Challenges and Opportunities in the encryption Industry

Recently, social media has been filled with criticism and mockery of the current state of the encryption industry, with some individuals who have found success in this field among the critics. As a practitioner, I believe it is unnecessary to stand on a moral high ground and point fingers just because the industry is in a downturn. After all, it is the existence and development of this industry that have created their achievements today. The phrase "stay true to the original intention" aptly expresses this meaning.

Currently, the encryption industry is facing a downturn similar to that of 2018 or 2022. This is not only due to price issues but also because people have developed doubts and hesitations about the industry. The past two years can be described as a hopeful period, but now most people scoff at that hope. The main reason is that the long-anticipated "altcoin season" has not arrived, and in addition, the industry seems to have failed to produce new narratives over the past two years, or some new narratives quickly became fleeting.

However, the real challenge to the industry may not come from within, but from an external factor: the rapid development of artificial intelligence. AI has captured most of the attention of investors, including those in the encryption industry. It is understood that in the past year, many practitioners, especially developers, have shifted to the AI field. This has become another significant pressure faced by the encryption industry.

When the "Shanzhai Season" disappears without a trace, and comments about the "lack of new narratives" arise, coupled with AI frantically seizing the market, it seems that all that is left for the encryption circle is the sighs of practitioners. In addition, the recently emerging "Coin-Stock" track has also directly diverted the last portion of liquidity.

In the face of the concentrated outbreak of these subjective and objective problems, the encryption circle has once again fallen into a low period. However, without lows, how can there be highs? So, where are the opportunities for this industry now and in the future?

First of all, regarding "Shanzhai Season", although we cannot predict whether there will be a crazy market like in 2017 or 2021, if we only look at prices and multiples, there have actually been quite a few wealth creation myths over the past two years. It's just that it is no longer blooming everywhere, but rather concentrated in certain sectors or projects. This trend is likely to continue, and we need to adjust our mindset and expectations.

Analogous to the internet era, Amazon's stock price dropped by 90% when the internet bubble burst, but over the next 20 years, it increased by more than 600 times, far exceeding the peak at that time. Therefore, finding the "Amazon" in the encryption industry has become a new opportunity.

Secondly, regarding the new narrative, the recently highly discussed stablecoin is a very good example. Whether in the West or the East, stablecoins have become a hot topic. At the recent Shanghai Lujiazui Forum, the central bank governor mentioned stablecoins for the first time, highlighting their importance. At the same time, a certain authoritative media outlet also rarely published an article introducing stablecoins.

The influence of stablecoins should not be underestimated; its successful promotion could pave the way for subsequent e-commerce and online transaction activities, much like how Alipay solved online payment security issues back in the day. Perhaps when we look back in 10 years, we will realize that the transformation occurred in that very year.

The prosperity of stablecoins is expected to significantly expand the user base of the encryption circle, truly opening up the market, bringing in new users, and ushering in the industry's "iPhone moment". However, this process still requires 1-2 years of accumulation.

Finally, regarding AI, blockchain is likely to become a native tool for AI, solving the issues of information transmission between machines and real interaction between machines and humans. With the development of AI agents, ensuring that communication between machines is secure and reliable, and can be verified by humans, blockchain seems to be an indispensable solution.

Currently, this direction is still in the early stages for blockchain. It is important to note that the AI agents mentioned here combined with blockchain are not the kind of concepts that were hyped up this January; most of the hype is not worth taking seriously.

When some changes have already occurred or are about to come, what we should do is not resist, but gladly accept and adapt to the trend.

Criticism is not a compliance, but a struggle to accept reality. After expressing emotions, we still need to move forward. Rationality will ultimately triumph over sensibility, and the encryption industry will not remain in a downturn forever. Why not face the wind once again?