Mike Novogratz – a billionaire investor and former hedge fund manager – has always been there to defend bitcoin whenever it is acting crazy, but in a recent interview, he claimed that the world’s number one digital currency by market cap will never be used for payments.
Mike Novogratz Says BTC Will Not Be Used for Payments
This is likely going to come as a huge blow for bitcoin and crypto purists given that the asset and many of its altcoin cousins were initially set up to replace credit cards and fiat. The idea that bitcoin would be used in the future not just as a speculative asset, but as a means of paying for goods and services has been slowly realized given how many retailers and companies are turned off by the asset’s volatility.
When something as vulnerable to price swings as bitcoin comes along, it is more likely that retailers will look upon it with a raised eyebrow rather than with a smile. The currency presents hazards for companies given they can potentially miss out on profit should they fail to transfer it to fiat quickly enough.
Say, for example, you walk into a store and purchase $60 worth of merchandise using bitcoin. You leave, and the store does not exchange that BTC for fiat right away. The next day, the price of bitcoin changes that turns your $60 into $30. You will still have walked away with everything you bought, but the store has just lost half its profit for that particular transaction. It is not entirely fair, and thus we cannot fully blame the many enterprises that have said “no” to BTC payments in recent years.
But the idea of bitcoin as a payment method suffers from other problems as well. According to Novogratz, bitcoin is an extremely slow system that could not handle mass payments and transactions even if it wanted to. In a recent interview, Novogratz stated:
Bitcoin’s not going to be payments. The system really is not set up for payments. It’s not fast enough for thousands and thousands of transactions.
It’s Not Fast Enough
By contrast, he sees bitcoin serving as the ultimate hedge fund in the coming future. He believes it will be a store of value similar with gold, and that many will turn to it to keep their portfolios intact and their wealth steady and protected should moments of economic strife take hold just like they have done over the past year during the coronavirus pandemic. He comments:
What’s unique about stores of value is they’re social constructs. It has value because we say it does. There has never been a more successful brand created in 12 years by a community. It was like they floated the baby in the river, and the community raised the baby and it’s now worth around $1 trillion.