Stop Pretending, This Is Just a Casino: On the Complete Collapse of Crypto Narratives

Anyway, it’s already 4 a.m. as I’m writing this. Maybe I should stop this kind of “doomsday” thinking about the structural problems of the crypto industry.

Article author, source: MarsBit

…On the decay of the original arguments for cryptocurrency…

While sorting through this article, several thought-provoking questions gradually surfaced:

First, the transmission pipeline and endpoint of ideology

From Ayn Rand to libertarians to Cypherpunks, and finally to crypto builders, this path forms an interesting case study showing how revolutionary movements are “captured” by their own incentive structures.

The original vision of cryptocurrency was as a tool for individual sovereignty, which was internally consistent. The problem is that “building a parallel financial system” and “maximizing token value” create two fundamentally different optimization goals, and market forces have, with great consistency, selected the latter.

Second, incentive corruption as a systemic (failure) feature

What’s fascinating is that despite the ubiquitous grand statements about “financial infrastructure,” the industry so quickly converged on “casino mechanisms.” This is not a bug, nor is it the failure of individual participants, but rather the predictable outcome when the following conditions occur:

Capital allocation rewards “narrative” rather than “utility”;

Liquidity allows for exits without achieving Product Market Fit (PMF);

Token models create a perverse feedback loop between “speculation” and “adoption.”

The L1 (public chain) wars are a perfect example: tens of billions of dollars were deployed, not because they solved real problems, but because capital was chasing rank-based bets in a tournament viewed as “winner takes all.”

The net result: massive value destruction, with no progress toward the stated goals.

Third, cognitive distortion and lack of calibration

The most underrated point here is that people are losing the ability to recognize sustainable business models. When you operate in an environment where market cap (mcap) is completely decoupled from fundamentals, you are essentially training your pattern recognition on noise.

Valuation becomes a kind of cult metric. Everyone is well-versed in the rituals (TVL, transaction counts, “ecosystem growth”), but the connection between these metrics and real value creation has been severed.

This causes an “adverse selection” problem: those who excel the most in the crypto space are often those whose value models are least applicable to productive economic activity.

Fourth, gamblification as a form of distributed harm

Normalizing zero-sum wealth extraction as a business strategy has externalities that go beyond individual participants. When “financial nihilism” evolves from a meme into the operating philosophy of millions of young people, you see a formation of preferences.

From a purely extractive perspective, they are training an entire generation on how to view economic participation.

The impact on social mobility is real: if your wealth generation model is “discovering asymmetric bets earlier than others,” rather than “creating value others are willing to pay for,” then you are optimizing for “lottery thinking.” This model is hard to scale.

Fifth, the problem of post hoc rationalization

“Do you want to make money, or do you want to prove you’re right?” But the more interesting question is: could this industry have evolved differently? Or were the incentive structures always destined to produce this outcome?

My view is: once tokens became the primary business model, gamblification was inevitable. When the funding mechanism itself depends on speculation to function, you cannot build a parallel financial infrastructure.

I have run these dynamics through various frameworks, and always reach the same conclusion:

It’s not that good technology was misapplied. Rather, the design of the incentive mechanisms fundamentally guaranteed this result.