Castle Island Ventures partner: I don’t regret spending eight years in the cryptocurrency industry

Original Title: I do not regret spending 8 years of my life in crypto

Original Author: 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 Crypto," in which he laments the industry's inherent capital destruction and financial nihilism.

People in the crypto space love to mock these kinds of "angry exit" articles, and relish recalling the high-profile departures of historical figures like Mike Hearn or Jeff Garzik (while also pointing out how much bitcoin has risen since they left).

But Ken's article is largely correct. He says:

Crypto claims to help decentralize the financial system, which I once deeply believed. But in reality, it is just a super-system of speculation and gambling, essentially a replica of the current economy. Reality hit me like a truck: I was not building a new financial system, I was building a casino. A casino that does not call itself a casino, but is the largest, always-on, multiplayer casino our generation has ever built.

Ken points out that VCs have burned through billions of dollars funding various new public chains, even though we clearly don't need that many. This is true, although his description of incentive models is slightly off (VCs are essentially conduits for capital—they only do what limited partners are willing to tolerate). Ken also criticizes the proliferation of perpetual and spot DEXs, prediction markets, and meme coin launchpads. Indeed, while you can defend these concepts in the abstract (except for meme coin launchpads, which make no sense), it is undeniable that their proliferation is simply because the market incentivizes it and VCs are willing to pay for it.

Ken says he entered crypto with idealistic expectations and a sparkle in his eye. This is familiar to anyone in the field: he had libertarian tendencies. But in the end, he did not realize libertarian ideals; instead, he built a casino. Specifically, he is best known for his work at Ribbon Finance, a protocol that allows users to deposit assets into vaults and earn yields by systematically selling options.

I don't want to sound too harsh, but it's true. If it were me, I would reflect deeply as well. When the conflict between principles and work becomes unbearable, Ken reached his pessimistic conclusion: crypto is a casino, not a revolution.

What struck me most is that it reminds me of an article Mike Hearn wrote nearly a decade ago. Hearn wrote:

Why did bitcoin fail? Because the community behind it failed. It was supposed to be a new kind of decentralized currency, with no "systemically important institutions," no "too big to fail," but instead it became something worse: a system completely controlled by a small group of people. Worse still, the network is on the verge of technical collapse. The mechanisms that were supposed to prevent all this have failed, so there is little reason to believe that bitcoin can really be better than the existing financial system.

The details differ, but the argument is the same. Bitcoin/crypto was supposed to be something (decentralization, cypherpunk practice), but it turned into something else (casino, centralization). Both agree: it ultimately did not become better than the existing financial system.

The arguments of Hearn and Ken can be summed up in one sentence: crypto had an original purpose, but ultimately went astray. So we have to ask: what is the purpose of crypto?

The Five Goals of Crypto

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. However, I am not dogmatic about any side, not even the hardcore bitcoin camp.

Restoring Sound Money

This was the original dream, shared by most (though not all) early bitcoin players. The idea is that, given time, bitcoin will pose a competitive threat to the monetary privileges of many sovereign nations, and may even replace fiat currency, bringing us back to a new gold standard-like order. This camp usually believes that everything else in crypto is a distraction and a scam, merely riding bitcoin's coattails. Admittedly, bitcoin has made limited progress at the level of national sovereignty, but in just 15 years, it has gone far enough as an important monetary asset. Those who hold this view have long been caught between disillusionment and hope, with almost delusional expectations that widespread bitcoin adoption is just around the corner.

Encoding Business Logic with Smart Contracts

This view is advocated by Vitalik Buterin and most in the Ethereum camp: since we can digitize money, we can express all kinds of transactions and contracts in code, making the world more efficient and fair. For bitcoin fundamentalists, this was once heresy. But it has indeed succeeded in some narrow areas, especially contracts that are easy to express mathematically, such as derivatives.

Making Digital Property Rights Real

This is my summary of the "Web3" or "read-write-own" philosophy. The idea is reasonable: digital property rights should be as real and reliable as physical property rights. However, its practical applications—NFTs, Web3 social—have either gone completely off track or, to put it kindly, are ahead of their time. Despite billions of dollars invested, few now defend this philosophy. But I still think there is something worth considering here. I believe many of our current online dilemmas stem from not truly "owning" our online identities and spaces, nor being able to effectively control who we interact with and how our content is distributed. I believe that one day we will regain sovereignty over our digital property, and blockchain will likely play a role. It's just that the timing isn't right yet.

Improving Capital Market Efficiency

This is the least ideological of the five goals. Few people get excited about securities settlement, COBOL, SWIFT, or wire transfer windows. But regardless, this is indeed a real driving force for a significant part of the crypto industry. The logic is: the Western financial system is built on outdated tech stacks, and due to path dependence, it is extremely difficult to upgrade (no one dares to easily replace core infrastructure that processes trillions of dollars in settlements daily), so an update has long been needed. This update must come from outside the system and use a completely new architecture. The value here is mostly in efficiency gains and possible consumer surplus, so it's less exciting.

Expanding Global Financial Inclusion

Finally, there are some passionate people who see crypto as an inclusive technology that can provide low-cost financial infrastructure globally, and for some, this is the first time in their lives they have access to financial services. This means enabling people to self-custody crypto assets (nowadays more commonly stablecoins), access tokenized securities or money market funds, obtain credit cards issued based on crypto wallets or exchange accounts, and be treated equally on the financial internet. This is a very real phenomenon, and its apparent success provides comfort to many idealists whose enthusiasm has waned.

Pragmatic Optimism

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

I could go on at length, saying that bubbles always accompany major technological changes, that bubbles actually catalyze the construction of useful infrastructure, and that crypto is especially speculative 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, you must hold on to this. Speculation, mania, and capital flight should be understood as inevitable but unpleasant side effects of building useful infrastructure. It brings real human costs, and I don't mean to downplay that. Meme coins, pointless gambling, and financial nihilism becoming normalized among young people is especially disheartening and does society no good. But this is an inevitable (even if negative) side effect of building capital markets on permissionless rails. I don't think there's any other way; you just have to accept that this is part of how blockchains work. And you can choose not to participate.

The key is: crypto has its goals, and it's perfectly normal to have ideals about it. It is precisely these goals that motivate thousands of people to devote their careers to this industry.

It's just that it may not be as exciting as you imagined.

The world is unlikely to suddenly fully embrace bitcoin. NFTs have not revolutionized digital ownership, and capital markets are moving on-chain slowly. Apart from the US dollar, we have not tokenized many assets, and no authoritarian regime has fallen because ordinary people hold crypto wallets. Smart contracts are mainly used for derivatives, and little else. So far, the only applications with real product-market fit remain bitcoin, stablecoins, DEXs, and prediction markets. Yes, much of the value created may be captured by big companies or ultimately returned to consumers in the form of efficiency gains and cost savings.

Therefore, the real challenge is to maintain an optimism rooted in realistic possibilities, rather than indulging in blindly optimistic fantasies. If you believe in a libertarian utopia, the gap between expectations and reality will eventually disillusion you. As for the casino effect, unrestrained token issuance, and rampant speculation, these should be seen as ugly tumors in the industry's belly—hard to remove, but objectively present. If you think the costs brought by blockchain outweigh its benefits, then choosing disillusionment is entirely reasonable. But in my view, things are actually better than ever. We have more evidence than ever that we are on the right track.

Just remember that goal.