What's a 'Nocoiner'? Inside the World of Crypto Sceptics

'The OC' actor Ben McKenzie is the most recent high-profile example of a critic who thinks the cryptocurrency bubble is about to burst.

In the cult-like world of crypto, there’s nothing worse than a nocoiner. 

“Nocoiner” – also spelled “no-coiner” – is a derogatory term that encompasses everyone from those who don’t invest in cryptocurrency, family members who are too stupid to see its benefits and people who missed the boat with it years ago and are now bitter. 

But just as quickly as the term became an inside joke for crypto bros, nocoiners are beginning to wear the label as a badge of honour. The title is now being repurposed to include the growing number of people who believe the crypto bubble is about to burst. 

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At the forefront of this scene is Ben McKenzie, AKA tank top-wearing hottie Ryan Atwood off The OC. McKenzie has become a vocal critic of cryptocurrency and NFTs over the past few years, has written several articles on the subject, and is now working with New Republic journalist Jacob Silverman on a book titled Easy Money – a kind of “Big Short for crypto”, as he told The Cut.

In an article for Slate, where McKenzie condemned fellow celebrities for shilling coins to fans, he argues that “crypto is a wildly anarchic, unregulated form of Wild West financial capitalism that is fueled by rampant speculation, sketchy stablecoins, and the murky dealings of a few big whales and insiders whose influence over these markets may be greater than most traders realise.” 

Like McKenzie, Kerry Balenthiran, a risk manager from Reading, is also a nocoiner. The 48-year-old has never invested in crypto, though he sees its benefits in theory, like the idea of a decentralised payment mechanism independent of governments. His main concern, however, is “that new coins are being minted all the time with the sole objective of making the creators or promoters of these coins money”.

“These new coins aren’t investments, but just a means of transferring capital from the naïve to these figures,” he argues. 

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Fellow nocoiner Martin Walker works at a management think-tank and first began researching crypto in 2015. His final conclusion? None of the claims made sense, he says: “All you had left was a new type of Ponzi scheme.” His dislike only grew over the past few years as the hype around Bitcoin soared. Now the 50 year-old from London believes crypto is actually “value-destroying” due to the huge costs in running the system – particularly when it comes to mining coins. 

Writer Amelie Wikström agrees. The 41-year-old from Sweden has always been cynical of crypto and first dismissed it as a get rich quick scheme, before learning of cryptojacking – when people hack someone else's computer to mine cryptocurrency – and was horrified. Now, she thinks crypto is “a system for creating massive amounts of pollution and laundering money while producing absolutely no goods or services”. 

This criticism isn’t unwarranted. Generating Bitcoin uses about 91 terawatt-hours of electricity a year. As the New York Times points out, that’s more than the amount used by Finland, home to 5.5 million people. Cryptocurrency’s electricity usage has increased by about ten times in just the past five years.

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The invasion of Ukraine has also brought fresh attention to whether crypto can be used to hide shadily-obtained wealth. As self-described no-coiner Josef Singer puts it: “Russian oligarchs can now sell their assets for Bitcoin and move somewhere offshore and it cannot be controlled by big governments.”

It’s unlikely that cryptocurrency is being used to dodge sanctions on a meaningful scale – popular blockchains like Bitcoin and Ethereum are public, meaning that any large-scale illicit transactions would be quickly noticed. Crypto companies have downplayed the currency’s potential for large-scale illicit transactions, with major cryptocurrency exchanges, like Binance and Coinbase, complying with official sanctions on Russia.

What has been observed, however, is ordinary Ukrainians and Russians buying crypto to avoid the instability of their own currency. Ironically, it’s the volatility of crypto that put Singer off. Unlike the others interviewed, he invested in Bitcoin in 2018, but this only led him to disaster. “I lost some money there and said never again.” His mantra now is to only invest in things he understands.

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But crypto isn’t just for people from countries whose traditional currencies are in freefall.

It’s been called the Wild West of investing, leading to an environment that is ripe for scams. “In its short life, the crypto industry has recreated pretty well every form of the scam and bad practice created by conventional finance over hundreds of years,” Walker points out. In the past, scammers have created professional and credible-looking online adverts for fake coins, faking celebrity approval and sharing made-up testimonials before disappearing with investors’ cash.

According to the Federal Trade Commission (FTC) Consumer Sentinel, reports of crypto scams soared to nearly 7,000 people reporting losses of more than £61m ($80m) from October 2020 through to March 2021. It’s a 12-fold increase compared to the number of reports oer the same period a year ago. The organisation also noted there was a 1,000 percent rise in reported losses.

And then there’s the rise of actual celebrity endorsements. Journalist Max Read mapped out the “deeply unsettling” wave of A-listers – including Ashton Kutcher, Reese Witherspoon, Gwyneth Paltrow and Eminem – now buying and promoting NFTs. Hearing Paris Hilton and Jimmy Fallon croon to each other about their roughly £164,000 ($216,000)-acquired Bored Ape Yacht Club NFTs isn’t just cringe. To nocoiners, it’s downright shady. 

Danish student and nocoiner Malthe Bugge argues that the industry now operates as a “pyramid scheme”. Celebrities reap the benefit from recruiting new investors in their fanbase, as this drives up the price of their NFT or coin. “The chain goes on until you're the unlucky sucker that's left with an http link that leads to a ‘valueless’ product,” the 18-year-old says.

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We’re already beginning to see the impacts of celebrity crypto #sponcon. Kim Kardashian is being sued for pushing Ethereum Max, a speculative digital token created only a month previously, to her 250 million followers. She has been accused of misleading investors to purchase the coin and then dumping it on them as its value plummeted.

Vili Lehdonvirta, professor of economic sociology and digital social research at the Oxford Internet Institute, said criticisms of crypto are often justified. “An NFT or a cryptocurrency token only provides a return if someone else comes along and buys it from you for an even higher price,” he explains. “At some point, the market runs out of buyers and the last buyer is left holding the token. It’s a zero-sum game that transfers wealth from a large number of late buyers to a small number of early buyers.

“The only person who is guaranteed to make a profit is the initial issuer, plus any celebrities who are paid to promote the token. Fans trust celebrities, and so I think it is questionable of celebrities to take advantage of their fans’ credulousness in this way.”

If NFTs are sold as digital merchandise – the equivalent of an exclusive band t-shirt – rather than a speculative investment, then the situation would be different. But since NFTs have been marketed as speculative investments that have made people very rich, “it is hard to argue that they are being sold on aesthetics alone”, Lehdonvirta says.

But what about fears the crypto bubble will soon burst? “We've already seen a lot of implosions of the market, including most recently,” says Martin Schmalz, a professor of finance and economics at the University of Oxford. “What's different from a Ponzi scheme is that the market also has recovered many times from this. It's just very volatile.”

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Like many nocoiners, Schmalz thinks the industry must be regulated. He argues this would even develop its potential for use, as firms wouldn’t be afraid of being labelled illegal. “Traditional finance wouldn't work well without the mountain of regulation that prevents fraud and theft, which plagues crypto so much.”

Nocoiners are derided by the crypto world. It’s a symptom of the identity politics and tribalism that is “part of how cryptocurrency corporations market their tokens”, explains Lehdonvirta. “Buy a token from us and you can feel part of an imagined community. Don’t buy, and you are an ostracised outsider.”

But, he acknowledges, “crypto-criticism has turned into its own cottage industry, with book publishing deals and media appearances, so it is not entirely devoid of its own incentive structures” – something that Ben McKenzie probably knows all too well. 

Still, the rise of a nocoiner industry is a drop in the ocean compared to the multi-billion-dollar crypto conglomerates devoted to “spreading the crypto gospel”, as Lehdonvirta puts it. 

Nocoiners might be considered no-hope normies by crypto bros, but the irony is much of what they say is true. Crypto is unregulated, energy-consuming and ridden with scams. Undercutting that scepticism hasn’t addressed the industry’s issues. Maybe it’s worth listening to them.

@ruchosharma

Tagged:

Tech, Bitcoin, cryptocurrency, crypto, NFT, nfts

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