CHAIN REACTION · Issue 5

Crypto State of the Union

Since Issue 1, this newsletter has been quietly building a crypto foundation — brick by brick.

We opened with the original cypherpunk principles: why crypto was born, what it was actually for, and why the people behind it weren’t just tech nerds but ideological dissenters from a financial system they didn’t trust.

Then came Yonatan Sompolinsky — the math guy behind Kaspa, whose earlier work on GHOST protocol was cited in Ethereum’s own whitepaper, and who most people still haven’t heard of. We broke down what Kaspa actually is — first in playground metaphors, then in plain terms. Speed without sacrificing the decentralization and security that make the whole thing mean something.

That’s the foundation. Now the harder conversation.

The State of Play

This isn’t a down year. This isn’t the dog days. For anyone who joined the crypto system in the last four or five years, this has been an absolute financial dumpster fire. And the strange part is — crypto is everywhere in the headlines.

Stablecoins are crypto. Tom Lee’s BitMine just invested $9 billion into Ethereum and other assets, planting a flag that looks a lot like a long-term conviction bet. Bitcoin and Ethereum now have Wall Street ETFs. The infrastructure is being built.

And yet — most people still don’t really understand what any of it is.

Is it a new financial system? A network of digital communities organized around shared protocols? Is it outside the traditional financial system or now inside it? Are crypto projects just elaborate scams? Is there genuine innovation? Real utility? Are these things commodities, currencies, or something closer to stocks?

If you answered yes to all of that — you’re actually not wrong.

Here’s the honest read: crypto is currently in its believer stage. Either you believe in it or you don’t. There’s a real possibility it all fails. But there’s also the feeling that its roots are already too deep in the culture and the capital markets to fully disappear.

The Bid Problem

The core financial problem right now is that most crypto projects can’t hold a bid. That means there isn’t enough sustained buying activity to keep prices stable, let alone growing. They keep falling. The main culprit is trust — or the lack of it. The risk feels too high, the timeline too uncertain, and too many people have been burned to feel comfortable leaving money in.

But zoom out, and the picture gets more interesting.

Crypto has always been, at its heart, a retail phenomenon. It moves on emotion. And right now, retail — the everyday investor, Main Street — is wrecked. Everything we bought five or six years ago costs roughly double. Wages didn’t double. Savings didn’t double. The gap between what things cost and what people actually have is widening in ways that are hard to look at directly.

And here’s where crypto was supposed to be the answer — and why so many people flocked to it in the first place.

Dollar Debasement

When a government prints money at scale, the value of every dollar (or any other nationalized unit of currency) already in circulation quietly shrinks. It’s inflation’s quieter cousin — less visible, more systemic. Crypto, Bitcoin especially, was built as a direct response to that: a fixed supply, no central authority, no printing press. The pitch was sound money for a world that had stopped trusting fiat.

The irony is brutal: the very conditions that justified crypto’s existence are now the same conditions making it hard for regular people to stay in it. When your rent is up 40% and your grocery bill is up 30%, you don’t leave money sitting in volatile assets hoping for a ten-year payoff. You pull it out.

The pain of being early and called stupid. That’s the price of entry for asymmetric upside.

Where We Stand

The problems crypto is trying to solve are real. But trust — in the projects, in the people running them, in the timeline — is still being sorted out.

Crypto’s allure, beyond the technology, was being early to a new capitalistic frontier. It’s not quite like anything we’ve seen before — part investment, part digital community, part ideology.

If we knew where this was heading, the payout would be low. That’s what government bonds are for — parking money in an instrument that pays 3–5% with near certainty.

Crypto offers no such certainty: the volatility, the not knowing, the pain of being early and called stupid. That’s the price of entry for asymmetric upside.

Whether that price buys protection from dollar debasement, inflation, and a broken job market remains the question. We’re invested in the answer.