Casinos and Conference Rooms

Note: as with the last couple of Three Things issues, this article was also written a few months ago. I really struggled with the decision about whether or not to publish it, given how much has changed the past few months. Most obviously, I’m no longer working on anything crypto related. And I’ve softened my stance on several of these points including the value and promise of decentralized governance, and the potential of cryptocurrency more generally.

As before, I decided to publish it anyway, with only some minor cleanup. If nothing else, it serves as a historical artifact, and it’s remarkable to reread this now and see how much my thinking has shifted over the past few months.

If you have zero interest in blockchain or cryptocurrency, feel free to skip this one.

There’s been a lot of bearish sentiment lately, more than I think I’ve ever seen in the nearly nine years I’ve been working in this industry. It perplexes me, because the fundamentals are better than ever before. Blockchain tech gets better every day. There are more and more use cases, and more good products than ever before. To cite the most obvious example, stablecoins are already changing the lives of people everywhere.

And yet there’s a persistent, growing narrative that crypto has failed: failed to win the hearts and minds of the masses, failed to change the world. One OG, Ken Chan, ragequit recently with a strongly worded post with a no-BS title: I Wasted 8 Years of My Life in Crypto. After eight years, he felt frustrated that all he had built was “a casino.”

Others reported that attendees recently left Breakpoint, a major industry event, feeling that sentiment is low, that OGs are checked out, that there’s very little fresh capital entering the space, that investors are doing poorly, etc.

Here are my thoughts, as someone who’s been doing this for a while.

A few years ago a friend described being an earnest, serious builder in this industry in a very funny way that I’ve always remembered: it’s like being stuck in a conference room inside a casino hotel, diligently doing boring but important work, heads down, all the while seeing your friends just outside the window on the casino floor making money hand over fist. At least, that’s how it used to feel.

In my mind, there have always been two parallel crypto worlds: the casino, and the builders.

When reading the X thread that I mentioned above, I couldn’t help but think, yeah, well, duh, you chose to build a casino. You built a DeFi exchange platform. What did you think would happen? What did you think people would use it for?

There are so many other, more meaningful, more valuable things that Ken, and other talented people like him, could’ve chosen to work on. For instance, novel consensus mechanisms, or P2P algorithms. DAOs and decentralized governance. Proof of personhood. Stablecoins. I could keep going. Granted, these things are unsexy and much less profitable, but they’re more socially valuable.

According to his writing, Ken entered the space in 2017, bright eyed and bushy tailed, attracted by the idea of building a better world, starting with a better, more inclusive financial system. We have that much in common, but that’s where the similarities end. He quickly got distracted by shiny things, namely DeFi. This didn’t happen to all of us. Some of us never gave up on trying to actually improve the world. Some of us are harder to distract.

I get it. I get why people choose to work on yet another fungible DeFi protocol rather than building infrastructure and applications that solve real problems and will stand the test of time. People like to chase the shiny things. They go where the money and attention are, and money and attention tend to flow towards the same shiny things. These are also the same things crypto investors have been backing for years. They’re just following the incentives, and you can’t fault them for that, can you? And DeFi does have a legitimate role to play and does create real value, doesn’t it? And isn’t it where the users are?

But I think a lot of what’s held the industry back, a lot of the reason it still lacks mainstream appeal, is because of the overemphasis on DeFi relative to the other applications. And I think it’s appropriate to call this out, and to fault people for choosing to chase shiny DeFi things, especially ones with unsustainable marketing mechanisms like airdrops or point systems. These will blow up for a hot minute as users come smelling money, and will then fade away like 99.9% of the other DeFi protocols. In fact, the world does not need more shitcoin casinos. The marginal casino adds basically no value to the world; on balance it destroys value.

As for users, and profits: well, how is that working out for you today? If founders and builders are capricious and chase shiny things and go where the money is, well, users and traders are even more so. They immediately rush to the next shiny thing: the next potential airdrop, the next points scheme, the next incentive scheme. They’re the opposite of loyal. Why do we keep running the same playbook, why do we keep trying to satisfy these value-less hungry ghosts who by definition cannot be satisfied? If you’ve spent years of your life working on unsustainable DeFi slop, of course you’re feeling frustrated and jaded today. How could you not be?

For an earnest builder, a bear market is nothing new. It’s always been this way! It’s the water we swim in. Yes, it can be painful and difficult at times. At times, the jealousy can feel overwhelming. But at least we’re still here, earnestly, diligently building, gradually making progress. Our technology is gradually getting better, and the infrastructure is gradually powering more applications with more users. Not explosive numbers, but numbers that are gradually, sustainably increasing, for the right reasons. And those users aren’t going to disappear because of another shiny thing, because of an airdrop or a points campaign.

In that respect, nothing has actually changed for us. It’s always been in a bear market for diligent builders, and we’re okay with that.

In this industry the question frequently arises: which inning are we in?

We used to have consensus on the answer to this question. I’ve been around long enough to remember when, a few years ago, we’d frequently say that it’s the “bottom of the first inning” or “we’re only in the second inning.” For the non Americans in the room, that translates to: it’s still really early. In fact, this shared belief was one of the things that sustained us through the deep, dark bear markets of yesteryear.

Recently, however, opinions on this have become divided. This was made clear in a fascinating recent exchange on X between Keone Hon, the cofounder of Monad, and Arthur Hayes, a well known and outspoken investor. In the conversation, Keone points out all the ways in which Monad is novel and exciting. Arthur is completely dismissive of this argument, responding by saying, I don’t care about your fundamentals, talk to me about your token flows. The simplest possible interpretation of the situation is two radically different stances, as Jill Gunter later pointed out: Keone is an optimist and thinks our best days are still ahead of us; by contrast, Arthur thinks that most of the value in crypto has already been taken off the table, and what’s left is zero sum: effectively, traders fighting for table scraps.

For my part, I side with Keone here. There’s little doubt in my mind that the best days of crypto are still ahead of us. Why do I feel this way so strongly? For one thing, the fundamentals are better than ever, and are still getting better. Monad is a great example here: it’s a total re-engineering of Ethereum from top to bottom, offering better performance than anything that came before. Ethereum itself is making big strides towards scalability, privacy, and other goals. It’s true on the social as well as the technical side: more companies and even nation states are putting Bitcoin (and a limited number of other digital assets) on their balance sheet, and fiat currencies are being debased faster than ever.

For another, we simply shouldn’t get ahead of ourselves. At its core, crypto represents a fundamental shift in the way that humans collaborate, make decisions, and solve problems together. It’s a profound paradigm shift in the world as we know it, and while we’re well on our way, these things take time. Paradigm shifts of this scale take at least a full generation to play out. We’re halfway there at absolute best; and I think probably not even this far. I think we’re somewhere around the bottom of the third inning, maybe top of the fourth, and certainly no further. You ain’t seen nothing yet.

Then there’s the AI factor. A lot of the most diligent, cleverest builders have changed gears from crypto to AI recently. And a lot of investment that might otherwise have flowed into things like crypto is instead flowing into AI.

But AI and crypto are complementary technologies; neither works well without the other. Balaji has articulated this more clearly than anyone: AI leads to abundance, while crypto introduces digital scarcity. This is yin and yang: two opposing, balancing forces. They need each other. We need AI for abundance: in wealth creation, in value, in content. But we also need crypto, both in the sense of cryptography and cryptocurrency, more than ever, to balance this abundance. We need it to assert ownership over objects of true value, and to reintroduce scarcity. AI slop is everywhere: it’s valueless and it’s devalued content in general. But content authentically produced and signed by known human actors, and released in limited quantities, is also more valuable than ever before.

AI agents also need cryptocurrency to engage in commerce. Cryptocurrency is Internet-native money; it’s simply math under the hood, which is the native language of computer science and of the Internet. There’s zero chance that AI agents transact with one another using fiat money and traditional payment rails like credit cards. Those rails are slow and expensive, and they’re gated. Agentic commerce, which will be huge and might eventually dominate the entire economy, will obviously play out on crypto rails.

And crypto has a role to play in governing AI: in creating community-governed, community-curated models, and in ensuring that content creators are fairly compensated when their work is included in training and inference. A world where the most powerful AI tools are all controlled by big, unaccountable, centralized companies, as they are today, is a pretty dystopian world; we desperately need a Linux to OpenAI’s Microsoft Windows. We know a thing or two about decentralized ownership and governance, and we’re working hard to bring this to governance of AI.

It’s a match made in heaven, and we’re just getting started. The best days are yet to come.

I remember clear as day why I joined this industry. I remember why I was excited the first time I learned about Bitcoin, and then about Ethereum. A few years later, I wrote about it in a long essay.

Bitcoin is about financial freedom, and freedom and responsibility more generally. It’s about money taken out of the hands of government. It’s about sound economics, in an age of reckless economic policy. Ethereum is about unstoppable applications. It’s about tools and mechanisms for building better human institutions—money, yes, but lots of other things as well: property registries, stable coins, games, and many others besides. Many other crypto and crypto-adjacent projects bring new ideas and new features to the table, but this core set of ideas and values is where it all began.

The need for these ideas hasn’t changed one bit. In fact, it’s much greater than it was a few years ago. Start with economics. Monetary policy is even more reckless than it used to be: look at how rapidly the US national debt is growing and how rapidly the US dollar is losing value. The existing financial system simply isn’t able to keep up with the times. It was designed for a different era, one when traders took off work at 3:30pm to head to the golf course, and never worked weekends or holidays. It’s embarrassingly, ridiculously behind the times.

The always-on nature of blockchain and DeFi, coupled with the transparency and resilience of smart contracts and public blockchains, their open and participatory nature, the way they’re governed in the open, are strictly better than what came before. It took a while, but the proliferation of stablecoins makes it clear that the world is waking up to this reality. A world where you can make a stablecoin transaction in the middle of the night for a fraction of a cent, and have it arrive instantly into a wallet on the other side of the world, cannot be challenged by traditional finance. What’s more, there are the benefits of such a system for dissidents and freedom fighters, and many others who are regularly debanked by the traditional financial system for spurious reasons or for no reason at all.

Then there’s freedom itself. Repression, of financial and other varieties, is rising monotonically, as is the number of autocracies and unfree countries. More people now live in unfree rather than in free countries. Freedom money, money and other assets that can’t be seized by even the most repressive, authoritarian regime, are more important than ever before.

Speaking of governance: what we’re building in crypto governance is also strictly better than what came before. Yes, it’s immature and still naive in many ways, but the tools and ideas are rapidly maturing. Decentralized governance benefits from the same things as decentralized finance: transparency, openness, censorship resistance, and its participatory nature. Anyone, anywhere is free to participate, regardless of where they come from, what language they speak, what they look like, how old they are, what credentials they have, how much money they have, etc.

I haven’t given up on these ideals for a moment. They’re the things that initially brought me to the space, and they’re what get me out of bed every morning excited and grateful to be working on this problem with a values-aligned team and community. I think that a lot of what’s driven the recent sense of disillusionment is people giving up on these ideals, or an influx of people who never held such ideals in the first place. Yes, it’s a long road, and we still have a long way to go. The scammers and ponzis and shitcoin casinos aren’t helping.

But this is why I started, why we started, and it’s why we’re still here. Never forget why you started.