Like millions of people all over the world, celebrities have been pulled in by the lure of cryptocurrencies over the past years. And they have done it all–from endorsing different cryptos and exchanges to creating and marketing their own non-fungible tokens (NFTs). 

Whether celebrities were paid to endorse crypto or they were promoting their own investments, it cannot be denied that famous faces have contributed significantly to the growth of the crypto industry. 

However, there are also those who openly criticize crypto and aim to create awareness about its dangers. And one of them is The O.C. and Gotham actor Ben McKenzie, who has immersed himself in the crypto world in a totally different way than his colleagues.

McKenzie is a known crypto critic, and he has even written a book entitled “Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud.” He was also invited to testify at the Senate Banking Committee hearing about “crypto trading and lending” and “the recent collapse of FTX/Alameda and the broader implosion of the cryptocurrency markets.” 

“’Cryptocurrencies’ are not currencies by any reasonable economic definition, as they are unable to fulfill any of the three functions of money. They are a poor medium of exchange, unit of account, and store of value,” McKenzie stated during his testimony. 

McKenzie has an undergraduate degree in economics; he knows what he is talking about. Because of this, the actor and author has also been invited to speak at many crypto and blockchain events. Most recently, McKenzie joined as a panelist discussing crypto regulation at the London Blockchain Conference held at the Queen Elizabeth II Centre earlier this month. 

The three-day event is geared toward spreading awareness about how blockchain can revolutionize digital systems and maximize profit of businesses and governments worldwide. And central to this kind of theme is digital asset regulation and how it will affect the crypto and blockchain industry. 

Joining McKenzie in the panel are former European Central Bank (ECB) Executive Board Member and former Central Bank of Luxembourg Governor Yves Mersch, and Switzerland-based BSV Association Global Public Policy Director and blockchain distribution channel SmartLedger Chairman Bryan Daugherty.

For McKenzie, correctly identifying what cryptos are is crucial in drafting and enacting effective crypto regulation without curtailing innovation. In the United States, for instance, there are two major agencies that govern the crypto industry on top of state regulating bodies: the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

The CFTC classifies crypto as a commodity, while the SEC views it as a security. According to Investopedia, a security is “a fungible, negotiable financial instrument that holds some type of monetary value,” while a commodity is “a basic good used in commerce that is interchangeable with other goods of the same type.” Classifying crypto as a commodity implies more relaxed regulations, and McKenzie believes this needs to be rectified first.

“Well, how do [cryptos] work? You put real money into them. You expected to make money off of that investment through no work of your own. That sounded like an investment contract to me… So, by and large, I think they’re securities,” the actor explained to the audience of the London Blockchain Conference.

“[Crypto] is a security: 1) an investment of money 2) in a common enterprise 3) with the expectation of profit 4) to be derived from the efforts of others. To my mind, every coin or token easily satisfies the four prongs of the Howey Test,” McKenzie explained in the Senate hearing.

When it comes to blockchain, McKenzie maintains an agnostic attitude because its actual benefits remain to be seen. However, he recognizes that it has potential when properly developed and utilized. 

“I think blockchain being used as a ledger in which you could have both privacy but also a public database that people could reference is an alluring idea. Money is trust, we made it up, it’s this social construct. And it’s difficult to create trust if you’re not able to really have full transparency,” McKenzie said in an interview on the sidelines of the conference.

This is where the BSV Blockchain, an enterprise utility blockchain that the London Blockchain Conference is advocating, comes in. Because it has restored the original Bitcoin protocol, it is able to scale unbounded. To explain it simply, the data block and transaction capacity that are the essence of a blockchain can be increased exponentially. This also allows for fees to be reduced to mere fractions of a cent.

When scaled properly, a blockchain can accommodate the data needs of global enterprises and governments; hence, offering utility that unscalable blockchains cannot provide. To put it in numbers, the unscalable BTC Blockchain can only process 1MB blocks and seven transactions per second (TPS) at a current average fee of $1.99 per transaction.

The BSV Blockchain, on the other hand, has already increased its block size to 4GB with a throughput of 50,000 to 100,000 TPS. BSV’s average transaction fee is at $0.000015, and this can further be lowered as the network scales. This makes the blockchain not only efficient and fast enough to process global data needs, but also economical for practical application.

Imagine spending $1.99 million on the BTC Blockchain for a million transactions compared to just $1,500 on the BSV Blockchain. Also, an unscalable blockchain cannot process a million transactions because it will bring about network latency and further surge transaction fees. With this, it is obvious which one has potential for enterprise and government utility. 

Although the BSV Blockchain has the capacity to be utilized as technological plumbing for digital systems and platforms across different industries, impending crypto regulation can become a threat to its innovation. Educating policymakers is key to enforcing effective yet pro-innovation laws.

“I think that on both the federal and the state side, where there’s a huge misunderstanding of these technologies and the purpose of these technologies, there’s still a great deal of education that has to occur. And it started with the definition of these terms, it starts with the actual implications of what this technology can do,” Daugherty pointed out.

Blockchain conferences are also crucial in educating policymakers on how to create balanced crypto regulation. While tighter regulation is necessary, especially after what happened in the FTX collapse last year, where over a million users lost money, utmost care must be taken to protect innovation.

“Regulation, if it comes in too early, if it is intrusive at the beginning, it could stifle innovation. So, you have to have a proportionate approach. And proportionality is nice in words, [but] it’s more difficult in practice. And that’s why we have these panels to discuss what is the right amount,” Mersch explained.

McKenzie also added that there should be a system in place where policymakers and other relevant authorities are required to declare all digital assets they own. This is in order to gauge whether or not they have a stake within the crypto industry that may influence their decisions in policymaking. This not only protects the interests of crypto users, but also ensures that blockchain innovation will not be stifled.

Like other emerging technologies, such as artificial intelligence (AI) and the metaverse, blockchain is still in its early stages of adoption. As adoption continues to be rolled out and blockchain is correctly scaled to meet market demands, exabyte-sized blocks and millions of TPS are possible in the future. This is what will provide utility for both enterprises and governments, in turn propelling the world into a whole new era of technological advancement.