Actor Ben McKenzie Gives Inaccurate Testimony on Bitcoin to Senate Banking Committee
• Actor Ben McKenzie and Professor Hillary J. Allen provided inaccurate testimony regarding Bitcoin to the U.S. Senate Committee on Banking, Housing & Urban Affairs.
• The Senate Banking Committee Chair Senator Sherrod Brown suggested the hearing was intended to “educate the public” on the dangers of cryptocurrencies and floated the idea of banning them altogether.
• Mr. McKenzie lacks the qualifications and expertise one would expect for being called before the U.S. Senate Banking Committee to testify on the inner workings of financial technology, making basic errors in his testimony.
The U.S. Senate Committee on Banking, Housing & Urban Affairs received inaccurate testimony regarding Bitcoin on December 14. Actor Ben McKenzie and Professor Hillary J. Allen, both lacking the qualifications and expertise one would expect for being called before the U.S. Senate Banking Committee to testify on the inner workings of financial technology, made basic errors in his testimony. The hearing, entitled “Crypto Crash: Why the FTX Bubble Burst and Harm to Consumers,” had all the markings of political theater and provided a stage to misinform senators and the public. It coincided with Elizabeth Warren’s new financial surveillance bill, which is a disaster for privacy and civil liberties.
On December 18, the Senate Banking Committee Chair Senator Sherrod Brown divulged on “Meet The Press” that the hearing was intended to “educate the public” on the dangers of cryptocurrencies and floated the idea of banning them altogether. Mr. McKenzie, who has starred in “The O.C.,” “Gotham” and “Southland,” stated that “Bitcoin cannot work as a medium of exchange because it cannot scale. The Bitcoin network can only process 5 to 7 transactions a second. By comparison, Visa can handle tens of thousands. To facilitate that relatively trivial amount of transactions, Bitcoin uses an enormous amount of energy. In 2021, Bitcoin consumed 134 TWh in total, comparable to the electrical energy consumed by the country of Argentina. Bitcoin simply cannot ever work at scale as a medium of exchange.”
However, this statement is incorrect. Bitcoin is a decentralized network and it can scale, but the solution is off-chain scaling. This means that transactions are not broadcasted to the entire network, but rather to a few nodes that are responsible for validating the transaction. This reduces the amount of energy and computing power needed to process the transactions. In addition, Bitcoin has already been used to facilitate tens of thousands of transactions per second in the form of the Lightning Network.
The hearing had the potential to bring much needed attention to the importance of digital currencies and the need to regulate them properly. However, it was hampered by the lack of expertise and understanding of blockchain technology. As a result, the hearing failed to provide any meaningful insight into the state of the industry, instead providing senators and the public with an inaccurate view of the technology.
It is essential that legislators receive accurate and reliable information about digital currencies before taking action. It is essential that lawmakers understand the potential of blockchain technology and how it can be used to improve the financial system. The Senate Banking Committee should ensure that they invite experts in the field to provide informed testimony in the future.