Tokens, Blockchain, and Bitcoin: Deconstructing the Wave of Financialization in the Crypto World

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1. Introduction

Since the late 20th century, the global economic system has been in constant evolution, while fiat currencies—as the primary medium of exchange—have kept their stability under intense focus from academia and society. Traditional fiat currencies, such as the U.S. Dollar, have their supply governed by the monetary policies set by central banks. When the money supply expands excessively, it often triggers inflation, leading to a decline in the currency's purchasing power and the implicit erosion of wealth held by individuals. This economic reality encourages people to seek ways to hedge risk and store value, giving rise to diverse "financial" activities, including savings, investment, and real estate purchases.

Within this macro context, financial activity is viewed as an opposite to cash devaluation, aimed at combating the persistent decline in purchasing power. The more currency is issued, the lower the incentive for residents to hold cash, thereby increasing the activity of financial markets. It was precisely to address these inherent flaws of fiat currency that Bitcoin was conceived, with its primary objective being the creation of a "non-inflating monetary mechanism."

2. Bitcoin and Blockchain's "Definancialization" Vision

Bitcoin’s design philosophy focuses on solving the inflation problem endemic to fiat monetary systems. By imposing a fixed supply cap, Bitcoin aims to be an anti-inflationary store of value. More importantly, the blockchain technology underpinning Bitcoin offers a revolutionary solution to the pervasive lack of trust and information asymmetry in traditional societies.

The blockchain is fundamentally a decentralized, distributed ledger collectively maintained by a network of nodes. Once a transaction record is written to this ledger, it becomes exceptionally difficult to tamper with, ensuring both transparency and non-repudiation of data. This characteristic inherently eliminates the possibility of "cooking the books" and, through consensus mechanisms, removes the need for mutual trust between transacting parties.

Based on this, Bitcoin’s initial purpose was envisioned as "digital gold," an asset people could securely hold to counter inflation, rather than a transactional currency frequently used for consumption and investment. Following this logic, an ideal Bitcoin world should have been a "definancialized" domain, one where the scale of financial activities is relatively small, and people tend towards long-term holding. However, with technological advancement, particularly the advent of Ethereum, this predetermined course deviated significantly.

3. Ethereum and the Token Economy it Spawned: Towards "Hyper-Financialization"

Ethereum introduced a pivotal innovation built upon the Bitcoin blockchain: "Smart Contracts." A smart contract is a code program that automatically executes predetermined terms when specific conditions are met. These contracts are deployed on the blockchain, and once executed, their outcomes are irreversible.

The introduction of smart contracts revolutionized the scope of blockchain applications. It enabled users to autonomously issue and manage their own "Tokens" on the blockchain. A token can be understood as a digital certificate that represents a certain asset or right within the blockchain network. For instance, a user can create a smart contract to fragment an original piece of data or content (such as a digital artwork, a contract clause, or even a recorded event), into several tradeable units, with each unit being a token.

For example, imagine an original record is divided into 10,000 fragments, each representing one percent of the record's ownership or access rights. Through smart contracts, developers can stipulate the total supply of these tokens, their transfer rules, and potential additional functionalities. When these tokens are issued and sold by the user on the market, if enough buyers are willing to purchase them, a trading market for that token can be formed.

3.1. The Infinite Possibility of Tokenization and the "Meme Coin" Phenomenon

The key to smart contracts lies in their compatibility with "arbitrary content." This means that, theoretically, any entity or concept that can be digitally represented and possesses potential value can be digitalized through tokenization, turning it into a tradeable digital asset. From abstract text records and audio clips to concrete physical assets like a piece of clothing, they can all be "tokenized" as long as a reliable mapping can be established on the blockchain.

This characteristic has led to a proliferation of token launches, many of which are driven by entertainment, social elements, or community culture, with content leaning towards novelty and irrational consumption—the "Meme Coins." The emergence of coins like Dogecoin and Shiba Inu, as well as tokens centered around concepts like the Moon and Mars, are notable examples of Meme Coins. The value volatility of these tokens is often driven by community sentiment, internet hype, and social media trends, rather than traditional fundamental analysis.

3.2. Fungible and Non-Fungible Tokens (NFTs)

Based on their interchangeability, tokens can be classified into two main types:

• Fungible Tokens: These are tokens where every unit is essentially identical and can be mutually substituted, maintaining equal value. In the cryptocurrency system, Bitcoin or Ethereum themselves are examples of fungible tokens.
• Non-Fungible Tokens (NFTs): Each NFT is unique, and its value is derived from its distinctiveness and scarcity. They are typically linked to a unique identifier pointing to a specific digital item (such as art, collectibles, or gaming assets).

NFTs have garnered significant attention in recent years, particularly in the realm of art collecting. For example, in 2022, a piece of NFT avatar from the "Bored Ape Yacht Club" fetched a peak price of 147 Ethereum (equivalent to approximately $420,000 at the time). In essence, by purchasing such an NFT, the user secures an exclusive record on the blockchain proving ownership of a specific digital asset and granting the user the right to transfer that record.

3.3. The Rise of "Hyper-Financialization"

The widespread application of tokenization has connected seemingly disparate entities with digital financial markets in an unprecedented manner. Any tangible or intangible existence can potentially be converted into a tradeable financial asset. This process is, in essence, a manifestation of "Hyper-financialization," a phenomenon where financial logic permeates every corner of socio-economic activity, leading to virtually all things being assessed and traded within a financialized framework.

4. Conclusion: The Ironic Reversal from "Definancialization" to "Hyper-Financialization"

Reflecting on the evolution of cryptocurrency, a deeply ironic trajectory emerges. Bitcoin's original vision was the construction of a "definancialized" monetary system, intended to provide a stable store of value to combat the inflationary tendencies of fiat currency. However, the token economy catalyzed by Ethereum and its smart contracts has instead led this initial intention towards the opposite extreme of "Hyper-financialization."

Today, countless items that were not historically considered financial assets are being tokenized and flooding financial markets, becoming highly speculative financial instruments. In this process, market price volatility has sharply increased, making a stable metric of value elusive. This not only challenges Bitcoin’s foundational design philosophy but also prompts profound reflection on the nature of digital assets, the standards for value judgment, and the future direction of the financial system. This transition from "anti-financialization" to "hyper-financialization" provides an illuminating case study of how technological innovation reshapes socio-economic structures.