There is a commercial for the cryptocurrency trading platform FTX that aired during the NBA playoffs. It shows superstar Steph Curry going through a crazy version of his time — eating cereal, making pasta, carving an ice sculpture — while narrator Shaquille O’Neal insists Curry knows everything there is to know about crypto. An annoyed Curry repeatedly denies it. “I’m not an expert — and I don’t have to be,” Curry finally says into the camera, holding up the FTX app on his phone. “With FTX, I have everything I need to buy, sell and trade crypto securely.”
Give Curry and FTX points for fairness. The new commercial says what should have been clear to everyone: the countless celebrities who have jumped on the crypto (and NFT) train almost certainly know very little about what they’re selling. This goes beyond the inherently transactional nature of corporate sponsorship. Everyone knows that athletes advertise because they are paid for it, not because they actually use the product. (Hulu has a series of really hilarious commercials that capitalize on that.) I doubt Curry, who got $45 million last season to play basketball, eats too many Subway sandwiches. Still, I trust he can tell the difference between the Steak and Cheese and the All-American Club that he pulls out in a recent commercial. On the other hand, it would be amazing to hear that Curry – whether Tom Brady, Paris Hilton, Charli D’Amelio, Snoop Dogg or Matt Damon – could explain what someone is buying when they invest in crypto.
Sadly, the honesty of the Curry ad is offset by the cynicism, which sets a new standard for an industry that has plenty to spare. The crypto advertising blitz kicked off in earnest late last year, rising along with the price of digital assets. The Super Bowl infamously featured several big-budget industry commercials. Most notable was an FTX ad in which comedian Larry David dismissed crypto as a passing fad, with the kicker, “Don’t be like Larry.” As several observers pointed out, these ads remarkably omitted something about crypto’s substantive merits. Instead, they tried to instill a sense of FOMO, or fear of missing out, by suggesting that viewers who don’t buy now will regret it, just like Larry.
In any case, these FOMO ads left open the possibility that a consumer would learn about crypto before investing in it. The Curry commercial does away with that pretension. To be fair, there is a difference between not being an expert about something and being ignorant about it. But the ad is clearly aimed at people who have been hesitant to trade crypto because they don’t understand. The message to them: don’t worry, neither is Steph! And maybe, by extension, no one either! If everyone is acting in ignorance, you may not be at a great disadvantage. So go ahead, trade away. FTX did not respond to requests for comment.
Warren Buffett, the legendary investor, is said to have advised, “Never invest in a company you cannot understand.” (It’s not clear he ever used those exact words, but the saying has taken on a life of its own.) A traditional investment is a gamble that the company you invest in will become more valuable over time. As the fundamentals improve and the company grows and becomes more profitable, more people will be willing to pay more for some of it, increasing the value of your stock. If you don’t understand how the company makes money, you have no basis for making a reasoned judgment about how the stock will perform. But as the Curry commercial makes clear, the crypto market has a way around that middle step. Forget the basics: to average investors, buying a particular cryptocurrency seems like a pure gamble that someone else will want to buy it for more money in the future. This is also the ethos behind the meme stock phenomenon, which is philosophically closer to the crypto world than traditional stock market investing.
There is a name for investments whose value depends purely on finding prospective buyers who are willing to pay more than what you put in: Ponzi schemes. Critics have tagged crypto with that label for almost as long as crypto has existed. Recently, the criticism gained support from an unlikely source. Sam Bankman-Fried, the founder and CEO of FTX, appeared on the odd many podcasting. In the course of the discussion, Bloomberg’s financial columnist Matt Levine asked Bankman-Fried for an explanation of “yield farming,” a form of crypto investment in which people can buy into “liquidity pools” that can afford super-high interest rates, but also go south quickly.
