Home / Crypto Investing Theory (August 2026)

I have a simple crypto investing theory that it takes ~10 years for the mainstream world to meaningfully adopt a crypto use case after the initial hype cycle.

Bitcoin launched in 2008, and while the initial pitch was peer-to-peer money, Bitcoin's core use case as an alternative store of value emerged around 2011 or 2012. However, the Bitcoin ETFs didn't launch until 2021, which is when I'd argue the mainstream started to consider Bitcoin as an alternative store of value to gold.

Ethereum launched in 2015 and the first use case was an online investment club, but by 2017 it was clear that the killer use case was supporting decentralized finance more broadly. The idea was that every service Wall Street offers will be digitized and more accessible, more transparent, faster, and cheaper as a result. If this ~10 year theory is right, we're at the beginning of mainstream DeFi adoption now, which big institutions like Blackrock are calling "tokenization" - likely because they want a future where they control the trading of all assets as tokens, not a future where protocols disintermediate them entirely.

The last big initial hype cycle in crypto was NFTs in 2021. This was recent enough that most of us can't help but think of jpegs of ugly cartoon monkeys trading for $100k, but like the cycles before, there were good ideas hidden in the mess. It makes sense that people will want to own and trade digital assets. That could be buying digital art, investing in a musician's next album or even being paid a small royalty if your digital IP is used by AI agents. It's kind of crazy you can spend your life creating something, and AI can scrape it and sell it without paying you a dime. If there is a future where you can own your digital IP, I have to assume AI will prefer to handle that programatically, not set up a call with a lawyer to discuss terms.

If this all plays out, why would it take 10 years for an idea to enter the mainstream? I think it has something to do with crypto's unique combination of being online, initially unregulated, and heavily financialized, which leads to faster, shorter, and more frequent boom and bust cycles than we see in other industries. In a sense, crypto is a sped up fractal of the broader market cycles.

I wonder if in 1,000 years historians will look back on crypto cycles vs cycles in the traditional markets like we view forest fires in nature. In a natural environment, forest fires happen more frequently, whereas in a manmade environment, where we protect ourselves from fires, our efforts inadvertently cause less frequent but much larger fires. I have a fear we may also be doing this with the traditional financial system - patching up short term problems in a way that kicks the can down the road, whereas in crypto nearly everything burns down every few years and only a very few great projects live to see another cycle.

Crypto's short, extreme, unregulated cycles lead people to associate the entire idea underlying the cycle with unhinged speculation. 99% of people are not digging into complex on-chain analytics to see what people are actually using and paying for, they read a few headlines about the most sensational stories and the baby gets thrown out with the bath water. Then, over the course of the next 10 years, the speculators leave, the true missionaries remain to build out the tech, and when the idea comes back around, it's old and boring enough by that point that it attracts real users and value investors, and fewer speculators, and the technology starts to get valued more on fundamentals like usage and revenue and less on the hype of a new idea.

What's funny is that some of the best investment opportunities may be hiding in plain sight. Most of crypto is completely open-source, meaning anyone can invest in it and anyone can view real-time data on nearly every project. If you want to invest in a decentralized exchange, you can view every transaction made on that exchange. This is very different from private early-stage companies, where even the largest investors rarely get much insight into what's happening on a day-to-day basis, not to mention it's extremely difficult to gain access to invest in private deals in the first place. However, because the barrier to launching a crypto project is so low, the internet is flooded with bad projects, but there may be needles in the haystack that are valued far below what VC's would value the company at if it was raising in the private markets.

Going back to the ten year cycle theory, while crypto is ultimately a technology, like finance it is also lindy and amorphous. When it comes to money, it's often smarter to trust the older, more boring thing. And finance is also, at least partially, a social construct. The dollar has value because the government says it has value and we trust the government. But at the end of the day, dollars are pieces of paper we believe have value, and it appears that it takes 10 years for many of us to believe ones and zeroes backed by trusted tech can have value, too. Or at the very least, ones and zeros backed by tech that's backed by pieces of paper that are backed by the gov that's backed by trust in the gov, at least until we go back to trading sea shells. That would certainly be a lot simpler.