The Development of Crypto Assets: From Marginal to Mainstream

Introduction

Time flies, and the blockchain industry has undergone tremendous changes. From winter to craze, from destruction to rebirth, in December 2024, the price of Bitcoin broke through the $100,000 mark, with a market value rising to the seventh largest global asset, second only to Alphabet (Google). This milestone breakthrough is not only a numerical victory but also marks an important turning point for Crypto Assets from the fringes to the mainstream. This article will outline the development process of Bitcoin from gray to compliance, introduce the main categories of Crypto Assets, and explore the future prospects of Crypto Assets.

The Rise of Bitcoin

On November 1, 2008, a mysterious person or group using the pseudonym Satoshi Nakamoto published the white paper "Bitcoin: A Peer-to-Peer Electronic Cash System." This innovative proposal addressed the issue of the issuance and circulation of Crypto Assets without a central authority through decentralized blockchain technology and a proof-of-work mechanism.

On January 3, 2009, the Bitcoin genesis block was born on a small server in Helsinki, Netherlands, marking the beginning of a new era of Crypto Assets.

On May 22, 2010, a netizen purchased two pizzas for 10,000 Bitcoins, marking the first real transaction of Bitcoin. This transaction was worth about 30 dollars at the time, and today it exceeds 1 billion dollars. To commemorate this event, May 22 is designated as "Pizza Day" by the encryption community.

The main application scenario of Bitcoin in its early days was dark web transactions. Between 2011 and 2013, the Bitcoin circulating on the dark web platform Silk Road accounted for as much as 80% of the total circulation.

In 2013, Bitcoin began to attract the attention of mainstream institutions. In September of the same year, the first Bitcoin trust fund, GBTC, was launched on the secondary market of US stocks, and the price of Bitcoin also broke through the $1200 mark.

During this period, early exchanges emerged like mushrooms after rain. Mt. Gox once became the largest Bitcoin exchange in the world, but went bankrupt after a hacking attack in February 2014, leading to a collapse of the Crypto Assets market as a whole. Another early exchange, Coinbase, was founded in 2012 and successfully went public in April 2021, becoming the first listed Crypto Assets company in the United States.

In December 2017, the Chicago Mercantile Exchange launched the world's first Bitcoin futures, and the price of Bitcoin subsequently soared to nearly $20,000.

In August 2020, the software company MicroStrategy began purchasing Bitcoin on a large scale, becoming the first company to include Bitcoin on its balance sheet among major U.S. stock exchanges. As of now, MicroStrategy holds approximately 440,000 coins, making it the publicly traded company with the largest holdings.

Tesla CEO Elon Musk is also a supporter of Crypto Assets. Tesla invested $1.5 billion in buying Bitcoin in January 2021. In April of the same year, the price of Bitcoin surpassed $64,000, and in November it even reached a historical high of $69,000.

In 2022, affected by the bankruptcy of FTX, the world's second-largest centralized Crypto Assets exchange, the price of Bitcoin once fell to $15,500. Tesla also sold 75% of its Bitcoin holdings at the low point.

In January 2024, BlackRock launched the Bitcoin spot ETF (IBIT), pushing the Bitcoin price past the $40,000 mark. In November of the same year, with the results of the U.S. elections revealed, the crypto market heated up again, and the Bitcoin price continuously set new historical highs, reaching a maximum of $108,000.

Main Crypto Assets Classification

There are many types of Crypto Assets, and this article mainly introduces the three largest by market capitalization: Layer1, Meme, and DeFi.

Layer1

Layer 1 is a general term for underlying blockchains, representing projects including Bitcoin, Ethereum, BNB, Solana, and Sui, providing infrastructure support for the entire ecosystem.

Ethereum was proposed by Vitalik Buterin in November 2013 and is a decentralized global computing platform that supports the execution of complex smart contracts. Ethereum pioneered the era of smart contracts on the blockchain, is the starting point of Web3, and is the only Crypto Asset besides Bitcoin that has a spot ETF.

In July 2017, a trading platform was launched, which has now become the largest Crypto Assets exchange in the world. Its platform coin is currently the highest market value platform coin, which can be used to enjoy trading fee discounts, participate in new project launches, and serve as a Gas token on a certain smart chain.

In September 2017, former Ethereum co-founder Charles Hoskinson launched the PoS blockchain Cardano, aimed at addressing Ethereum's shortcomings, including interoperability, scalability, and sustainability.

In November 2017, former Qualcomm engineer Anatoly Yakovenko released the Solana white paper, introducing the "Proof of History" (PoH) mechanism. Solana, as a representative of high-performance Layer 1, sacrificed some decentralization compared to Ethereum, but improved performance by a hundredfold.

In September 2021, a senior engineer from Facebook's (now Meta) encryption department founded Mysten Labs and launched the high-performance Layer1 Sui in August of the following year. Sui writes smart contracts using the Move language and adopts an object-based data model to achieve high throughput and low latency. Sui is experiencing rapid growth in 2024 and is dubbed the "Solana Killer."

Meme

Meme coin is a unique digital asset in the Crypto Assets field, blending elements of humor, creativity, and social interaction.

On December 6, 2013, programmers Jackson Palmer and Billy Markus, inspired by the popular Shiba Inu "Doge" meme, created Dogecoin. Dogecoin was initially just a joke project mocking the extravagant phenomena of the Crypto Assets circle, but it became the first Meme coin and is also the favorite Crypto Asset of a well-known entrepreneur.

Other well-known Meme coins also include SHIB and PEPE on Ethereum, as well as BONK on Solana.

DeFi

DeFi (Decentralized Finance) refers to the financial application ecosystem running on the blockchain, not controlled by central authorities, but executing transactions through smart contracts.

In the summer of 2020, DeFi projects exploded on Ethereum, driving the total market capitalization of Crypto Assets to grow nearly 100 times. DeFi is currently the largest innovation at the application layer of blockchain.

DeFi projects mainly include stablecoins, decentralized exchanges (DEX), and lending platforms.

Stablecoins are divided into two categories: centralized (such as USDT, USDC) and decentralized (such as DAI, USDe), aimed at maintaining a 1:1 exchange rate with fiat currencies (mainly the US dollar).

DEX is represented by certain DEX and Curve. Among them, certain DEX is the largest DEX on Ethereum, with a trading volume exceeding $450 billion in 2023, accounting for half of the entire DEX market and surpassing the spot trading volume of the largest exchange in the United States.

Lending platforms are represented by AAVE and Compound. AAVE is one of the largest lending projects on Ethereum, allowing users to borrow and lend multiple Crypto Assets and earn interest without the need for intermediaries. AAVE has not experienced any major security incidents to date.

Conclusion

As Bitcoin breaks through the $100,000 mark, we should adopt a more open attitude towards Crypto Assets. Mainstream Crypto Assets have become high liquidity and high value assets, and may be incorporated into the balance sheets of more companies in the future, and even become reserve assets for some countries.

Crypto Assets projects can be likened to early tech startups: Layer1 is similar to SaaS companies, Meme coins are akin to trendy brands, and DeFi resembles financial companies. Crypto Assets typically have voting rights, and some can even earn interest, similar to company stocks. However, compared to traditional stocks, the issuance threshold for Crypto Assets is lower, resulting in higher risks and more rampant speculation.

Web3 represents a significant technological revolution, with Crypto Assets being both a component and a byproduct of it. Although there may be bubbles in the Crypto Assets market, transformative technologies are often accompanied by bubbles. We should adopt a more inclusive attitude towards the development of Web3 and Crypto Assets.

In the Web3 world, everyone can choose their own role: investor, opinion leader, arbitrageur, developer, or merely an observer. The market is filled with greed and fear, and human nature has both good and evil sides. The era of adventure in Web3 has begun; there are inevitably shadows in the sunlight, but those who are unwilling to take risks will also miss out on the sunlight.