Bitcoin should be." One side said Bitcoin should be currency, the other said it should be gold. One side wanted functionality, the other wanted a narrative. Ultimately, the narrative won. This is a key observation from this experiment: even in the most decentralized systems, power spontaneously recentralizes. Controlling the codebase means controlling the definition; controlling the definition means controlling sovereignty. Decentralized protocols cannot prevent centralized governance. The Bitcoin white paper is titled "Peer-to-Peer Electronic Cash System"—ironically, no one buys anything with Bitcoin today. What's left of something that has lost its functionality? Only a narrative. Thus, Bitcoin transformed into "digital gold." But the "digital gold" analogy doesn't hold up to scrutiny. Gold's scarcity comes from physical laws—the chemical properties of element 79 on the periodic table are determined by the Big Bang and supernova nucleosynthesis, which no one can change. But Bitcoin's scarcity comes from its code protocol, and code can be copied. In fact, it has been copied countless times—LTC, DOGE, forks like BCH and BSV, and countless faster, more feature-rich competing chains. Bitcoin's only non-replicable aspect is its network effect and first-mover advantage, but network effects are not physical laws; they can be eroded, migrated, and replaced. Gold doesn't need to worry about a "Gold 2.0" one day; Bitcoin cannot. Gold is backed by massive non-financial demand—jewelry consumption, electronics industry, aerospace, medical devices, and tens of thousands of tons of strategic reserves held by central banks worldwide. This demand provides a solid price floor for gold: even if all speculators exit simultaneously, gold will still have buyers and users. Bitcoin lacks this safety net. It is not a raw material for any industrial process, nor a necessity for any consumer scenario. All of Bitcoin's demand comes from a single source: the belief that it will become more expensive in the future. Once this belief wavers, no fundamental demand can support the price. The ultimate question in the consensus game is: where is the last buyer? From retail investors to institutions to sovereign wealth funds, the path of consensus expansion seems unstoppable, but the entry of each new type of buyer shrinks the pool of remaining potential buyers. When everyone has entered the market, who will be left holding the bag? There is also a more fundamental crisis: the collapse of the security model. As mentioned earlier, halving is a metronome of faith. But from an engineering perspective, halving is a time bomb. The assumption supporting Bitcoin's security model is that as block rewards decrease, transaction fees will steadily increase due to the scarcity of block space, eventually replacing block rewards as the main source of income for miners. But reality has proven otherwise—with each halving, miners' block reward income is halved, while electricity costs and hardware depreciation remain unchanged. Profit margins are squeezed, marginal miners exit the market, the network's hashrate decreases, and security is consequently reduced. Meanwhile, users are leaving due to high transaction fees, and businesses are abandoning the service due to poor user experience. On-chain transaction volume and fee revenue have not grown as expected. When block rewards eventually approach zero, and transaction fees cannot support sufficient computing power, who will guarantee network security? Bitcoin may not collapse in the way people imagine—not overnight to zero, but slowly losing its security foundation with each halving, until a black swan event triggers it at a critical point. Each halving reduces its time to find the answer by four years. After stripping away the veneer of faith and dismantling the narrative mechanism, a more fundamental question must be addressed: how many people truly demand freedom? The real demand for blockchain technology exists. A large number of people are using it—for cross-border fund transfers under capital controls, hedging in gray areas, privacy protection, and censorship-resistant payments. A Chinese businessman needs to transfer money abroad, an Argentinian family needs to hedge against currency devaluation, an individual in a sanctioned region needs access to the global financial network, and there are also gray-area money laundering and various unspeakable transactions. These needs are rigid and real. Users don't care about the ideal of decentralization, but they need this channel. Stablecoins are the core carrier of these needs—USDT's daily transaction volume on the Tron chain has exceeded the total cross-border payments of many medium-sized countries. However, these needs share a common characteristic: niche, hidden, and with low ceilings. How many people need to circumvent capital controls? How large are the scenarios requiring anonymous transactions? What percentage of the global population is affected by financial sanctions? This is a real but limited market. Those who need it are already using it. The real problem lies with the industry. The term "small circle" doesn't refer to users—users have genuine needs. "Small circle" refers to industry professionals. The scale of development and funding of exchanges, public chains, DApp developers, and investment institutions in the crypto industry are configured according to the logic of the mass market. Billions of dollars have been invested in payments, social media, games, content platforms, and supply chain management—all based on a flawed assumption: ordinary people need decentralization. Ordinary people don't. 99% of people would rather use WeChat Pay than manage their private keys. Convenience takes precedence over sovereignty. Freedom has a cost, and most people are unwilling to pay that cost—they don't even see it as a loss. Those who need it are already using it, and they don't need much infrastructure—a wallet, an exchange, and a stable blockchain are enough. The demand ceiling is low, but the industry is investing in it as if it were an infinite ceiling. This is the essence of "self-indulgence within a small circle"—practitioners are building a pipeline for a niche need as if it were world-changing infrastructure. The mismatch in scale is the root cause of almost all the huge investments that have failed in this industry. It's not that the technology is bad, it's not that the team is bad, it's that the market simply isn't big enough. This also explains why the business models of the crypto industry have ultimately converged into three: exchanges, collecting fees and listing fees from speculators; stablecoins, collecting seigniorage and interest rate differentials—Tether uses user-deposited dollars to buy US Treasury bonds, generating over $13 billion in net profit in 2024 with a team of less than 100 people, surpassing most Wall Street investment banks and becoming the most profitable company in the crypto industry, bar none; and quantitative trading, profiting from market fluctuations and market making. These three business models serve three different types of people: exchanges serve speculators—a large group whose goal is to make money, who don't care about decentralization or libertarianism, and who need volatility and leverage; stablecoins serve a niche group of users with real needs—cross-border transfers, hedging, and gray market transactions—who need a conduit; and quantitative trading serves the market's liquidity. None of them are serving a "decentralized future for a billion people." The only truly profitable business is the infrastructure that serves speculators and those with real needs—not the grand narratives that try to get ordinary people to embrace blockchain. But this niche need is enough. Even if Bitcoin's fate, as predicted in the previous chapter, slowly erodes its security foundation with each halving, blockchain as infrastructure will not disappear. Stablecoins don't need Bitcoin, Ethereum doesn't need Bitcoin, and value transfer networks don't need to be tied to a single chain. Bitcoin is the flagship product of this experiment, but not the only one. Blockchain technology may be rudimentary, applications may be scarce, and speculation may be rampant—but it has opened a door: for the first time, individuals possess the ability to store and transfer value without relying on any institution. This is humanity's weapon against Leviathan. In a world where governments can freeze bank accounts, central banks can print unlimited amounts of money, and financial institutions can impose arbitrary restrictions, a value transfer network that no one can shut down has inherent significance. Even if the most successful product of this experiment is a compromise—a centrally issued, decentralized alternative to the dollar—it still proves one thing: Leviathan cannot completely control the flow of value. In 2021, China completely banned cryptocurrency mining and trading. The Bitcoin network didn't stop for a second. Over 65% of the global computing power was wiped out by the ban, millions of mining machines migrated across continents, and within months, the computing power regrouped in North America, Central Asia, and Northern Europe. A country used all its administrative power to shut down a network, yet not a single block was missing. This is perhaps the most powerful illustration of the phrase "cannot be shut down." Once this door is opened, it can never be closed again. Like all real experiments, it is full of failures, noise, and side effects. Most projects will go to zero, most narratives will be forgotten, and most participants will lose money. This market is not lacking in fanaticism, scams, self-righteous idealists, or bloodthirsty speculators. But the value of an experiment never lies in the success of every step, but in whether it opens up a possibility that didn't exist before. Just as printing disrupted the church's monopoly on knowledge, and the internet disrupted traditional media's monopoly on information, blockchain shakes the financial intermediaries' monopoly on the flow of value. This disruption may take decades to show its full consequences, but the direction is irreversible. Pandora's box has been opened. Returning to the initial question: What exactly is blockchain? More than a decade has passed, and the answer is becoming increasingly simple: it is a hardcore liberal experiment. This experiment, using fifteen years and trillions of dollars, has answered an ancient question of political philosophy for humanity—where are the boundaries of freedom? The answer is: freedom is real, expensive, and only a few can wield it. But as long as this few exist, this door can never be closed. True freedom is not about owning a decentralized wallet, but about having a mind that is not dictated by the emotions of the masses.
Joy
Weatherly
Anais