Crypto Innovation Cycle
The crypto industry has been around for about 15 years, and many people have identified recurring patterns. One pattern I’ve noticed is what I call the crypto innovation cycle.
This cycle began with Bitcoin and consists of four phases.
Phase 1 — Invention #
In this phase, a new paradigm is invented. This idea typically reimagines something traditionally done differently, but crypto enables it to operate without centralized control. Phase one is always met with extreme skepticism as people struggle to grasp the core invention.
Phase 2 — Evangelism #
In this phase, core believers promote a narrative about how the invention will change society. Early adopters recognize the invention’s potential and craft stories to explain its value to the masses. This leads to the rise of subject matter experts who proselytize and educate others about the invention.
Phase 3 — Adoption #
In this phase, widespread adoption of the technology begins. Former skeptics become believers after emotionally connecting with a narrative. This phase also sees a surge of participants seeking to capitalize on the innovation without fully understanding its value proposition. Many people overlay their own narratives onto the invention, even if they conflict with its fundamental principles.
Phase 4 — Meme #
This final phase is driven entirely by narrative and community rather than innovation. Early believers start copying the original invention and adding their own spin, fragmenting the community into core believers (maximalists) and false prophets. This phase involves extensive copying, heated debates, and minimal innovation. Yet, at the end of phase four, a new innovation often emerges just when it seems like nothing new is possible.
Examples
- Bitcoin → Roger Ver → Users → DogeCoin
- Ethereum → Vitalik Buterin → Users → BSC/Avalanche
- DeFi → Hayden Adams → Users → PancakeSwap/SushiSwap
- Wif → Ansem/Murad → Users → PNut/Trump