Author: Nic Carter, Co-founder of Castle Island Ventures
Compiled by: Felix, PANews
Ken Chan, co-founder of Aevo, recently published an article stating that he wasted 8 years of his life in the crypto industry. Ken Chan believes that the crypto industry has deviated from its original intention of "decentralized finance" and has evolved into the largest and most widely participated speculative and gambling system in human history. This pessimistic view has sparked heated discussions in the crypto community. Nic Carter, co-founder of Castle Island Ventures, also published an article to participate in the discussion. The full text is as follows.
No one can serve two masters: for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and mammon (Note: the personification of wealth in religious legends). —Matthew
Ken Chang recently published an article titled "I Wasted 8 Years of My Life in Cryptocurrency," lamenting that the industry seems inherently characterized by capital consumption and financial nihilism.
People in the crypto circle love to mock such "rage quit" articles, gleefully recalling how historical figures like Mike Hearn and Jeff Garzik made grand exits back in the day, and then smugly pointing out how much Bitcoin has risen since they left.
But Ken's article is mostly correct. He said:
"Cryptocurrency claimed to decentralize the financial system, and I fully believed it at first, but the reality is, it's just a super speculative and gambling system, essentially just a mirror of the current economy. The truth hit me like a damn truck: I wasn't building a new financial system at all, I built a casino. A casino that refuses to admit it's a casino, yet it's the largest, 24/7, multi-player casino ever created by our generation."
Ken points out that VCs burned tens of billions of dollars supporting countless new L1s, and we clearly don't need that many. This is indeed correct, although he slightly distorts the incentive model (VCs are just conduits for capital). He also decries the proliferation of perpetual contracts, spot DEXs, prediction markets, and meme coin launch platforms. Admittedly, while you can defend these concepts on an abstract level (except for meme coin launch platforms, which are utterly indefensible), it's undeniable that they proliferate simply because the market has incentives and VCs are willing to invest.
Ken says he entered the crypto space full of idealism. Everyone should be very familiar with this: he had Randian libertarian leanings. But instead of practicing libertarianism, he built a casino. Specifically, he is best known for his involvement in developing Ribbon Finance, a protocol that allows users to deposit assets into vaults and earn yield by systematically selling options.
I don't want to be too harsh personally, but that's the fact. If it were me, I would also engage in some deep reflection. As the conflict between principle and practice became increasingly unbearable, Ken ultimately pessimistically realized: cryptocurrency is a casino, not a revolution.
When reading Ken's article, what struck me most was how it reminded me of Mike Hearn's famous exit宣言 almost 10 years ago. Hearn wrote:
Why did Bitcoin fail? It's because the community failed. What was supposed to be a new decentralized currency, without 'systemically important institutions' and 'too big to fail' entities, has become something worse: a system entirely controlled by a handful of people. Worse still, the network is on the verge of technical collapse. The mechanisms that were supposed to prevent this outcome have failed, so there's little reason left to believe Bitcoin can be any better than the existing financial system.
The details differ, but the argument is the same. Bitcoin/cryptocurrency was supposed to be one thing (decentralized, cypherpunk practice), but it turned into another (casino, centralized). Both Hearn and Chang believe: it ultimately isn't any better than the existing financial system.
Their arguments boil down to one sentence: cryptocurrency started out meaning one thing, but then it became something else. So we are stuck in a debate about the "teleology" of cryptocurrency—what is its purpose?
The Five Purposes of Cryptocurrency
In my personal view, there are roughly five camps, and they are not entirely mutually exclusive. For example, I most identify with the first and fifth, but I also have some sympathy for the others. However, I am not a die-hard adherent to any single one, not even the most hardcore Bitcoin camp.
1. Restoring Sound Money
This was the shared dream of the early majority of Bitcoin supporters, though not all agree. The idea is that over time, Bitcoin will pose a competitive threat to the monetary privileges of many countries, potentially even replacing their currencies, returning to an arrangement similar to a new gold standard. People in this group often believe everything else happening in crypto is a distracting scam riding Bitcoin's coattails. Bitcoin has made limited progress at the sovereign level, but it's quite an achievement to become a significant monetary asset in just 15 years. Bitcoiners holding this view are always in a state of intertwined disillusionment and hope, anticipating Bitcoin's full adoption is just around the corner.
2. Encoding Business Logic into Smart Contracts
This is the view most promoted by Vitalik Buterin and Ethereum supporters: since money can be digitized, so can various transactions and contracts be written as code, making the world more efficient and fair. This was initially heresy to Bitcoin proponents. But it has succeeded in some narrow areas, especially contracts easily expressed mathematically, like derivatives.
3. Making Digital Property "Real"
I think this is the best summary of the "Web3" or "Read Write Own" idea: digital property should be as real as physical property. The idea itself has value, but its implementation (NFTs, Web3 social) has either gone completely astray or is too ahead of its time. Despite billions poured into it, few defend it today. But I still think the idea has merit. Most problems on the internet today stem from not truly owning your own web space and not having real control over who you interact with or who sees your content. I believe we will eventually reclaim control over our online assets, and this will likely involve blockchains. It's just that the time for this idea hasn't matured yet.
4. Making Capital Markets More Efficient
This is the least ideological of the five. You'd be hard-pressed to find many people truly particularly interested in securities settlement, COBOL, SWIFT, or bank wire windows. But this实实在在 supports a large part of the crypto industry's value. The core idea is: the Western financial system is built on outdated technology that is extremely difficult to update due to path dependency (you can't just tear down and rebuild core infrastructure handling trillions in daily settlements). This update must come from outside the system and adopt a completely new architecture. The value here is mainly体现在 in efficiency gains and possible consumer surplus, so it's not particularly exciting.
5. Expanding Financial Accessibility Globally
Finally, there are the compassionate ones who see cryptocurrency as an inclusive technology, enabling people in less developed countries to use low-cost financial infrastructure for the first time: allowing them to self-custody crypto assets or stablecoins, buy tokenized stocks or money market funds, get a card based on a crypto wallet or exchange account, and be treated as equals on the financial internet. This is a very real phenomenon and provides motivation for many idealists whose enthusiasm is waning to keep going.
Pragmatic Optimism
So who is right? The idealists, or the cynics? Or some unknown third answer?
I could go on at length about how bubbles always accompany major technological changes, how bubbles actually facilitate useful infrastructure construction, and why cryptocurrency is especially filled with speculation because it is inherently a financial technology, but this is mostly just self-consolation.
The real answer is: maintaining pragmatic optimism is the correct attitude. Whenever you feel extremely pessimistic about the "crypto casino," hold firmly to this attitude. Speculation, mania, and predation should be understood as inevitable, unpleasant externalities in the process of building useful infrastructure. It does bring very real negative effects, which I don't want to downplay. The normalization of meme coins, mindless gambling, and financial nihilism among young people is depressing and socially harmful. But this is an inevitable side effect of building permissionless capital markets. This situation wouldn't happen without blockchains. You just have to accept this as a negative consequence of how blockchains operate. You don't have to participate in it.
To summarize here, cryptocurrency has its purposes, and it's completely fine to be idealistic about it. There is a force激励着成千上万的人 to dedicate their careers to this industry.
It's just that this purpose might not be as exciting as you imagined.
The world will most likely not experience "hyperbitcoinization." NFTs haven't revolutionized digital ownership. Capital markets are moving on-chain, but progress is slow. Not much has been truly tokenized besides the dollar. No authoritarian regime has been overthrown by ordinary people carrying crypto wallets. Smart contracts mostly only involve derivatives, nothing else. The applications that currently have true product-market fit are limited to Bitcoin, stablecoins, decentralized exchanges, and prediction markets. And, most of the value created will likely be captured by large companies or returned to consumers in the form of efficiency gains and cost savings.
So the real challenge is: maintaining a down-to-earth, reality-based optimism, rather than indulging in blind fantasy. If you believe in a Randian libertarian utopia, the gap between expectation and reality will eventually break you. As for the casino-like mechanisms, unrestrained token issuance, and疯狂投机行为, they should be seen as unpleasant flaws of the industry, yet difficult to eradicate. If you believe that the costs brought by introducing blockchains to the world outweigh the benefits, you have every reason to be disappointed. But in my personal view, the situation is actually better than ever. We have more evidence than ever that we are on the right path. Just don't forget the original intention.
Related reading: Nihilism and Vicious Cycles, Why Should We Oppose Over-Financialization?
