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

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

Original author: Nico Carter, Partner at Castle Island Ventures

Original translation by: AididiaoJP, Foresight News

Ken Chang recently published an article titled "I Wasted Eight Years of My Life on Cryptocurrency," in which he lamented the industry's inherent capitalist destruction and financial nihilism.

Crypto enthusiasts often mock articles about "angrily exiting the market," and relish recounting the stories of historical figures like Mike Hearn or Jeff Garzik making their high-profile exits (while also pointing out how much Bitcoin rose after they left).

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

Cryptocurrencies claimed to help decentralize the financial system, and I once believed it wholeheartedly. But the reality is, it's just a super-system of speculation and gambling, essentially a replica of the current economy. Reality hit me like a truck, waking me up. I wasn't building a new financial system; I built a casino. A casino that doesn't call itself a casino, yet it's the largest, 24/7, multiplayer online casino our generation has ever built.

Ken points out that venture capitalists are burning through billions of dollars to fund various new public chains, and we clearly don't need that many. This is true, although his description of the incentive model is slightly flawed (VCs are essentially conduits of capital—generally speaking, they only do 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 on an abstract level (except for meme coin launch platforms, which are utterly illogical), their proliferation is undeniable simply because the market is so incentivized and VCs are willing to foot the bill.

Ken said he entered the cryptocurrency world with idealistic aspirations and a bright vision. This is familiar to those involved in the field: he had libertarian tendencies. But instead of putting his libertarian ideals into practice, 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 profits by systematically selling options.

I don't want to be too harsh, but it's true. If I were in that situation, I would also reflect deeply. When the conflict between principles and work became unbearable, Ken came to his pessimistic conclusion: cryptocurrency is a casino, not a revolution.

What struck me most was that it reminded me of an article Mike Hearn wrote nearly ten years ago. Hearn wrote:

Why did Bitcoin fail? Because the community behind it failed. It was supposed to be a new kind of decentralized currency, without "systemically important institutions" or "too big to fail," but it became something worse: a system entirely controlled by a few. Worse still, the network is on the verge of technical collapse. The mechanisms that were supposed to prevent this have failed, so there's little reason to believe that Bitcoin can truly be better than the existing financial system.

While the details differ, the arguments are consistent. Bitcoin/cryptocurrency was supposed to be something (decentralization, cypherpunk practice), but it turned out to be something else entirely (casino, centralized). Both agree that it ultimately did not improve upon the existing financial system.

Hearn and Ken's argument can be summarized as follows: Cryptocurrencies initially had a purpose, but ultimately went astray. This forces us to 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 agree with the first and fifth camps, but I have empathy for all camps. However, I am not fixated on any one side, not even the hardcore Bitcoin camp.

Restoring sound currency

This was the initial dream, shared by most (but not all) early Bitcoin enthusiasts. The idea was that, given time, Bitcoin would pose a competing threat to the monetary privileges of many sovereign nations, and might even replace fiat currency, leading us back to a new gold standard order. This camp generally viewed everything else in the cryptocurrency space as interference and a scam, merely riding on Bitcoin's coattails. Undeniably, Bitcoin's progress at the national sovereign level has been limited, but in just 15 years, it has come quite far as an important monetary asset. Those who subscribe to this view have long been caught in a paradox of disillusionment and hope, harboring an almost delusional expectation that Bitcoin's widespread adoption is just around the corner.

Encoding business logic with smart contracts

This view, championed by Vitalik Buterin and many in the Ethereum camp, argues that since we can digitize currency, we can express all kinds of transactions and contracts in code, making the world more efficient and fairer. To Bitcoin purists, this was once heresy. However, it has indeed achieved success in certain niche areas, especially in contracts that are easily expressed mathematically, such as derivatives.

Making digital property rights real

This is my summary of the "Web3" or "read-write ownership" philosophy. Its concept isn't without merit; digital property rights should be as real and reliable as physical property rights. However, its practices, such as NFTs and Web3 social networking, have either gone completely astray or, to put it more politely, been ill-timed. Despite billions of dollars invested, few now defend this philosophy. But I still believe there are points worth considering. I believe many of our current online predicaments stem from the fact that we don't truly "own" our online identities and spaces, nor can we effectively control our interactions and content distribution. I believe that one day we will regain sovereignty over our digital assets, and blockchain is likely to play a role in this. However, the time is not yet ripe for this idea.

Improve capital market efficiency

This is the least ideologically driven of the five goals. Few will be excited about securities settlement, the COBOL language, the SWIFT system, or wire transfer windows. However, it is indeed a real driving force behind a significant part of the cryptocurrency industry. The logic is this: the Western financial system is built on an outdated technology stack, extremely difficult to upgrade due to path dependence (no one dares to easily replace the core infrastructure that handles trillions of dollars in settlements daily), and therefore has long been in need of an update. This update must come from outside the system and adopt a completely new architecture. Its value lies mostly in efficiency improvements and potential consumer surplus, hence its less exciting nature.

Expanding global financial inclusion

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

Pragmatic optimism

So, who is right? The idealist, or the pessimist? Or is there a third possibility?

I could have gone on and on about how bubbles always accompany major technological changes, how bubbles actually catalyze the construction of useful infrastructure, and how cryptocurrencies are particularly speculative precisely because they are financial technologies—but that would be somewhat self-comforting.

My real answer is: maintaining pragmatic optimism is the right attitude. You must hold onto this whenever you feel hopeless about cryptocurrency casinos. Speculation, frenzy, and capital flight should be understood as unavoidable but unpleasant side effects of building useful infrastructure. It incurs real human costs, and I don't mean to downplay them. The normalization of Memecoins, pointless gambling, and financial nihilism among young people is particularly frustrating and detrimental to society. But this is an inevitable (even negative) side effect of building capital markets on a permissionless track. I believe there's no other way but to accept that it's part of how blockchain works. And you can choose not to participate.

The key point is this: cryptocurrencies have their goals, and it's perfectly normal to have ideals about them. It is precisely these goals that inspire thousands of people to dedicate their careers to this industry.

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

The world is unlikely to suddenly and universally embrace Bitcoin. NFTs haven't revolutionized digital ownership; capital markets are slowly moving to blockchain. Aside from the US dollar, we haven't tokenized many assets, and no authoritarian regime has fallen because ordinary people hold crypto wallets. Smart contracts are primarily used for derivatives, with few others. To date, truly market-fit applications remain limited to Bitcoin, stablecoins, DEXs, and prediction markets. Much of the value created may be captured by large corporations or ultimately returned to consumers in the form of efficiency gains and cost savings.

Therefore, the real challenge lies in maintaining an optimism rooted in realistic possibilities, rather than indulging in blindly optimistic fantasies. If you subscribe to 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 all be seen as ugly growths on the industry's core—difficult to remove, yet objectively present. If you believe the costs of blockchain have outweighed its benefits, then choosing disillusionment is entirely reasonable. But in my view, the current situation is actually better than ever before. We have more evidence than ever before that we are on the right track.

Just remember that goal.

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