Crypto should not be viewed as a single "industry" like quantum computing or space technology, but rather as a completely new asset class and foundational technology . Like electricity in the last century and the internet in recent decades, it will permeate and fundamentally transform many existing business sectors while simultaneously creating entirely new industries.
For both entrepreneurs and investors, those who understand both the technology and the existing markets—that is, those who understand how cryptography will reshape these markets and give rise to new crypto-enabled giants—will have a significant advantage, regardless of whether the cryptographic layer is eventually abstracted (becomes invisible) on the user end.
If the internet is a protocol for transferring information from one person to another at zero marginal cost, then encryption is a protocol for transferring value from one person to another at (almost) zero marginal cost. The internet has already disrupted approximately 20% of global GDP and created numerous new business models. Encryption has the potential to disrupt an even larger proportion of global GDP, particularly in areas where transactions require the participation of trusted third parties (such as finance, law, and auditing), while also enabling entirely new business models (such as prediction markets and DePIN).
Much of the current widespread discussion in this field (and the recent notion that high returns are no longer possible) stems largely from semantic misunderstandings . People often use the single word "Crypto" to describe three very different things:
1. CryptoMoney (cryptocurrency)
2. CryptoTech (encryption technology)
3. Crypto Applications
1. CryptoMoney (cryptocurrency)
We define this as the "hard currency/store of value" narrative, which is precisely what initially attracted many people to the BTC/Crypto space. While we don't know how much more upside there is or how long it will take, even after the recent decline, we are only about 20 times away from parity with gold's market capitalization.
2. CryptoTech (encryption technology)
This category primarily refers to infrastructure such as Layer-1. While innovation continues in this area, most application developers we spoke with felt that existing technologies were "good enough" for the products they wanted to build. Certain verticals may still require specific middleware, but overall, the next 1000x return is unlikely to occur here.
3. Crypto Applications
This refers to user-facing B2C and B2B applications—which are adopted because the encryption schemes are superior or less costly than existing ones; it also includes new business models built on CryptoTech.
Many early app builders focused more on token listings than on building the app itself. Furthermore, the entire "GameFi" space has so far underperformed. But now—with the emergence of stablecoin businesses, prediction markets, and more—we are indeed seeing more high-quality developers realize that they can build real (and even monetizable) applications on top of crypto.
The combination of AI and Crypto is very promising in our view. We are witnessing AI agents evolving from single agents focused solely on productivity improvement into networks of agents participating in large-scale economic activities, thus forming an economy where agents collaborate with humans. This "agent-human collaborative economy" will create a closed loop of value creation and consumption on the blockchain.
Ribbit Capital 's recent " Token Letter " paints a picture of the future: an explosive growth in the number of tokens, which we believe will eventually be issued and traded on-chain. Overall, we observe that the builders in the Web 3 + AI space differ from the earlier generation of crypto application developers who primarily focused on the tokens themselves. The Asian developer community is witnessing a surge of emerging AI agent application talent, many of whom will build tokenized companies. Furthermore, market structure legislation (especially similar regulatory frameworks outside the US) will act as a catalyst, allowing developers to build on crypto infrastructure (crypto rails) with clear regulations.
Although we use the term "Crypto" for all three, it is important to differentiate between 1, 2, and 3 in terms of return potential.
Perhaps as an industry, we should come up with a new term; or perhaps we can use the term "Web 3" specifically to focus on the CryptoApplication category. We believe that this third category is where most of the wealth will be created in the future, and it's the area that will build many 1000x opportunities in the coming years.
We don't know how the market will perform in the short term, but the darkest hour is always before dawn. The internet restructured information; encryption will restructure value. Entire industries will not only be changed—they will be reinvented from scratch.
Original link: A Tale of Three Cryptos: Fixing the Semantics to See the Opportunity
This article is a translation of "A Tale of Three Cryptos" published by Panga Capital. It aims to share information and institutional perspectives and does not constitute any investment advice, offer, or recommendation for any product . Statements such as "thousandfold returns" and "hundredfold opportunities" mentioned in the article are the author's personal judgment based on specific market conditions and are highly subjective and uncertain.
Cryptocurrency assets are highly volatile and carry significant market risk. Readers are strongly advised to maintain independent judgment, strictly adhere to local laws and regulations, invest rationally, and bear all risks themselves. While this translation strives for accuracy, in case of discrepancies with the original English text, please refer to the original English version published by Panga Capital.
