Cryptocurrency’s Promised Year Faces Uncertainty
New York — This year was anticipated to be a transformative period for cryptocurrency, a 16-year-old asset class that has been heralded as the future of financial systems. The multi-trillion-dollar sector seemed to be on a trajectory to fulfill its aspirations, receiving significant support from mainstream investors, bipartisan legislative backing in Congress, a favorable regulatory environment, and even endorsement from the U.S. President. However, the reality has been starkly different, as the crypto market has experienced significant turbulence, with Bitcoin plummeting by 30% since reaching its peak in early October— a decline that surpasses that of the broader stock market.
Industry Critic Voices Concerns
Among the notable critics of the crypto landscape is actor and author Ben McKenzie, who recently unveiled his documentary, “Everyone Is Lying to You for Money,” at the DOC NYC film festival. In a virtual discussion, McKenzie, known for his roles in “The OC” and “Gotham,” shared insights into the current market downturn and the timing of his film’s release.
Understanding Crypto Volatility
CNN: Despite the substantial institutional backing for crypto, why do we continue to witness such fluctuations?
Ben McKenzie: There are several factors at play. Firstly, the economy appears to be slowing. When viewing cryptocurrency as an investment in digital code, it serves as an indicator for the more speculative segments of the market. It acts like a canary in a coal mine— a significant drop in crypto values may signal broader economic troubles. Additionally, the previous surge in crypto prices was largely driven by corporate investment strategies, with MicroStrategy being a notable example. However, the company’s fortunes are waning, with its stock down approximately 40% this month, raising concerns about potential Bitcoin sales. Furthermore, many investors engage in excessive leverage to amplify their crypto investments. When prices decrease, the subsequent de-leveraging can lead to rapid collapses, often outpacing the initial rise, which is particularly alarming given the increasing scale of investments.
Debating the Value of Crypto Investments
CNN: You have been vocal about your belief that crypto is inherently a scam. How do you respond to proponents who argue that early investments have yielded significant returns despite the market’s volatility?
Ben McKenzie: Advocates point out that those who invested early in what I and others have labeled a Ponzi scheme would have profited, and I acknowledge that point. However, it misses the larger argument. Ultimately, crypto lacks an underlying asset, which means it operates as a zero-sum game where one’s gain is another’s loss. This raises ethical questions that extend beyond mere financial investment. The level of crime associated with cryptocurrency is staggering, including billions in money laundering, influence peddling, and terrorist financing. Is it justifiable for a few to profit while many others suffer? Personally, I believe it is not.
Concerns for the Future of Crypto
CNN: What worries you about the future trajectory of cryptocurrency?
Ben McKenzie: I felt uneasy when Trump endorsed crypto last summer, and my concerns deepened when he was elected. I have been astonished by the extent of the scams happening in the sector. However, I find myself somewhat reassured lately as his approval ratings decline, the market falters, and the economy shows signs of slowing. Historical patterns suggest that unpopular leaders often face significant challenges.
Shifting Focus from Crypto to AI
CNN: As someone who has consistently raised alarms about crypto, are you considering expanding your focus to include other speculative trends, such as AI? Is there a sequel to “Easy Money” in the pipeline?
Ben McKenzie: I am indeed tempted to explore the realm of AI, which has gained considerable traction. There is a concept known as the ‘grift shift’—a classic con artist strategy of promoting something that may not function well now but holds great promise for the future. This has been a successful pitch for crypto and is also a common narrative for AI. While I do not necessarily endorse the direction AI is heading, it is important to note that it does involve tangible developments that serve real-world functions, distinguishing it from gambling and illicit activities.
