Actor Ben McKenzie compares crypto to modern gambling
Crypto.news – Renowned actor and author Ben McKenzie recently joined the OddLodds Bloomberg show to share his journey into the world of cryptocurrency, and his candid thoughts reveal a skeptical and intriguing perspective. This exploration led to his book ‘Easy Money’, a dive into the concept of money, lying and the unique function of cryptocurrencies.
McKenzie’s foray into crypto began during the pandemic as he saw people raking in significant profits. Despite a previous bad investment experience, a friend’s recommendation led him to bitcoin (BTC) and further into the depths of cryptocurrencies.
McKenzie argues in his book that cryptocurrencies do not work like traditional currencies. To fully understand the subject, he took part in a free online course on blockchain and crypto taught by Gary Gensler, the head of the Securities and Exchange Commission (SEC).
During the podcast, McKenzie expressed concern about the popularity of bitcoin and other cryptocurrencies, suggesting they could form a massive Ponzi scheme. He compared his skepticism to the story “The Emperor’s New Clothes,” in which apparent wisdom and popularity hide an underlying folly.
The podcast also touched on the appeal of cryptocurrencies, especially for young men. McKenzie argued that the subprime crisis and the subsequent release of the Bitcoin white paper in 2008 led to distrust in traditional financial systems, making the idea of a decentralized currency tempting.
Despite cryptocurrency’s appeal as a solution for the unbanked and a potential wealth builder, McKenzie questioned their authenticity and trading status. He noted that the real money in crypto is much smaller than the inflated market cap suggests, often driven by speculation and leverage rather than real investments.
Celsius, a cryptocurrency lending company, was given as an example to illustrate this discrepancy. McKenzie claimed that only 10-15% of the market cap could represent real money, with the rest mostly speculative and leveraged.
A primary concern with cryptocurrencies is their liquidity. McKenzie pointed out that foreign exchanges like Binance generate the most trading volume. However, the validity of this volume is uncertain due to the prevalence of wash trading (artificial trading activity) on unregulated exchanges. The resulting lack of liquidity and possible manipulation creates market risks.
In addition, unlimited leverage in crypto markets is possible, as individuals can create as much cryptocurrency as they want, which can lead to market instability. Cryptocurrency exchange FTX has been accused of creating new tokens, lending against them and manipulating their value with wash trading.
Conflicts of interest also arise when exchanges issue their tokens or stablecoins. McKenzie emphasized his skepticism about the use of stablecoin USDT, questioning the legitimacy and nature of the client relationships involved. Despite doubts and allegations of financial misconduct, the stablecoin manager has managed to maintain its peg to the US dollar.
The author also talked about Binance, one of the most prominent cryptocurrency exchanges, which has come under scrutiny for practices such as the lack of a headquarters and the alleged Tai Chi document designed to divert the attention of regulators.
During the discussion, McKenzie described a baffling interview with Sam Bankman-Fried, the CEO of FTX. Bankman-Fried struggled to articulate the benefits of cryptocurrencies and made idiosyncratic statements about yield farming in the crypto industry. McKenzie expressed concern about the lack of industry regulation and the confusion surrounding the classification of cryptocurrency as commodities or securities.
The conversation then turned to those affected by the volatility of the crypto market. For some, cryptocurrencies symbolize freedom and financial self-determination. However, McKenzie highlighted the dangers of gambling addiction within the crypto space. He compared the crypto market to a casino without the entertainment value, arguing that it is a zero sum game.
In a surprising connection, McKenzie linked the end of online poker to the beginning of bitcoin. Both industries have striking similarities, with the initial bitcoin code including a poker lobby.
When the government restricted online poker, some of those involved, such as Stuart Hogner and Daniel Friedberg, moved into the cryptocurrency industry. McKenzie suggested that parallels exist between the two domains, with bitcoin possibly seen as a way to enable gambling abroad.
In addition, he saw similarities in tactics and language in both industries. Notably, both use “community” and often rely on peer pressure. While acknowledging that community-building could be a positive aspect of cryptocurrency, McKenzie emphasized that strong communities can also emerge among plaintiffs in class-action lawsuits against fraudulent companies.
Near the end of the interview, McKenzie discussed the idea that some individuals are pushing an “anti-crypto” narrative. He acknowledged that bitcoin’s decentralization and direct access granted to owners provide some security. However, he also pointed to limitations such as scalability issues and the environmental impact of high energy consumption.
In addition, McKenzie expressed concern about the usefulness of cryptocurrency for illegal activities. Just as it can be used for legitimate transactions, it can be exploited by people with malicious intent.
This article was originally published on Crypto.news