Castle Island Ventures Partner: I don't regret spending eight years in the cryptocurrency industry.

Writing by: Nic Carter, Partner at Castle Island Ventures

Translated by: AididiaoJP, Foresight News

Ken Chang recently published an article titled “I Wasted Eight Years of My Life in Cryptocurrency,” in which he painfully discusses the inherent capital destruction and financial nihilism within the industry.

People in the crypto space often mock such “angry exit” articles and enjoy recalling stories of historical figures like Mike Hearn or Jeff Garzik making high-profile departures (while also pointing out how much Bitcoin has risen since they left).

But Ken’s article is largely correct. He states:

Cryptocurrencies claim to help decentralize the financial system. I once believed this wholeheartedly, but the reality is that it’s just a super system of speculation and gambling, essentially a replica of the current economy. The truth hit me like a truck: I wasn’t building a new financial system; I created a casino. A casino that doesn’t even call itself a casino, yet it’s the largest, all-day, multi-user online casino built by our generation.

Ken points out that venture capitalists have burned through billions of dollars funding various new blockchains, yet we clearly don’t need that many. This is true, although his description of incentive models is somewhat biased (VCs are essentially capital pipelines—they generally do only what limited partners are willing to tolerate). Ken also criticizes the proliferation of perpetual and spot DEXs, prediction markets, meme coin launch platforms, etc. Indeed, while you can defend these concepts abstractly (except for meme coin launch platforms, which are nonsensical), their proliferation is undeniably driven by market incentives and VC willingness to pay.

Ken says he entered the crypto space with idealistic dreams and bright eyes. This is familiar to many participants: he leans towards libertarian ideals. But in the end, he did not practice libertarian ideals—instead, he built a casino. Specifically, he’s best known for his work at Ribbon Finance, a protocol allowing users to deposit assets into vaults and earn yields by systematically selling options.

I don’t want to be overly harsh, but it’s true. If I were in his shoes, I would also reflect deeply. When the conflict between principles and work becomes unbearable, Ken’s bleak conclusion is: cryptocurrencies are a casino, not a revolution.

What struck me deeply is that it reminded me of an article written nearly ten years ago by Mike Hearn. Hearn wrote:

Why did Bitcoin fail? Because its community failed. It was supposed to become a new kind of decentralized currency, without “systemically important institutions,” without “too big to fail,” but it turned into something worse: a system controlled entirely by a few people. Even worse, the network is on the brink of technical collapse. The mechanisms meant to prevent all this have failed, so there’s little reason to believe Bitcoin can be better than the existing financial system.

Though the details differ, the argument is the same. Bitcoin / cryptocurrency should be something (decentralization, cyberpunk practices), but has become another (casino, centralization). Both agree: ultimately, it did not become better than the current financial system.

Hearn and Ken’s argument can be summarized in one sentence: cryptocurrencies initially had good intentions but ultimately went astray. So we must ask: what is the true purpose of cryptocurrencies?

Five Goals of Cryptocurrency

In my view, there are roughly five camps, which are not mutually exclusive. Personally, I most identify with the first and fifth camps, but I empathize with all of them. I am not dogmatic about any side, even the hardcore Bitcoin camp.

Restoring Sound Money

This is the original dream shared by most (but not all) early Bitcoin enthusiasts. The idea is that, given time, Bitcoin could threaten the monetary privileges of many sovereign nations, possibly replacing fiat currency and returning us to a new gold-standard-like order. This camp generally views everything else in the crypto space as interference and scams, merely riding on Bitcoin’s coattails. Admittedly, Bitcoin’s progress at the national sovereignty level has been limited, but in just 15 years, it has already come a long way as an important monetary asset. Those who agree with this view often fluctuate between disillusionment and hope—holding onto nearly delusional expectations that Bitcoin will soon be widely adopted.

Encoding Business Logic with Smart Contracts

This view is advocated by Vitalik Buterin and most Ethereum camp members: since we can digitize money, we can also express various transactions and contracts in code, making the world more efficient and fair. For Bitcoin purists, this was once heresy. But it has indeed succeeded in certain narrow domains, especially with contracts that are easily expressed mathematically, such as derivatives.

Making Digital Property Real

This is my summary of the “Web3” or “Read-Write-Own” philosophy. Its premise isn’t unreasonable: digital property should be as real and reliable as physical property. But in practice, NFT and Web3 social ventures have either gone completely off course or, to be polite, been born at the wrong time. Despite billions of dollars invested, few now defend this philosophy. Still, I believe there are aspects worth pondering. Many of our current online dilemmas stem from not truly “owning” our digital identities and spaces, nor being able to effectively control interaction targets and content distribution. I believe one day we will regain sovereignty over our digital assets, with blockchain likely playing a role. But that idea is not yet ripe.

Improving Capital Market Efficiency

This is the least ideological of the five goals. Few get excited about securities settlement, COBOL, SWIFT, or wire transfer windows. But nonetheless, it remains a crucial practical driver for the crypto industry. The logic is: Western financial systems are built on outdated tech stacks; due to path dependency, upgrades are extremely difficult (no one dares to replace core facilities handling trillions of dollars daily). So, a major overhaul is needed from outside the system, with a new architecture. The value here mainly manifests as efficiency gains and potential consumer surplus, which are less thrilling.

Expanding Global Financial Inclusion

Finally, some passionate people see crypto as an inclusive technology capable of providing low-cost financial infrastructure worldwide. For some, this is the first time they can access financial services—being able to self-custody crypto assets (now more often stablecoins), access tokenized securities or money market funds, obtain crypto-based credit cards issued via wallets or exchanges, and be treated equally on the financial internet. This is a very real phenomenon; its superficial success offers solace to many disillusioned idealists.

Pragmatic Optimism

So, who is right? The idealists or the pessimists? Or is there a third way?

I could go on at length about how bubbles always accompany major technological innovations, with bubbles actually catalyzing the building of useful infrastructure, and that crypto’s high speculation is partly because it is itself a financial technology—but that’s somewhat self-consoling.

My real answer is: maintaining pragmatic optimism is the right attitude. Whenever you feel despair about the crypto casino, cling to this. Speculation, frenzy, and capital flight are inevitable side effects of building useful infrastructure. They come with real human costs, and I don’t intend to downplay that. The normalization of meme coins, pointless gambling, and financial nihilism among young people is especially disheartening and unhelpful to society. But these are the unavoidable (even negative) side effects of building a capital market on an permissionless track. I see no other way; you can only accept that this is part of how blockchain operates. And you can choose not to participate.

The key is: cryptocurrencies have goals. It’s perfectly normal to hold idealistic visions for them. It’s this very purpose that motivates thousands to dedicate their careers to the industry.

However, it may not be as exciting as you imagine.

It’s highly unlikely that the world will suddenly embrace Bitcoin completely. NFTs haven’t revolutionized digital ownership, capital markets are slowly moving onto the chain. Aside from the dollar, we haven’t tokenized many assets, and no authoritarian regime has fallen because ordinary people hold crypto wallets. Smart contracts are mainly used for derivatives, with few other applications. The truly market-ready applications so far remain limited to Bitcoin, stablecoins, DEXs, and prediction markets. Yes, much of the value created may be captured by big corporations or ultimately returned to consumers via efficiency gains and cost savings.

Therefore, the real challenge is to maintain a grounded optimism rooted in realistic possibility, rather than blind optimism. If you believe in a libertarian utopia, the gap between expectations and reality will eventually disappoint you. As for casino effects, unlimited token issuance, rampant speculation—these are ugly warts in the industry’s core, hard to remove but objectively present. If you think the costs brought by blockchain outweigh its benefits, disillusionment is a reasonable choice. But in my view, the current situation is better than ever. We have more evidence than ever that we are on the right path.

Just remember that goal.