Chapter 5: The Present — Fourth Epoch and Global Adoption

First they ignore you, then they laugh, then they fight desperately. And then Bitcoin wins.

Forgive me for taking such liberties with Mahatma Gandhi's famous quote, but it captures Bitcoin's journey so perfectly I couldn't resist. While it's still too early to declare crypto's unconditional victory, the fourth cycle that began in November 2022 from $15,500 opened a fundamentally new chapter. The one where Bitcoin transformed from a toxic asset for outcasts into a welcome guest on Wall Street and a topic of strategic discussions in government halls.

The contrast with the past shows the scale of transformation. Just yesterday, banks blocked accounts for buying crypto, calling it "client protection from fraud." Today, those same banks beg regulators to approve their Bitcoin ETFs. Yesterday, Warren Buffett called Bitcoin "rat poison squared." Today, his protégés are buying every dip. Yesterday, politicians denounced crypto as a tool for criminals. Today, Senator Cynthia Lummis dreams of a million bitcoins in US strategic reserves. If this isn't victory, what is?

Bitcoin won. But every victory in the fourth cycle demanded its price. Compromise that crypto anarchists of the first wave would call betrayal. KYC for access to liquidity. ETFs for institutional billions. Regulation for legality. We negotiated the future piece by piece, convincing ourselves it was temporary. The history of the fourth cycle is full of such deals, where crypto gave away pieces of its soul for a place in the big game. And this game continues right now.

At the time of writing, exactly half the cycle has passed. August 2024. Bitcoin has been stuck in the $58,000-72,000 range for four months straight. But the market isn't bored. Mini-apocalypses regularly spice things up: Germany dumping 50,000 confiscated bitcoins, the Japanese yen reverses and crushes trillion-dollar carry trades, Michael Saylor announces another purchase, quietly competing with BlackRock. The market jerks nervously, crypto Twitter panics between "Just believe in Bitcoin" mantras. Three days later, Bitcoin bounces back as if nothing happened.

Bitcoin's volatility isn't a bug, it's a feature. Each compression only loads more energy into the spring. Just one spark, one new narrative, and all this pent-up force will explode into another growth surge. In 2020, that spark was DeFi summer and NFT season. What will ignite this time? Ordinals and Runes turning boring Bitcoin into a platform for everything? RWA promising to tokenize trillions in traditional assets? Or something completely new we can't even imagine yet?

But I'm getting ahead of myself again, such is my authorial quirk, I promise, for the last time. To understand where we're heading, we need to grasp what ground has already been covered. From internet money for geeks to an asset discussed in the White House. From "magical internet beans" to corporate treasuries. From meme to mainstream.

The story of the fourth cycle is about how Bitcoin did the impossible: it forced the establishment to accept it. In this struggle, all sides made compromises. Crypto anarchists accepted centralized services requiring KYC. Bankers still don't believe they're buying "the very same Ponzi." And Bitcoin doesn't care. It keeps producing a new block every 10 minutes, as it has for 15 years.

Crypto vs SEC

If we imagine the crypto industry as a medieval kingdom, then Gary Gensler is undoubtedly its Grand Inquisitor. SEC Chairman since April 2021, former MIT professor who taught blockchain. A man who should have been a bridge between crypto and regulators became its chief executioner. The community still debates whether this was fate's irony or calculated betrayal.

Gensler came to the SEC with a reputation as someone who understood technology. At MIT, he taught blockchain courses, said smart things about decentralization's potential. The crypto community believed: finally, our guy in the system. How naive we were. Within months, it became clear: the kindly professor image was a mask, the crusade against crypto was just beginning.

Gensler's strategy was simple as a sledgehammer. All crypto is securities. Except Bitcoin. Maybe. But that's not certain. And since they're securities, welcome under SEC jurisdiction with all that entails: registration, reporting, and most importantly, fines and prosecutions for past "violations." Crypto projects found themselves trapped: the 1933 Securities Act was written in times so ancient that few know if computers even existed then. Applying it to tokens is like regulating the internet by pigeon post rules.

"Regulation through enforcement" became Gensler's signature style. Instead of clear rules, the SEC preferred sudden lawsuits. Everyone in the industry became a target. Even a project with innocent NFTs from famous artists could become a defendant in a case about illegal securities sales. Ripple, Coinbase, Binance, Kraken: the list of victims grew like a snowball. The second half of the third cycle passed in an atmosphere of fear and uncertainty. Everyone waited for their turn.

The fourth cycle immediately didn't go well for the SEC. The first serious crack in the agency's winning strategy was the case against Ripple Labs. Back in December 2020, the SEC accused Ripple of selling $1.3 billion in unregistered securities. For most, this would mean the end: agree, pay the fine, move on. But Ripple chose war.

Years of legal battles. Mountains of documents, armies of lawyers, millions in legal fees. The SEC demanded recognition that all XRP sales were illegal. Ripple insisted: XRP isn't a security but a digital currency like Bitcoin. The crypto community followed every hearing like a World Cup final. The stakes were cosmic: if Ripple lost, the precedent would bury the entire industry.

On July 13, 2023, Judge Analisa Torres delivered a historic verdict. A Solomon's decision: institutional XRP sales are securities. Open market sales to regular people are not securities. The SEC technically won, but Ripple celebrated. The main message was clear: tokens themselves aren't securities. Context matters.

Crypto Twitter exploded. XRP shot up 75% in a day. Other altcoins followed the leader. For the first time in a long while, the industry had hope. Gensler no longer looked invincible. His "everything is securities" doctrine misfired for the first time. But the Gensler empire struck back.

Binance, the world's largest crypto exchange, had played cat and mouse with regulators for years. CZ built an empire on a simple principle: move fast, ask forgiveness later. Regulatory gray zones became the exchange's home turf. "Exchange without headquarters" sounded like cyberpunk utopia. For regulators, it was a nightmare.

By 2023, US authorities' patience had run out. Department of Justice, FinCEN, OFAC, CFTC: everyone wanted blood. Accusations poured down like hail: money laundering, sanctions violations, serving Americans without a license. Binance was surrounded. And then CZ made a decision that shocked everyone: he surrendered.

On November 21, 2023, CZ pleaded guilty to violating anti-money laundering laws. Binance would pay $4.3 billion, the largest fine in crypto history. CZ stepped down as CEO, agreed to a personal $50 million fine. The empire survived, but the emperor abdicated.

This was a hard time for many. Despite all problems, Binance remained a symbol of freedom from the traditional system. And here it was brought to its knees. But the deal showed: you can negotiate even with the toughest regulators. The price was high, including loss of freedom and agreeing to live by others' rules. But it's better than total war of annihilation.

New Binance CEO Richard Teng immediately launched a charm offensive. Compliance, transparency, cooperation became the exchange's new mantras. Skeptics called it the end of the crypto anarchist era. Crypto had matured, and teenage rebellion gave way to adult compromises. The revolution dreamed of by founders quietly turned into evolution, where each step forward required a step toward the system.

But while Binance negotiated with authorities, a more serious bomb was brewing in US federal courts. Grayscale Bitcoin Trust, the largest Bitcoin fund with $16 billion in assets, had tried to convert to an ETF for years. The SEC rejected applications again and again. Official reason: market manipulation, insufficient investor protection. Gensler's standard brush-off.

Grayscale decided: enough. In June 2022, the company sued the SEC. The argument was elegant in its simplicity: you approved Bitcoin futures ETF but reject spot Bitcoin ETF. Either Bitcoin is mature enough for ETF or it isn't. You can't be a little bit pregnant.

On August 29, 2023, the DC Circuit Court of Appeals delivered its verdict: the SEC acted "arbitrarily and capriciously." Grayscale's rejection was unlawful. The court ordered the SEC to reconsider. The wording was maximally harsh for the restrained language of judicial decisions. For the first time, the SEC was put in its place so clearly and publicly.

The court decision became a turning point. The SEC was cornered. Rejecting Grayscale's application now meant open defiance of the court. Approving meant opening floodgates for everyone else. Gensler understood: the battle was lost. All that remained was deciding how to lose with minimal reputational damage.

By October 2023, SEC leaks multiplied like mushrooms after rain. Insiders whispered: get ready, ETF is coming. Not one, but several at once. The SEC decided: if we're opening doors, then for everyone at once. BlackRock, Fidelity, Invesco, VanEck. All the heavyweights of traditional finance lined up. Crypto held its breath.

January 10, 2024. The day before the historic decision, some joker hacked the SEC's Twitter and wrote: "ETFs approved!" The market soared and immediately crashed when the SEC denied the news. Gensler was furious. The final humiliation before capitulation.

January 11, 2024, the SEC officially approved 11 spot Bitcoin ETFs at once. The crypto community rejoiced. A period of universal joy and euphoria. Everyone thought now we'll really live, Bitcoin's price will soar above the clouds. And though this would happen eventually, not immediately. First, the market experienced a dump from those who bought rumors and sold news. The main disappointment: it barely affected the rest of the crypto market. Bitcoin entered the high society of financial assets but didn't pull others along. This was a cold shower for the entire community when the ETF approval party ended.

As for Gensler, he squeezed out a smile at the press conference and retreated to the shadows. Until his resignation in January 2025, he barely appeared in media. The SEC fortress had fallen, Bitcoin became a recognized asset and magnet for hundreds of billions from Wall Street.

History will remember this day as the moment when crypto finally won the war for legitimacy. But like any war victory, this came at a dear price. A meme became popular where crypto anarchists of the past, fighting the system, were replaced by a generation of wild crypto apes, agreeing to anything as long as the price rose.

The fall of the SEC fortress opened floodgates that had held back institutional capital for years. No longer did they need to fear the regulatory guillotine for investing in "unregulated securities." ETFs provided a legal, understandable, protected way to get Bitcoin exposure. The real irony is that we fought so long for independence from Wall Street, only to celebrate when they started buying us. And the man who led this takeover was the one we considered the main enemy. The Great Redistribution began.

The Great Redistribution

Larry Fink. A name that just a couple years ago was pronounced with condemnation in the crypto community, like recalling a general from an enemy army. CEO of BlackRock, the world's largest asset manager with $10 trillion under management. A man whose word moves markets. A Wall Street titan. And a fierce Bitcoin critic.

Back in the third cycle, Fink called Bitcoin a "money laundering index." Every interview was a death sentence: speculative bubble, criminal tool, threat to financial stability. The community responded with memes and caustic tweets. BlackRock seemed an insurmountable wall between crypto and institutional money.

And then something changed. Most likely, a whole range of factors: the Fed's money printer and rising inflation, dedollarization and frequent client inquiries about Bitcoin. Or he simply saw the numbers, how Bitcoin outperformed all traditional assets over the past decade. The fact remains: by 2023, Larry Fink had transformed from chief hater to chief Bitcoin evangelist.

The transformation was so radical that many didn't believe their ears. "Bitcoin is digital gold." "An international asset that can protect against any currency devaluation." "Technology that will revolutionize finance." This was the same Larry Fink! The man who manages assets exceeding most countries' GDP.

But Fink didn't just talk, he acted. The Bitcoin ETF application was filed with surgical precision. All past SEC rejections accounted for, all loopholes closed, best lawyers hired. When BlackRock wants something, BlackRock gets it. The company has an impeccable reputation for getting SEC approvals: 575 successful applications out of 576 submitted. Their ETF applications almost always pass. Everyone on Wall Street knows this.

On June 15, 2023, BlackRock filed an application for iShares Bitcoin Trust. The market reacted instantly: Bitcoin shot up 15% in a day. Not because BlackRock bought Bitcoin. But because everyone understood: when BlackRock enters the game, the game changes. This was a signal to all of Wall Street: Bitcoin is now a respectable asset.

Fink deployed a media campaign worthy of presidential elections. CNBC, Bloomberg, Fox Business: he was everywhere. And everywhere he repeated the same thing. Bitcoin isn't a dollar competitor. It's inflation protection. It's digital gold for the digital age. It's an asset that should be in every portfolio. At least a little. For diversification.

Listening to Fink, it was easy to forget that just recently he had criticized Bitcoin. But that was the moment's irony: the enemy wasn't defeated, he simply switched sides. And we welcomed him with open arms because he brought trillions. Another compromise in a long chain of compromises. BlackRock didn't just buy Bitcoin. It domesticated it, turning it from a weapon against the system into its new tool.

And the process went on. BlackRock's clients, managing trillions, began asking: when can we buy? Pension funds, insurance companies, family offices: everyone wanted Bitcoin exposure. But they wanted it through familiar instruments. Not through strange crypto exchanges with questionable reputations. But through ETF from BlackRock. Proven brand, familiar mechanics, regulatory protection.

January 11, 2024, when the SEC approved 11 Bitcoin ETFs, including BlackRock's iShares Bitcoin Trust, the dream became reality. But the real battle was just beginning. Not even a battle, but a war. A war for real bitcoins.

The problem was liquidity. For ETFs to work, you need real bitcoins. Lots of bitcoins. But there are only 21 million total, and most are lost or frozen in HODLers' cold wallets. BlackRock needed a source. And it found one.

Grayscale Bitcoin Trust (GBTC) sat on 620,000 bitcoins. For years, the fund traded at a discount to net asset value, trapped in an outdated structure. Converting to ETF should have been salvation. Grayscale didn't account for one factor: Wall Street greed.

GBTC's fee was 2% annually. BlackRock set fees at 0.25%. An eight-fold difference. For institutional investors with billion-dollar portfolios, this is millions in annual savings. The math is ruthless. The exodus from Grayscale began on day one and continued for months.

In the first days of trading, GBTC lost $580 million. Investors withdrew bitcoins and immediately bought BlackRock or Fidelity ETFs. Grayscale tried to retain clients: marketing campaigns, promises to reduce fees, appeals to loyalty. Useless. In the first month, GBTC lost 120,000 bitcoins. In three months: 300,000. Half the fund's assets evaporated. The largest Bitcoin redistribution in history. BlackRock was the main beneficiary. By August 2024, iShares Bitcoin Trust had accumulated over 350,000 bitcoins, becoming the world's largest corporate holder.

BlackRock wasn't alone in this feast. Fidelity, another giant with $4.5 trillion under management, also showed appetite. Their Wise Origin Bitcoin Fund attracted 150,000 bitcoins. Cathie Wood's Ark Invest collected 50,000. Even conservative Vanguard began taking notice.

The institutional machine worked at full capacity. Every day brought news: Wisconsin pension fund bought Bitcoin ETF. Texas insurance company added exposure. Norwegian sovereign fund "studying opportunities." The dam burst. What crypto enthusiasts had predicted for years was happening before our eyes.

The price didn't just rise, it rocketed. After a brief fall that knocked the most impatient from their saddles, the price quickly returned to $45,000 and from there grew without stopping until approaching $73,000. And when it seemed the coveted $100,000 was within reach, the price suddenly stalled.

The cause was panic from mass selling. Germany decided to dump 50,000 confiscated bitcoins. Not through auction, not through over-the-counter deals, but straight to the open market. As if they specifically wanted to crash the price.

German bitcoins were confiscated from Movie2k pirate site operators back in 2013. Ten years they gathered dust in government wallets until some bureaucrat decided: time to sell. Perfect timing to sell at the bottom. Sales came in waves. 2,000 bitcoins in the morning. 3,000 after lunch. 5,000 in the Asian session. Traders watched government wallets like a ticking time bomb. Every movement caused panic. Price dropped, longs got liquidated, panic intensified.

Others followed Germany. Genesis Trading, stuck in bankruptcy proceedings after the 2022 crash, was liquidating assets. Jump Trading, one of the largest market makers, was also reducing positions.

But the biggest blow came from where it wasn't expected. The Japanese yen, which had served as a source of cheap funding for carry trades for years, suddenly reversed. The Bank of Japan raised rates for the first time in a decade. A trillion dollars in carry trade positions began unwinding. All risk assets flew down. Bitcoin was no exception.

August 5, 2024, Bitcoin, already seriously fallen from the $73,000 ATH, fell even lower and broke $50,000. Everything happened lightning-fast, and though the price quickly recovered part of the losses, crypto Twitter fell into despair. "ETFs didn't save us." "Institutions dumped us." "End of bull market." Panic was total.

But attentive observers noticed an interesting detail: bitcoins weren't leaving ETFs; inflows actually accelerated. These weren't famous hedge fund experts but ordinary users who could read on-chain data. For the especially lazy, special dashboards were created showing top-ups of all major treasuries: from BlackRock and MicroStrategy to sovereign funds and government wallets. Another advantage of blockchain in action.

BlackRock bought every dip. 5,000 bitcoins a day. 10,000. 15,000. Larry Fink appeared on CNBC with a simple message: "Volatility creates opportunities." BlackRock's institutional clients apparently agreed. While retail panicked, smart money accumulated.

By the end of August 2024, the market had stabilized. German bitcoins absorbed. Genesis completed liquidations. The yen calmed down. When the smoke cleared, the picture had changed dramatically. ETFs held over 900,000 bitcoins. 4.5% of total supply. In seven months.

But the most interesting thing happened not in BlackRock but in millions of ordinary wallets. While whales moved billions, an army of small holders quietly accumulated. The number of addresses with balances over 1 BTC grew 20%. Addresses with 0.1 BTC: plus 35%. Addresses with 0.01 BTC: plus 50%.

Retail investors learned from past cycles' mistakes. Don't chase hype. Don't panic on drops. Just buy little by little and hold. Dollar Cost Averaging became the new generation of Bitcoiners' religion. $50 a week. $200 a month. Slowly but steadily.

Social media swarmed with success stories. An Ohio teacher who started with $100 monthly in 2020 accumulated 2 bitcoins. A Florida nurse turned stimulus checks into 0.5 BTC. A California student mined on his gaming computer and accumulated 0.3 BTC. Small victories of ordinary people.

The Great Redistribution of 2024 will go down in history as the moment when Bitcoin finally split into two worlds. The world of institutions with their ETFs, compliance, and quarterly reports, where Bitcoin is just a line in BlackRock's custodial database. And the world of crypto anarchists with their cold wallets, nodes, and "not your keys, not your coins" phrase, where every satoshi is an act of resistance against the system. The same asset, but two incompatible philosophies. And this split became another price crypto paid for recognition.

Yet both worlds need each other. Institutions bring liquidity and legitimacy. Enthusiasts preserve spirit and decentralization. Together they create a new financial reality. A reality where Bitcoin is simultaneously both a pension fund asset and a weapon against the system.

Larry Fink became the unexpected hero of this story. The man who was supposed to kill crypto anarchy gave it trillions in liquidity. The man who despised Bitcoin became its chief promoter. History loves irony. This irony brought hundreds of billions to crypto.

But this victory had a flip side. KYC on every corner, tax reports, account blocks for "suspicious activity." First-wave crypto anarchists watched with bitterness. Their dream of financial freedom turned into another regulated industry.

And yet, the foundation remained untouched. Blockchain is still transparent: anyone can check wallet balances, track transactions, learn total supply. No hidden data for elites, no special terminals. Block explorers are open to everyone. Try that with traditional banks or gold.

The 21 million coin limit also didn't go anywhere. Even if Satoshi appears and tries to change the code, it would just be another fork, of which there are already hundreds. Bitcoin remained Bitcoin. Perhaps that's the real victory: not revolution, but evolution. Not destroying the system, but creating an alternative within it.

Ethereum: The Empire Cracks at the Seams

While Bitcoin conquered Wall Street, Ethereum experienced its own revolution. Or rather, a series of revolutions, each promising to solve problems but creating new ones. The story of the second-largest blockchain by market cap in the fourth cycle is a story of how trying to become everything to everyone can lead to becoming nothing to no one.

September 15, 2022, what everyone had waited for years happened. The Merge. Ethereum's transition from Proof of Work to Proof of Stake. An event comparable in scale to changing an airplane's engine mid-flight. A technical feat many considered impossible. And it succeeded. Not one lost transaction, not a second of downtime. Flawless execution.

Environmentalists rejoiced: the network's energy consumption fell 99.95%. Institutional investors exhaled: finally, they could invest in a "green" blockchain without pangs of conscience. ETH holders anticipated deflation: miners would no longer sell 13,000 ETH daily for electricity. Everything looked perfect. Too perfect.

The first cracks appeared quickly. The promised 5-7% annual staking yields turned out closer to 3-4%, and that's before validator fees. Low yields especially hurt small stakers who also didn't have 32 ETH for their own node. Only pools remained. Lido became the largest, quickly capturing over 30% of all staked ether.

Lido Finance started as a decentralized protocol to democratize staking. Anyone could stake any amount of ETH and receive stETH, a liquid token representing staked ether. A brilliant solution to the "frozen capital" problem. You can both stake and use funds in DeFi. The perfect product for a bull market.

But Lido's success became Ethereum's curse. When one protocol controls a third of validators, decentralization questions become existential, not academic. Vitalik Buterin sounded the alarm, calling for limits on any pool's share. The community split: some saw a threat, others considered it natural evolution. The market voted with its feet, continuing to bring ether to Lido.

Another compromise in an endless chain. Staking democratization turned into new centralization. Solving the "frozen capital" problem created a "captured consensus" problem. Ethereum, which was supposed to become the world computer, was turning into a federation of semi-independent fiefdoms, each with its own validator-lord.

Rocket Pool tried to offer an alternative. "Truly decentralized staking" with nodes distributed worldwide. Technically flawless, ideologically correct. But Lido had already captured significant market share and wasn't giving it up. Where others were just starting, Lido already had huge liquidity and deep DeFi protocol integration. Users could use stETH as a regular token, borrow against it, farm yields. Network effects worked at full power.

But Ethereum's real problems were just beginning. If Lido centralization was unpleasant, what came next was catastrophic. The era of Layer 2 (L2) solutions arrived, meant to save the network from high fees. In reality, they turned out to be a Trojan horse. Arbitrum, Optimism, Base, zkSync, Polygon: each promised to scale Ethereum, improve user experience, and preserve Mainnet security. In reality, each built its own empire, competing with rivals for the main network's assets.

The logic was flawless, and the problem L2s solved really existed and was overdue. If Ethereum mainnet is too expensive, move all transactions to L2 where they cost pennies. Finality and security provided by Ethereum, speed and cheapness achieved through optimizations. Win-win for everyone, but that's in theory.

In practice, a fragmentation race began. Each L2 became a separate island with its own bridges, tokens, and rules. Users accustomed to unified Ethereum now had to juggle dozens of networks. Figure out which network their tokens are in, and whether there's gas for transactions in this L2? The problem of transferring assets between networks without going through the main network immediately arose, since otherwise such bridging for most small transactions simply made no economic sense¹. As a result, even a banal attempt to transfer USDC from Arbitrum to Base network turned into a real quest even for experienced DeFi users.

Ethereum split itself, creating not a scalable network but an archipelago of isolated islands. Two Ethereums appeared: ghostly mainnet for the rich and whales, and a fragmented L2 universe for everyone else. Users got low fees at the cost of losing unified space. Investors got new L2 tokens at the cost of diluting ETH value. Everyone got what they wanted but lost what they had: a unified, powerful, all-encompassing network.

Developers found themselves in the most difficult position. It wasn't clear which network to choose and whether to support Ethereum Mainnet at all. For projects, it was too expensive to maintain liquidity in pools across all networks. And attempts to focus on one network could lead to losing users if that particular L2 couldn't fulfill its promises to attract millions of users and billions in TVL.

Every decision forced compromises, killing Ethereum's integrity. Liquidity scattered across chains, efficiency vanished. But the real killer was splitting the user base, which destroyed network effects. Instead of one powerful network growing stronger, Ethereum became many weak networks competing with each other. Each user got less value, not more.

The decision to allow launching private, semi-centralized networks on top of decentralized Ethereum became the most controversial in its history. The community still can't reach consensus on whether benefits outweigh drawbacks. A blow was dealt to the network's ability to generate revenue and pay stakers for security. And this threatens main network security, which L2s themselves rely on.

When users massively moved to L2, mainnet fees collapsed to historic lows. Only a fraction of fees collected within L2 returned to the main network. L2s became parasites, extracting massive profits from users while barely paying rent for the infrastructure they depended on.

The problem sharply intensified with the launch of EIP-4844 (Dencun) upgrade in March 2024. Before the upgrade, L2s retained a modest portion of fees: OP Mainnet kept $0.20 for every dollar spent on Ethereum security. After Dencun, the picture changed dramatically. By August 2024, OP Mainnet retained $321 for every dollar sent to the main network. Base retained $226, Arbitrum One retained $28. Over 99% of fees stayed in L2, only crumbs went to the main network as rent².

Yes, fees within L2 fell to nearly zero and this zeroed out the main network stakers' revenue source. Considering user transactions within the main network became tens of times fewer, Ethereum was left without income. Staking yields fell below 2.5% annually. Considering inflation, a real loss. Only hope remains for ETH price growth itself.

Vitalik and the Ethereum Foundation team tried to save face. "We always wanted to make blockchain accessible." "L2 is part of the roadmap." "Ethereum becomes settlement layer for the global financial system." Beautiful words couldn't hide the fact: Ethereum allowed vampire projects to develop within itself. They took users and assets, giving virtually nothing in return. The vampire attack on mainnet proceeded without attempts to defend. Ethereum became a ghost of itself. The network was empty while life boiled on L2.

And then Solana entered the scene. A blockchain everyone considered dead after FTX's collapse in 2022. The price then crashed from $250 to $8. The ecosystem was in ruins. Developers fled. "Ethereum killer" became a meme. But Solana refused to die.

Anatoly Yakovenko and the team used the bear market for building. Firedancer, a new validator from Jump Trading, promised a million transactions per second. Compressed NFTs reduced minting costs to fractions of a cent. State compression made storing billions of accounts possible. Technical achievements Ethereum could only dream of.

Technology was only part of the story. Solana offered what Ethereum lost: simplicity. One network, one token, fees in cents. No L2s, no bridges, no fragmentation. Unified network for everything meant unified liquidity and unified user base.

Developers returned and launched new projects. DeFi protocols opened Solana branches and discovered: the branch brought more income than Ethereum headquarters. NFT collections migrated for low fees and found an active community. Memecoins, suffocating from $50 Ethereum transactions, flourished on Solana. Pump.fun platform launch raised memecoin fever to heights unreachable for Ethereum.

Numbers don't lie. Solana TVL grew from $200 million to $5 billion³. Daily active addresses exceeded Ethereum. DEX volumes approached the leader. Most importantly: this was organic growth, not pumped by airdrops and points like Ethereum L2s. People used Solana because it was convenient, fast, and cheap, not for future airdrops.

Ethereum maximalists fought back as they could. "Solana is centralized." "Network falls every month." "It's not a real blockchain." Old arguments sounded less convincing. Yes, Solana required powerful hardware for validators. But Ethereum with its 32 ETH minimum stake was also inaccessible to ordinary users. Solana's stability problems remained in the third cycle. Technical improvements gave it unprecedented resilience. Users forgave small delays and transaction cancellations: the main thing was keeping fees in cents and the memecoin casino bringing insane profits.

Culture also played a role. Ethereum became serious, corporate, boring. Endless discussions about protocols, governance, roadmaps. Solana remained wild, experimental, fun. Memecoins with absurd names, NFTs with questionable art, DeFi protocols exploding every week. Chaos, but living chaos. Like Ethereum in 2020.

By August 2024, the balance of power had changed dramatically. Ethereum still held the crown by market cap and TVL. But momentum was on Solana's side. Developers, users, attention: everything flowed toward the memecoin blockchain. History loves giving second chances. Solana used it fully.

The biggest surprise came from the market. In May 2024, the SEC unexpectedly approved Ethereum ETF. After Bitcoin, everyone expected years of struggle, courts, rejections. Even the most optimistic forecasts pointed to 2026. Instead, green light in months. What should have been Ethereum's moment of triumph came at the worst possible time.

July 23, 2024, Ethereum ETFs launched quietly, without fanfare. Perhaps they just weren't ready. The first day brought $1 billion. Institutions got access to smart contract magic. But price growth magic didn't happen. Volumes were many times smaller than Bitcoin ETFs. Capital inflows barely covered Grayscale Ethereum Trust outflows. ETH/BTC price continued declining. New lows replaced new lows. It seemed this would never end.

Ethereum isn't "digital silver" but oil for the digital economy. And for economic growth, cheap oil is better than expensive. Ethereum became the most scalable decentralized platform in history, but with its problems, competitors, and uncertain future. ETFs didn't save it. Perhaps interest will return in the future. But hopes that Ether would one day overtake Bitcoin and become number one have noticeably diminished. Even the most ardent ETH maximalists don't mention this anymore.

Yet no one seriously believes in the network's funeral either. Ethereum's ecosystem created such resilience and utility that competitors can't replicate it. As for price, the market is cyclical. While users continue using the network, decline will give way to growth. Those who criticize Ethereum today will tomorrow prove it's the best. Such is crypto's nature.

New Horizons

The struggle of old giants for dominance, where Bitcoin conquered Wall Street and Ethereum fought for the title of world computer, distracted attention from what was happening on the periphery. While titans made deals with the system, losing pieces of themselves in the process, innovations were emerging on the crypto universe's edges that didn't yet know what concessions were. Young, bold, ready to change the game's rules. Crypto was always strong in its ability to regenerate. And while everyone watched BTC and ETH price charts, measuring success in dollars and dominance percentages, technologies were already looming on the horizon that no one even suspected a year ago.

And who would have thought the year's main breakthrough would be Bitcoin itself. Boring, old, conservative. And suddenly, a platform for wild experiments in the spirit of 2017 Ethereum. The launch of Ordinals and Runes protocols opened the impossible in Bitcoin: storing financial assets, art, texts, even games. Right in the world's most secure blockchain, where previously there were only transactions. It's like opening a new continent in explored waters or discovering a portal to a parallel reality with elves and dragons in your wardrobe.

In this new world, every satoshi isn't just a small fraction of Bitcoin but a unique artifact. Bitcoin, created for payments, becomes eternal storage of human culture. Of course, it didn't come without scandal. Conservative maximalists were furious. Another compromise: Bitcoin gained new functionality at the cost of community split and losing part of its simplicity.

Miners approached pragmatically: new transactions bring fees, rare satoshis bring additional income. Users experiment, fail, try again. A new DeFi world is born around Bitcoin, captivating all the tech lovers. The boring payment network transforms into a settlement layer for wild meta-protocols. But that's a story for another chapter.

Parallel to this unfolds another revolution, less noisy but potentially no less massive. We're talking about Real World Assets, or simply RWA. Behind these three letters hide trillions of dollars in traditional assets awaiting tokenization. Real estate, stocks, bonds, art objects. Everything valuable in the physical world can get a digital twin in blockchain.

BlackRock is already experimenting with tokenized funds. Singapore tests government bonds on blockchain. Switzerland digitizes real estate. This isn't distant future, this is happening right now, quietly, slowly, and even somewhat mundanely boring. And the question is no longer whether tokenization of trillion-dollar markets will happen in principle. But which blockchain will become the standard for the future RWA industry. There are main candidates and a certain leader, but overall the battle is just beginning.

The most unusual happens at the intersection of two technologies that seemingly have nothing in common. Artificial intelligence meets cryptocurrency, and from this meeting new forms of interaction are born that are now even hard to imagine. The topic is vast and mind-blowing. For now, let's just imagine an AI agent that can not only think and create but also earn money. Pay for its computational resources. Hire other agents and even people. Invest earnings in Bitcoin and data centers. Seems like complete fantasy, doesn't it?

But we already have examples of such ideas coming to life. Truth Terminal earned millions on memecoins, simply tweeting insane ideas. Neural network agents integrate with crypto wallets. AI artists sell creations for crypto without human participation. When artificial intelligence gets financial autonomy, all game rules change. An economy is born where people and AI become equal participants. And most likely AI will prove more active and productive than meatbags. The future comes faster than we expected.

But what this cycle has already thundered with is the memecoin phenomenon. And it doesn't look like they're going to disappear. On the contrary, memecoins gain strength, forcing the industry to reconsider views on value and fairness. And while memecoins themselves are a known invention in crypto circles, it's precisely in the fourth cycle they got new, progressive meaning. Perhaps the community grew enough to see new perspective in an old friend. Now these aren't just coins with memes, but an alternative to VC projects that sell tokens to retail at hundreds of times what they bought them for.

PEPE, WIF, BONK. Doggies, frogs, other digital fauna. No utility, no promises to change the world, no venture funds with their vesting schedules. Only pure speculation and community power. And you know what? They outperformed 90% of "serious" projects with white papers thick as "War and Peace." Venture capitalists are shocked and in big losses. And some PEPE, drawn in five minutes, does 10,000x. This isn't just a bubble. It's retail investors' rebellion against a system where VCs get tokens for $0.001 and sell to retail for $10.

Fourth cycle paradox: while "serious" projects compromised with regulators and VC funds, memecoins remained the last bastion of crypto anarchy. No KYC, no vesting schedules, no promises. Pure speculation proved more honest than corporate respectability.

We'll return to the complete story of Memecoins vs VC coins confrontation. For now, let's just appreciate how dramatically crypto has evolved in the fourth cycle. Though we're only halfway through, the pace of change keeps accelerating, pushing the community toward something entirely new.

Meanwhile, while crypto experimented with new forms and philosophies, tectonic shifts were brewing in the corridors of power. Politicians who for years ignored "magical internet money" suddenly discovered that behind this money stand millions of voters. And these voters are ready to vote with their wallets. The crypto revolution came where it was least expected: to the very heart of the political system.

Political Revolution

Fifty-two million. Remember this number. That's how many Americans owned cryptocurrency by early 2024⁴. More than union members or most TV channels' audiences. But unlike passive viewers, these people invested real money in the digital future. They're ready to defend their investments. And they vote.

For years, politicians of all stripes ignored crypto. Too small a niche, too strange technology, too many scandals. It was easier to brush off with meaningless phrases about investor protection and anti-money laundering. But 52 million voters can't be ignored. Especially when they're young, technically savvy, and angry at those trying to take away their financial freedom.

Republicans understood this first. Maybe because their electorate is traditionally skeptical of government control. Maybe they just saw political opportunity. But the fact remains: by 2024, crypto support became part of the Republican platform. Democrats caught on, but it was too late. The image of "party choking innovation" stuck permanently.

And deservedly so. Operation Choke Point 2.0, the Biden administration's unofficial program, democratically decided to cut the crypto industry off from banking⁵. Regulators strongly recommended banks reconsider risks of working with crypto clients. Result: mass account closures, service refusals, payment blocks. Signature Bank and Silvergate, two major crypto-friendly banks, collapsed under pressure. Crypto companies from tiny startups to titans, including Coinbase, became financial outcasts in their own country.

The real breakthrough happened not in party headquarters but on K Street, where lobbyists dwell. 2024 saw peak activity of the first Crypto Super PAC called Fairshake with a $169 million budget. Coinbase, Ripple, a16z, and other giants chipped in to play politics by big business rules.

Super PAC is a legal form of political corruption in the US. Formally independent from candidates, they can spend unlimited sums supporting them or against opponents. Fairshake used this system masterfully. Supported 58 crypto-friendly candidates. 53 of them won, an overwhelming result for all crypto opponents.

The loudest victory was defeating Sherrod Brown, Ohio senator and fierce crypto opponent. Fairshake spent $40 million on his opponent. TV ads, social media, direct mail. The message was simple: Brown is against innovation, against jobs, against Ohio's future. Crypto wasn't even mentioned directly. But everyone understood what it was about.

Politicians across the country got the signal: better be friends with the crypto community. Or at least not openly hostile. Suddenly congressmen began studying blockchain. Senators spoke about innovation's importance. Even conservative Republicans discovered that Bitcoin embodies American values: freedom, independence, protection from government tyranny.

The crypto community celebrated victory, not noticing the irony: we fought against the lobbying and corruption system, but won by playing by its rules. $169 million on politics. Super PAC like oil magnates. We became what we fought against. Another compromise, another price for a place in the system.

And yet, despite these compromises, the most unexpected Bitcoin advocate became Senator Cynthia Lummis from Wyoming. An old-school Republican saw in Bitcoin what her colleagues missed: the perfect asset for government reserves. In a world where the dollar loses positions and debts grow, Bitcoin offered a way out. Fixed issuance, global recognition, impossibility of confiscation and transaction censorship. The perfect asset for global reserves. Why shouldn't the US be first? Especially since China already holds about 1% of supply or 190,000 BTC in reserves⁶. And this despite crypto bans for ordinary citizens.

Lummis went all-in. In July 2024, she introduced a bill to create a strategic Bitcoin reserve⁷. Goal: accumulate 1 million BTC over 5 years. 5% of total issuance in US government hands. Critics called it madness. Supporters saw geopolitical genius.

The math was on Lummis's side. There are 60 million millionaires on the planet, but only 21 million bitcoins, of which about 3 million are lost forever⁸. If every millionaire wants a whole bitcoin, only every fourth will get it. And if governments enter the game? Central banks? Sovereign funds? Here begins the big game, where competition is higher than at the Olympics. Those who start first get a huge advantage, like El Salvador or Bhutan. Those who are late will buy at a million per coin, and it's not certain they'll find the needed volume on the market.

It's precisely in this scarcity that lies the secret of MicroStrategy's premium. Saylor's years of patient accumulation created something more valuable than just bitcoins, it created a strategic position that newcomers can't replicate without moving the market. Those who bought early and gradually have a massive advantage over those trying to catch up.

The idea of government Bitcoin reserves spreads like a virus. In Argentina, new president Javier Milei openly supports crypto. Switzerland quietly studies opportunities. Even in Germany, which hastily sold confiscated bitcoins, voices are heard: "We made a historic mistake"⁹.

The most interesting processes were happening outside the US. The European Union, known for its love of regulation, suddenly became a leader in creating clear rules. MiCA (Markets in Crypto-Assets)¹⁰ came into force in 2024, creating a unified framework for all 27 EU countries. No uncertainty. Crypto companies know exactly what's allowed, what's forbidden, and how much it costs. Boring, but effective.

Asia traditionally led everyone in crypto adoption at the grassroots level but lagged in regulation. This changed. Hong Kong almost kept pace with the US on Bitcoin ETFs and became first to launch Ethereum ETF, positioning itself as Asia's crypto hub. Japan refined its already progressive legislation. Even China, where crypto is banned, sends signals about possible softening. Apparently, they calculated how much money flows to other jurisdictions.

The most unexpected turn happened in Russia. The country that for years couldn't decide its attitude toward crypto suddenly legalized it for international settlements. Sanctions did their job. When the traditional financial system became unavailable, Bitcoin turned out to be salvation. Not for sanctions evasion, officials emphasized, but for "diversifying settlements with friendly countries." Everyone understood what it was about.

By August 2024, the political landscape had changed beyond recognition. Crypto transformed from a marginal topic for geeks into mainstream political agenda. US presidential candidates competed in crypto-friendliness. Central banks studied Bitcoin as a reserve asset. Countries feared falling behind in the new technological race.

Revolution had triumphed, but not as early crypto anarchists imagined. Instead of overthrowing governments, Bitcoin became a tool of geopolitics. Instead of abolishing taxes, we got detailed regulation. Widespread KYC on centralized exchanges became the new normal. The system didn't collapse. It adapted and, though partially, absorbed the threat, turning it into its own instrument.

Yet we can't deny the success of the DeFi market. While it doesn't provide 100% anonymity, it does give control over assets and protection from censorship. The logic is simple: don't like KYC, trade on DEX.

Bitcoin, as well as cryptocurrencies in general, were, are, and will be an alternative to the classical financial system. Like Hydra, cryptocurrency grows new heads where governments cut off the old ones. Now people have a choice. Keep savings in fiat, stablecoins, or Bitcoin. Trust banks, centralized exchanges, or smart contracts and cold wallets. Rely on government or mathematics. Choice is freedom. And freedom, even limited, is better than its absence.

Epilogue: On the Threshold of the Unknown

So we've traveled more than half the path of the fourth cycle. From November 2022, when Bitcoin lay at the bottom of an ocean of despair, to August 2024, when the $100,000 target looks closer than ever. From outcast to establishment and strategic reserve. From anarchist dream to geopolitical instrument.

First they ignore you, then they laugh, then they fight desperately. And then you win. We've gone through all stages. The SEC fought and lost. Banks resisted and surrendered. Politicians ignored and awakened. Bitcoin won.

What price did this victory cost? We started with a dream of financial freedom without intermediaries and got ETFs from BlackRock. We fought against KYC and now celebrate that Coinbase got a license with full compliance. We despised lobbyists and created one of the most powerful Super PACs in history. Each compromise seemed reasonable. Each concession temporary. But add them together, and the picture changes. First-wave crypto anarchists would hardly recognize their creation.

My personal opinion: there's more triumph here than defeat. Bitcoin has always been and remains Schrödinger's cat. Victory and defeat simultaneously. A decentralized paradox we're still unraveling. What seems like compromise today might prove to be strategy tomorrow. Bitcoin, like all crypto, is changeable, which means plot twists await us that we don't expect.

Despite the skepticism and anxiety of first-wave Bitcoin maximalists, I remain optimistic. Crypto fulfills its main task: creating the possibility of choice. And this choice becomes richer each year. Want to play by the system's rules without understanding self-custody? Buy ETF. Don't trust banks? Store on a cold wallet. Don't like KYC? Welcome to DeFi. Afraid of volatility? Here are stablecoins. There's a tool for everyone. This may be the true victory of crypto evolution.

Ending this chapter, I look ahead and try to see what awaits in the second half of the cycle. I understand: there will be everything. Euphoria and disappointments, new records and surprises that crypto is rich in. Bitcoin development through Ordinals, DeFi evolution, asset tokenization, memecoins, NFTs. There won't be a shortage of surprises. This is exactly what delights true technology fans, makes them move, study, create.

But you know what, my dear reader? This is no longer so important. The main thing has happened. The genie is out of the bottle. The idea of decentralized money has taken root in millions of minds. An alternative to traditional finance has been created, technology has proven its viability. Although the cycle isn't finished, its role in history is determined. This is the cycle when crypto went from protest to part of the system, while simultaneously remaining an alternative to it.

We dreamed of revolution and got evolution. Slow, compromising, but unstoppable. The system didn't collapse under Bitcoin's onslaught. It adapted, absorbed the threat, turned it into its own tool. But here's the paradox: evolution proved more effective than revolution. Bitcoin changed the world not with an explosion, but with a thousand small steps. Each led to compromise, but together they paved the way to a new financial reality.

Satoshi, wherever you are, you can be proud. Or disappointed. Simultaneously. Like all of us.

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