A couple of days ago, a post got popular that contained a fair bit of “armchair redditor expertise” on what “is happening” in crypto using a very simple diagram.
Many crypto critics charge that the whole space is an elaborate ponzi scheme, and a zero sum greater fools game. This is due to the fact that they narrowly define “utility”. The truth is, as soon as there is a secondary liquid market for a cryptocurrency or blockchain and its native asset, it becomes a utility in the real world because it offers the transmission and manipulation of real world value.
Here is the revised diagram, and my point in summary:
You will see that in addition to investors cashing out, the security fee is the other leak of accrued value in a blockchain. I posted earlier an investment thesis where I mentioned how to fundamentally value crypto, or at least the rough framework I use. It is important to realize that most blockchains pay more in security costs than the transaction fees they receive from use. This means they ARE essentially zero sum most of the time. Only a few are not, and that is essentially Ethereum and its roll ups, though other modular PoS chains can eventually achieve the steady state of paying for security outright without diluting holders.