Friends, let’s talk about something interesting today: the ultimate relationship between the law of increasing entropy and the crypto financial market.

Some people say, isn't this something that is only taught in physics classes? What does it have to do with the cryptocurrency world? But think about it carefully, the essence of the financial market is a system of energy (capital) flow , and the law of increasing entropy has long predicted that all closed systems will eventually become chaotic . Look at the financial world from the subprime crisis to the P2P explosion and the bankruptcy of Silicon Valley Bank. Which one is not a living example of "entropy increase"? But what's interesting is that the crypto industry is like a shot in the arm, carving out a "negative entropy" path for the financial industry in chaos.

1. Financial entropy increase: from "orderly rapid wealth" to "disorderly lying flat"

The increase in entropy in the financial market is essentially a tragedy of energy dissipation.

First, the information entropy in the financial circle is increasing seriously. Why are retail investors always being ripped off? Just look at the GameStop incident - the "get rich quick myth" that was wildly spread on social media caused the stock price to soar 28 times in one month and then plummet 95%. The more information explodes, the higher the cognitive cost of ordinary people, and in the end they can only follow the trend.

Second, finance has a black hole effect. Trading commissions, inflation, leverage blow-ups... every level of circulation is consuming energy. For example, high-frequency trading in U.S. stocks seems to be efficient, but in fact it drains more than $30 billion from the market every year, proving that the "Maxwell demon" is still impossible to exist in the financial market.

Third, the financial subsystem is as fragile as Lego blocks. The 2008 subprime mortgage crisis is a typical example - CDOs were built on CDSs, and derivatives were stacked up to 18 layers. A small default could trigger a global credit freeze. Today, ETFs account for more than 40% of US stocks. Homogeneous investment has turned the market into a "zombie paradise", and the stock exchange relies on market makers to artificially prolong its life.

Behind these phenomena, all are the classic routines of the law of increasing entropy: closed system + no external force = inevitable chaos . But the question is - can traditional finance break this deadlock?

2. Crypto Industry: Using Mathematical Consensus to Fight Human Entropy Increase

At this time, the crypto industry jumped out and said I can do it! Its confidence comes from two axes: blockchain technology and mathematical consensus .

First, rely on Bitcoin to consume electricity and spit out order.

The Bitcoin network designed by Satoshi Nakamoto is essentially a "power-eating monster."

It is resistant to inflation and entropy increase, with an upper limit of 21 million coins + halving in four years, which directly locks the Federal Reserve's printing press's "excessive money issuance = increasing entropy" strategy.

Miners around the world compete with each other 24 hours a day, and no one can shut down this system. Compare it with the circuit breaker mechanism of the stock market, and the difference is obvious.

Rely on it to violently break the trust crisis. After the collapse of multiple crypto projects, Bitcoin was regarded as a safe-haven asset by institutions. The price stabilized at $100,000 in 2025, indicating that the market recognizes that mathematics is more reliable than human nature.

Second, DeFi cuts out the middlemen and acts as an “entropy reduction scalpel”

Why is traditional finance inefficient? Because banks, securities firms, and exchanges are all “entropy-increasing middlemen.”

DeF directly turns the table over and uses smart contracts as referees. Lending, trading, and clearing are all coded, saving 90% of the handling fee.

They also use liquidity pools to fight the herd effect. For example, Uniswap's AMM mechanism allows retail investors to become "market makers", and its TVL will exceed $200 billion in 2024, making Wall Street elites envious.

Third, DAO organizations use community autonomy to eliminate bureaucratic entropy.

How did Lehman Brothers fail? The internal decision chain was so long that it could circle the earth twice. And DAO (decentralized autonomous organization) is playing,
​Proposal voting is put on the chain to achieve financial democratization. For example, in risk control behavior, the Aave community can vote on the chain in minutes to change a parameter.

Contribution is mining. Crypto projects issue tokens to developers, which is more efficient and practical than traditional VC PPT financing.

These operations essentially transplant Schrödinger's statement that "life feeds on negative entropy" into the financial system - open system + continuous energy input = local entropy reduction.

3. The Battle of the Future: How Far Can Encrypted Negative Entropy Go?

But don’t rush to shout “yyds”, the crypto industry’s road to negative entropy also has three major levels:

First, the increase in regulatory entropy: we must be open but not naked​

The US SEC sues exchanges every day, and the University of East China directly bans mining. But what's interesting is that while the Federal Reserve is expected to cut interest rates in 2025, institutions are buying Bitcoin ETFs crazily - what does this mean? The financial circle is voting with its feet and rushing into the cryptocurrency circle. With the establishment of the US Bitcoin National Reserve, encryption will usher in a regulatory spring.

Second, technological entropy increases: Don’t let consensus become metaphysics​

PoW was criticized for its power consumption, PoS was criticized for its centralization, and even Vitalik Buterin was worried about it. However, the dual development of AI + blockchain has become the driving force of global growth, proving that traditional finance + blockchain = dimensionality reduction. The crypto industry has truly become a ladder for human economic development. In particular, the development of crypto financial derivatives such as perpetual contracts and crypto options has provided traders with more diverse wealth growth options.

The third is the increase in human entropy: FOMO and FUD never sleep

Musk's tweet can make Dogecoin soar 10 times, Trump's meme sells hundreds of billions of dollars overnight... But don't forget that Buffett has become a legend by "anti-entropy investment", and long-term players in the crypto market are also learning this trick - hoarding BTC and never letting it down. The crypto market is a blue ocean filled with human light and human desires. It naturally extracts entropy and creates a new order.

Of course, in a universe of increasing financial entropy, cryptocurrency cannot become Maxwell's demon. However, the existence of the crypto industry is like a morning star in the dark night, which points out one thing: as long as the system is open, energy is introduced, and evolution is maintained, order can grow out of chaos.

Let me share with you a quote from Soros: " The secret to my making money is to recognize that the market is inherently unpredictable. " But the revelation given by the crypto industry is more important: If you can't predict it, then reconstruct the rules.