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“What we obtain too cheap, we esteem too lightly: 'tis dearness only that gives everything its value.”

— Thomas Paine

Thursday year-in-review-mailbag

Q: Was it a good year for crypto?

Booming token prices and frantic trading volumes have made it a great year for the crypto industry, yes — 2024 represents an incredible comeback from the dark days after the fall of FTX and before the rise of spot ETFs.

But was it a great year for crypto itself?

I'm not sure.

We doubled down on memecoins last year and that will be a good thing if memecoins turn out to be a bridge to something more substantial.

But what that something might be was not any clearer at the end of 2024 than it was at the beginning.

Similarly, I’d argue that it was a great year for bitcoin but less so for Bitcoin.

(See what I've done there? With the capitalization? Clever, right?)

The price of bitcoin (lowercase to denote the asset) skyrocketed on spot ETFs, a mooted bitcoin strategic reserve, and incessant buying by MicroStrategy. 

But is that really a win for Bitcoin (uppercase to denote the network), given its core mission to create permissionless, censorship-resistant money?

I’m probably being too clever by half — higher prices are what propagates the Bitcoin meme, so it was a successful year, in that sense. 

But succeeding quickly by government diktat (the strategic reserve) and financial engineering (MicroStrategy) is not as valuable as succeeding slowly by winning hearts and minds — and if we let BlackRock custody all our bitcoin, what’s the point even?

(Full disclosure: I let BlackRock custody my bitcoin.)

It was a great year for Solana, too, which may have already achieved its North Star mission of becoming “decentralized Nasdaq” — but if the only thing we use it for is things like Fartcoin, does it matter?

Travis Kling made the definitive call of the year when he predicted in February that crypto prices would go up despite a “lack of pretense that any of this shit does anything or ever will do anything.”

In a note yesterday, here’s how Kling summed up the year: “I’m struck by how MUCH happened to crypto EXTERNALLY while simultaneously how LITTLE happened to crypto INTERNALLY.” 

Crypto added $1.6 trillion of market cap in 2024, but most of that is attributable to external forces like ETFs, the bitcoin strategic reserve and MicroStrategy.  

Those three sources of demand are largely why bitcoin still accounts for 58% of crypto’s market cap, up 10% from the start of 2024 and unchanged from all the way back in 2017.

I take that as indication that for all the new cryptos we’ve had since 2017, the industry hasn’t gotten much closer to finding real-world use cases, product-market fit or mainstream relevance.

A16z estimates that crypto had between 30 and 60 million users in 2024 — by comparison, the crypto-adjacent Hamster Kombat game on Telegram claimed to have 200 million users.

I’m hopeful that 2025 will be a year of internally generated progress that results in a lot more people using crypto for things a lot more useful than tap-to-earn games like Hamster Kombat. 

But I can’t say we’re off to a great start: Fartcoin was up as much as 50% this morning.

Q: Is Ethereum 2024’s biggest loser?

Only in crypto can something that’s up 46% in a year be considered a loser.

In fairness, however, ETH did that 46% by March and never got close to its all-time high — failing to make a new high in a year as good as 2024 does seem like a loss.

Also, the narrative around ETH took a turn for the worse: Messari calls Ethereum “the middle child of crypto” (they mean it sympathetically), the “ultrasound money” meme has been replaced by the perception that Ethereum is “chasing two rabbits,” and a John Charbonneau blog post crystallized the idea that Ethereum lacks a “North Star.”

Perception is often reality in crypto, so these things matter — but not necessarily for long.

Q: Are the institutions here yet?

Sort of, but it’s mostly just the sell-side institutions that arrived in 2024.

In TradFi, the “sell side” consists of the banks and brokers that make money by facilitating transactions on behalf of customers, and the “buy side” is the customers (asset managers, corporations, etc).

In 2024, crypto got a lot of sell-side adoption, such as BlackRock facilitating investment in bitcoin by offering ETFs, for example, but not much buy-side adoption (ETFs are mostly a retail product).

PYUSD, for example, is a great sign — it’s amazing that a mainstream institution like PayPal has a stablecoin — but institutional adoption isn’t here until PayPal is moving billions of those stablecoins on behalf of real-world businesses.

I’m not sure we got any closer to that kind of buy-side adoption in 2024.

(I’d like to be wrong about that, so please email me counterexamples: [email protected].)

Q: What was crypto’s biggest win in 2024?

Aside from bitcoin, crypto’s most significant win of the year may be the perception that it belongs in the conversation with AI as a productive, interesting, impactful and futuristic technology.

At the start of the year, it felt like AI had sucked all the oxygen out of the tech and investing world, leaving crypto gasping for air.

By the end of the year, however, President-elect Donald Trump appointed David Sacks as his “crypto and AI czar.”

I’m not sure being a crypto “czar” is much more of a real job than being a crypto newsletter writer; but I think the honorific title sends a powerful message that the Trump Administration considers crypto a technology that could shape the future.

This honorific was more bought than earned, however — crypto paid its way back into the tech limelight by being the top contributor in the US election.

It was money well spent, I think, because now the industry has four years of open-field running to prove that it belongs in the conversation with AI as a transformative technology.

2025 is the beginning of a golden age in which crypto is de facto unregulated in the US because enforcement actions will stop pending legislation and it will probably be years before any substantial legislation gets through Congress.

Crypto won’t stay unregulated forever though, so what we choose to do with this four-year free pass will matter.

Let’s hope it’s something better than Hamster Kombat and Fartcoin.

— Byron Gilliam

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