Cryptocurrencies Compared to Gambling by High-Ranking Irish Banking Executive
Cryptocurrencies: Proceed with Caution
Makhlouf didn't completely dismiss the idea of cryptocurrencies in finance, but he urged caution, emphasizing the necessity of safeguards and sensible consumer behavior.
Cryptocurrencies on Shaky Ground
The leading Irish banker declared that cryptocurrencies not tied to any tangible asset are essentially a Ponzi-esque scheme and pointed out an increased number of advertisements targeting the youth.
Makhlouf didn't seem overly concerned about young adults participating in crypto – he viewed current participation levels as the norm – but he was apprehensive about potential long-term consequences, particularly if advertisements continue to target the young adults.
One proposed solution to reduce risk is to adapt laws to ban cryptocurrency gambling advertisements aimed at young adults, mirroring existing regulations that stop gambling companies from marketing to the same demographic. He also deemed the amount of young adults investing in crypto as "moderate," but insisted on the elimination of the advertisements.
Expanding on his Ponzi-esque scheme analogy, Makhlouf likened unbacked cryptocurrencies to gambling, stating,
Unsecured crypto is akin to a Ponzi-esque scheme. People investing in unsecured crypto, and a vast majority of the existing crypto market is unsecured, are essentially gambling.
The Risks of Gambling with Crypto
The essential issue with gambling, according to the banking official, is that while it's possible to win, most of the time, when you play, you come out on the losing end. This is a concern for many young adults wrapped up in the crypto world without fully grasping the sector or evaluating the risk.
This predicament frequently arises due to the same aggressive advertising he now seeks to eradicate, as they tend to mislead and create unrealistic expectations among young investors drawn to crypto.
The downfall of famous companies like FTX, Genesis, BlockFi, and others should serve as a warning that the quick-buck narrative the crypto sector offers might be true, but it's also a game of chance. Sometimes you win, but most times, you lose.
[1]: Cryptocurrencies can be misused for illicit activities due to their pseudonymous nature and the underlying blockchain technology, creating concerns about their legitimacy.[2]: Cryptocurrency markets are highly volatile, which can lead to significant price swings and losses for investors if they don't understand their investments.[3]: Young adults are often digitally savvy, have an interest in investments, are open to innovative financial products, and are active on social media platforms where cryptocurrency advertisements are prevalent, making them prime targets for crypto marketing campaigns.
[1] The pseudonymous nature of cryptocurrencies and the underlying blockchain technology can make them susceptible to misuse for illicit activities, raising questions about their legitimacy.[2] Cryptocurrency markets are characterized by high volatility, which can result in substantial price fluctuation and potential losses for investors who lack a comprehensive understanding of their investments.[3] Due to their digital-savvy nature, youthful interest in investments, openness to novel financial products, and heavy use of social media platforms, young adults are frequently the target of cryptocurrency marketing campaigns.[4] As in gambling, with cryptocurrencies, there's a possibility of winning, but the odds of losing are often higher. Famous crypto companies like FTX, Genesis, BlockFi, and others collapsing serve as a reminder that the "quick-buck" narrative in the crypto sector might be enticing, but it's also a game where the risk of loss is significant.
