Author: Nic Carter, Partner at Castle Island Ventures; Translation: Golden Finance
You cannot serve two masters; for either he will hate the one and love the other, or he will hold to the one and despise the other. You cannot serve God and Mammon.
Matthew 6:24
Ken Chang recently published an article titled “I Wasted 8 Years in the Crypto Industry,” lamenting what seems to be an inherent tendency toward capital destruction and financial nihilism in the industry.
People in the crypto circle enjoy mocking these “rage-quit” articles, enthusiastically recalling some dramatic exits in history, such as… Mike Hearn or Jeff Garzik (and pointing out how much Bitcoin’s price has risen since then).
But most of Ken’s points are accurate. He says:
Crypto claims to help decentralize the financial system, and I genuinely believe that. But in reality, it’s just a super-system of speculation and gambling, merely a replica of the existing economy. Reality slapped me hard. I’m not building a new financial system; I’m building a casino. A casino that doesn’t even call itself one, but it’s the largest, online, multi-player casino our generation has conceived.
Ken points out that venture capital has already invested billions of dollars into new L1s, even though we don’t really need that many. That’s true, even if he slightly distorts the incentive mechanisms (VCs are just channels for capital—overall, they’ll do whatever LPs are willing to tolerate). Ken condemns the proliferation of decentralized exchanges (DEXs), prediction markets, Meme coin platforms, and so on. Indeed, while you can theoretically argue the reasonableness of these concepts (except for Meme platforms, which are fundamentally untenable), it’s undeniable that their proliferation is driven by market incentives, and VCs are willing to fund them.
Ken says he entered the crypto industry with passion and idealism. These motivations are very familiar to anyone involved: he sympathizes with Randian liberalism. However, he did not practice liberalism; instead, he created a casino. Specifically, his most notable achievement is his involvement with Ribbon Finance, which developed a protocol allowing users to deposit assets into vaults and earn yields through systematic options selling.
I don’t want to be too harsh, but that’s the truth. I also reflect deeply. When the conflict between principles and work becomes unbearable, Ken ultimately becomes pessimistic: crypto is just a casino, not a revolution.
Reading Ken’s article, what struck me was that it reminded me of an article written nearly ten years ago by Mike Hearn. Hearn wrote:
Why did Bitcoin fail? The reason lies in the failure of the community. Bitcoin was originally intended to be a new, decentralized form of currency, avoiding issues like “systemically important institutions” and the “too big to fail” problem. Now, it has become an even worse situation: a system controlled by a small minority. More worryingly, the Bitcoin network is on the brink of technical collapse. The mechanisms meant to prevent this have failed, so there’s little reason left to believe Bitcoin can outperform the existing financial system.
While details differ, the argument remains the same. The initial vision of Bitcoin/cryptocurrency was decentralization and punk cryptography, but it ultimately turned into a casino—centralized and controlled. Both sides agree: it ultimately isn’t better than the current financial system.
Hearn and Ken’s arguments can be summarized as: cryptocurrencies were originally purposeful, but ultimately turned into something else. Therefore, we end up debating the ultimate goal or purpose of crypto. But what exactly is the ultimate goal of cryptocurrency?
The Five Major Goals of Cryptocurrency
In my view, these can be roughly divided into five camps. They are not mutually exclusive. For example, I personally align most with the first and fifth camps, though I sympathize with all of them. I do not excessively favor any one camp, including even the hardcore Bitcoin supporters.
1. Restoring sound money
This is the original dream most (but not all) early Bitcoin holders subscribe to. Their idea was that, over time, Bitcoin would pose a competitive threat to the monetary privileges of many countries, possibly even replacing their currencies, bringing us back to a system resembling the gold standard. This group generally sees all the hype around cryptocurrencies as a distraction, a scam riding Bitcoin’s coattails. Undoubtedly, Bitcoin’s achievements at the sovereign currency level are limited, but as an important monetary asset, it has achieved remarkable success in just 15 years. Holders with this view are often disillusioned yet hopeful—though perhaps somewhat naively—they believe super-bitcoinization is imminent.
2. Encoding business logic into smart contracts
This is the view strongly supported by Vitalik Buterin and most Ethereum supporters: since we can digitize money, we can encode various transactions and contracts into code, making the world more efficient and fair. For Bitcoin supporters, this is almost heresy. But in certain aspects, this approach has undoubtedly succeeded, especially with contracts that are easy to express mathematically, such as derivatives.
3. Making digital assets tangible
This is my best summary of the “Web 3” or “Read Write Own” philosophy. It’s not without merit; it argues that digital assets should exist as tangibly as physical assets. However, the practical implementation—such as NFTs and Web 3 social platforms—is either completely wrong or, to put it more diplomatically, ahead of its time. Despite billions of dollars poured in, few now defend this idea. Still, I believe it has merits. I think most of our online dilemmas stem from the fact that we don’t truly own our namespaces, nor can we effectively control who we interact with or who can see our content. I believe, ultimately, we will regain control over our network assets, likely through blockchain technology. But right now, the timing for this vision hasn’t matured.
4. Improving capital markets efficiency
This is the least ideological of the five categories. You won’t see many enthusiasts interested in securities settlement, COBOL, SWIFT, or wire transfer windows. But for better or worse, it has driven a significant branch of the crypto industry. Its idea is that Western financial systems are built on outdated technology, and due to path dependence (you definitely wouldn’t want to replace the core infrastructure supporting trillions of dollars in daily settlements lightly), these technologies are difficult to upgrade and desperately need modernization. Such upgrades must come from outside the system and require entirely new architectures. Most of the value here lies in efficiency gains and potential consumer surplus, so it’s not very exciting.
5. Expanding global financial inclusion
Finally, there are well-meaning advocates who see crypto as an inclusive technology, believing it can enable developing countries in the Global South to access low-cost financial infrastructure, sometimes for the first time. This means giving them the opportunity to self-custody their crypto assets, or more commonly, stablecoins, tokenize stocks or money market funds, obtain debit cards linked to their crypto wallets or exchange accounts, and enjoy equal standing in internet finance. This is a real phenomenon; its apparent successes have gradually rekindled confidence among many passionate but skeptical theorists.
Pragmatic Optimism
So, are idealists or cynics correct? Or is there a third, lesser-known truth?
I could go on endlessly about how bubbles are always accompanied by major technological revolutions, that bubbles can indeed promote useful infrastructure development, and that cryptocurrencies are especially speculative because they are a financial technology—most of this is just self-soothing.
My real answer is: pragmatic optimism is the right attitude. Whenever you feel pessimistic about the crypto markets, you must hold onto this mindset. Speculation, exuberance, and arbitrage should be understood as unavoidable, albeit unpleasant, externalities in building useful infrastructure. They bring very real personnel costs; I don’t want to downplay this. Meme coins, mindless gambling, and the normalization of financial nihilism—especially among the young—are depressing and harmful to society. But these are inevitable (albeit negative) side effects of building permissionless capital markets. I believe that without blockchain technology, permissionless capital markets wouldn’t exist. You must accept that this is an inherent outcome of how blockchain works. You are under no obligation to participate.
In summary, cryptocurrencies have their ultimate goals, and it’s perfectly fine to be idealistic about them. It’s this very motivation that drives thousands to dedicate their lives to this industry.
But it may not be as exciting as you think.
The world may never see Bitcoin widely circulated. NFTs haven’t revolutionized digital ownership. Capital markets are slowly moving toward blockchain, but at a glacial pace. Outside of the dollar, we haven’t tokenized much else. No authoritarian regime has been overthrown by ordinary citizens’ crypto wallets. Smart contracts mostly deal with derivatives and have little other use. Currently, the only applications with true product-market fit are Bitcoin, stablecoins, DEXs, and prediction markets. Indeed, most of the value created may be captured by big corporations or ultimately returned to consumers through efficiency gains and cost savings.
Therefore, the challenge lies in maintaining a realistic, optimistic attitude rather than succumbing to blind fantasies. If you believe in Randian libertarian utopia, then the gap between expectations and reality will eventually close. As for casino-like operations, unrestricted token issuance, and rampant speculation—these should be seen as ugly but unavoidable blemishes of the industry. If you think blockchain costs outweigh its benefits, you’re entirely justified in feeling disappointed. But from my perspective, things are actually better than ever. We have more evidence than ever that we’re on the right path. Remember the ultimate goal.
