The Crypto Arc

Optimism, Pessimism, And What’s Left

I’m back with another Peter Thiel-inspired mashup. As a self-proclaimed Thielogian, I often reflect on the future through the lens of the scripture (Zero to One). Thiel’s framework is remarkably flexible, enabling the dissection of ideas, trends, and movements. However, it can sometimes feel more like Wittgenstein’s ruler—its reliability depends heavily on perspective—than a consistently clear lens.

As a crypto investor, I frequently analyze narratives to better grasp opportunities. With our industry at an inflexion point, poised to close the arbitrage gap in emerging technology markets, I find myself pondering how to uncover and inspire superior ideas and products.

Through Thiel’s lens, I see the crypto timeline as a progression: from the definite optimism of Bitcoin’s early days, to the indefinite optimism of Web3’s grand visions—settling on finance as the killer app—followed by the indefinite pessimism of the memecoin casino era, and now a strategic submission to regulatory clarity, which feels like definite pessimism.

The journey traces a path from cypherpunk ideals, through startup fervor, into degeneration, and ultimately toward standardization.

Is this arc universal across trends? A revolutionary idea, once partially validated, becomes a hyped panacea. When it fails to meet lofty expectations, it’s cursed, only to eventually settle into the status quo. The revolution doesn’t fully materialize, but we still ride (for some) a satisfying loop on Gartner’s hype cycle.

In crypto, the grand hype cycle is obscured by price volatility. Each crypto cycle—Bitcoin, ICOs promising a world computer, DeFi, memecoins, and now regulation and TradFi integration—seems like a fractal of a larger pattern. Right now, we’re in the Trough of Disillusionment. In Carlotta Perez’s technological surge framework we’re at the turning point.

Web3 promised to turbocharge Web2 profits, but onchain, decentralized, and tokenized. Yet, Web2 or Web3 isn’t a place—it’s not a distinct “thing.” As I noted a couple of years ago, it’s better understood as a “user preference,” and today, that preference remains niche. If you’re constantly referencing the old to explain the new, you’re not building something truly novel.

Crypto is no longer a frontier market, but opportunities still exist at the frontier of this now-established space. At this stage of maturity, where do the biggest wins lie? Intuitively, they come from growth-stage or late-mover advantages.

It’s also worth noting that centralized exchanges, once definite optimists championing crypto adoption, have turned into pessimists, now focused on defending their market share rather than advancing onchain adoption.

Successful exchanges, alongside L1s, generated the best returns for investors. Counterintuitively, the most competitive landscapes—where optimism faded into pragmatism—produced the biggest wins.

Does this mean there are no secrets left to uncover? I believe there are, and today’s secrets are yesterday’s lessons. Have we built many innovative, valuable companies or networks?

The low-hanging fruit has been picked—most projects either mimic what’s come before or remix it to feign originality. Too many solutions chase nonexistent problems, while others simply aim to replicate traditional finance onchain.

Crypto is an inherently revisionist force that failed at revolution. Today it grapples with a core (perhaps false) dilemma: “Do you want to be right, or do you want to make money?” In other words, do you sell out to the old regime at the price they’re willing to pay? Revolutionaries, weary of crying in the memecoin casino, are increasingly taking the offer.

Building indefinite things that builders thought users “ought to want” (no, people don’t want to own their data) and the clear success of centralized providers led to the current impasse. Definite optimists are nearly impossible to find in crypto today, but in that “nearly impossible” lies your chance to invest at the frontier.