Challenges and Opportunities in the Encryption Industry: From Low Valleys to New Peaks

Recently, social media has been filled with criticisms and ridicule of the current state of the encryption industry, including from those who have once succeeded in this field. As a practitioner, I believe it is unnecessary to stand on a moral high ground and blame others just because the industry is in a downturn. After all, it is the existence and development of this industry that has created their achievements today.

Currently, the encryption industry is indeed facing a low period similar to those in 2018 or 2022. This is not just due to price issues, but also stems from people's doubts and hesitations about the industry. The past two years can be described as a hopeful period, but now most people have lost confidence in that hope. The main reason is that the long-anticipated "altcoin season" has not arrived as expected, coupled with the fact that the industry seems to have not produced new narratives over the past two years, or some new narratives quickly turned out to be fleeting.

However, the real pressure on the industry may not come from within, but from external factors. In recent years, the rapid development of AI technology has captured much of the attention of investors, including those in the encryption industry. It is understood that in the past year, many practitioners, especially developers, have turned to the AI field. This has become the last straw that broke the industry's confidence.

Nowadays, as the "shanzhai season" disappears without a trace, and comments about the "lack of new narratives" arise, combined with the crazy rise of AI, it seems that all that is left for the encryption circle are the sighs of practitioners. In addition, the recently emerging "coin-stock" track has also directly diverted the last portion of liquidity.

Faced with the combination of these subjective and objective problems, the encryption industry has indeed fallen into another low period. But as the saying goes, without a low, how can there be a peak? So, where are the opportunities in this industry now and in the future?

First of all, regarding the issue of "Shanzhai Season," although we cannot predict whether there will be another crazy market like in 2017 or 2021, there have still been many wealth creation myths in the past two years in terms of price and return multiples. However, these opportunities are no longer widespread "in full bloom," but are concentrated in specific fields or sectors. This trend is likely to continue, and we need to adjust our mindset and expectations.

If we draw an analogy to the internet era, we can think of how Amazon's stock price plummeted by 90% during the dot-com bubble burst, but then increased by over 600 times in the following 20 years, surpassing 40 times its peak at that time. Therefore, finding the "Amazon" in the encryption industry has become a new opportunity.

Secondly, regarding the new narrative, we can focus on the recently prominent topic of stablecoins. Whether in the West or the East, stablecoins have become the center of heated discussions. Recently, senior officials from the central bank mentioned stablecoins for the first time, highlighting their increasing importance. The influence of stablecoins should not be underestimated; their success may be comparable to the launch of Alipay, which addressed the security issues of online payments, thereby promoting the development of e-commerce and various online transaction activities. Perhaps in 10 years, upon reflection, we will find 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 is currently still in its infancy and may require 1-2 years of accumulation.

Finally, regarding AI, I have long believed that blockchain is not just a technology that serves humans, but to a large extent, it will become a native tool for AI, solving the information transmission between machines and the 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, seems to be possible only through the use of blockchain, unless we want future AI agents to be completely detached from human control.

Currently, this direction is still in its early stages for blockchain. It is worth noting that the AI agents mentioned here, in conjunction with blockchain, are not the kind of concept that was hyped up in January of this year; most of the hype was fleeting and should not be taken too seriously.

When some changes have already occurred or are about to come, what we can do is not resist, but gladly accept and adapt to the trend. Complaining and cursing are not a form of adaptation, but a struggle to accept reality. After expressing our emotions, we still need to move forward. Rationality will eventually triumph over emotion, and the encryption industry will not remain in a downturn forever. Why not face challenges again and embrace new opportunities?