This was supposed to be the year that cryptocurrencies, a 16-year-old asset that promised to be the future of finance, finally came into its own.
The multitrillion-dollar industry has achieved virtually everything on its wish list over the past year: a wave of new funding from traditional investors, bipartisan industry-passed legislation in Congress, a supportive regulatory apparatus and, not least, the unconditional support of the President of the United States.
One of the industry’s most prominent critics is actor and author Ben McKenzie, who last week premiered his documentary “Everyone Is Lying to You for Money” at the DOC NYC documentary festival in New York.
On Friday (21), I spoke (virtually) with McKenzie, who has starred in TV series such as “The OC” and “Gotham”, to talk about
This conversation has been edited for clarity and brevity.
CNN: Considering all the institutional support for cryptocurrencies, why are we still seeing so much volatility?
Ben McKenzie: I think there are a few possible reasons. The first is that the economy is slowing down. And if you think of cryptocurrencies as an investment in essentially nothing but computer code, this serves as a sort of bellwether for the more speculative part of the market.
It’s like the canary in the coal mine — when cryptocurrencies plummet severely, it can be a sign that the broader economy is in decline.
Another reason is that the rise in cryptocurrency prices was driven by companies buying bitcoin as a corporate strategy — with MicroStrategy (now called Strategy) by far the most prominent.
But things are getting worse for the company, its shares (MSTR) are down about 40% for the month, and people are worried that it may have to sell its bitcoins.
The other problem with cryptocurrencies is that people take on huge amounts of leverage to increase their crypto bets. And when the price drops and deleveraging begins, everything falls apart just as quickly as it rose, if not faster.
What scares me right now is that the numbers just get bigger and bigger. But volatility never really goes away.
CNN: You have been outspoken in your opinion that cryptocurrencies are fundamentally a scam. What do you say to cryptocurrency enthusiasts when they argue that despite the volatility, if you had invested at virtually any time in the last 10 years, you would be sitting on huge gains?
McKenzie: You’re saying that if you had gotten into this thing I and others call a Ponzi scheme early, you would have profited. To which I respond: correct. Yes, very well. That’s not exactly the argument advocates think they’re making.
Ultimately, it still comes back to what I always say: cryptocurrencies – because they have no underlying assets – are a zero-sum game.
There is a moral component to this that goes far beyond what we are talking about in terms of making money from investments. The amount of crime that cryptocurrencies facilitate is truly frightening.
We are talking about money laundering in the billions of dollars, influence peddling, terrorist financing.
So is it worth it for some people to win and everyone else to lose? For me, the answer is no.
CNN: Looking ahead, what, if anything, is keeping you up at night about where we’re heading with cryptocurrencies?
McKenzie: I had a bad feeling when Trump embraced cryptocurrencies last summer, and then an even worse feeling when he was elected, and I was honestly shocked at how much fraud is going on.
But recently I’m feeling a little better… His poll numbers are starting to drop. The market is starting to plummet. The economy is starting to slow down.
And, you know, if you study other countries and other downfalls of unpopular leaders, he could be in for a sticky situation.
CNN: You’ve been a cryptocurrency Cassandra for a few years now, and I wonder if you intend to continue in this area or if you are expanding into other sectors of market speculation. In case it’s not obvious, I’m referring to AI… Is there an “Easy Money – Part 2” in development?
McKenzie: I’m definitely tempted to move into the field of AI, which is much broader at the moment.
There’s something called “scam change” – it’s a traditional scammer tactic to sell something that doesn’t work very well now, but in the future will be amazing. This has worked for cryptocurrencies, and it is certainly the discourse used for AI.
I have to say that I’m not a supporter of the direction AI is going, but in its limited defense, there is something real going on that has a function in the real world that isn’t just gambling and crime.
