Bitcoin [BTC] and XRP are not needed to solve global payment problems, says former PayPal CEO

Bill Harris, the former CEO of PayPal, spoke to CNBC in a recent interview where he stated that Bitcoin [BTC] has no use-cases apart from criminal activities. This is just one of the volley of negative statements the former executive made about Bitcoin.

Earlier this year, he even called Bitcoin the “greatest scam in history”, and stated in the interview that Bitcoin is going to zero. He said:

“It’s going to eventually go to zero, there’s no value there. The cult of Bitcoin make many claims, that its instant, free, scalable, efficient, secure, globally accepted and useful. It is none of those things.”

Speaking for the side of Bitcoin was Brian Kelly, the Founder and CEO of BKCM LLC. He began a debate with Harris as to the real use-case of cryptocurrencies. Notably, Kelly is the author of a book on Bitcoin and the impact it has on the world.

He argued against the points made by Harris, stating that the factors he mentioned were catalysts in the future from an investor’s point of view. He said:

“As things improve, we’re not going to stay at 7 TPS [transactions per second], we’re going to scale, we have to otherwise it is going to go to zero like you said.”

He also spoke about the idea that cryptocurrencies are a software program that allows its users to disintermediate parts of financial services. He went on to ask Harris whether he found any value in that.

The latter answered in the negative, stating that cryptocurrencies are not needed to solve payments problems. He stated:

“No. I think the problem statement is correct. One of the things people love about Bitcoin or XRP is, ‘Look at how difficult it is to get money from one country across the border to another. It’s slow it’s expensive its all those things.’ You don’t need Bitcoin, you don’t need XRP. You don’t need any of that to solve that problem, what you need is faster networks.”

Kelly also argued the same, stating that people are still using cryptocurrencies for that specific use case. However, Harris refuted this as well, stating:

“Hardly ever. This whole notion about broadly accepted or globally accepted, I dare you to find places where you can use it.”

In response, Kelly stated:

“There are 200,000 places you can use it worldwide. There’s also plenty of people using it internationally. Seagate Technologies use it to move money between their international subsidiaries.”

However, Harris was not fazed. He proceeded to argue that it did not constitute a meaningful percentage of total global flows, and also ask “why people should use it”. He also inquired about the advantages that come with using cryptocurrencies.

Kelly, at this point, spoke about how cryptocurrencies are useful in countries where the financial system was “broken”. Another use-case described by Kelly was cryptocurrencies as the Internet of Money in cross-border scenarios. He also said that there were multiple use-cases for the coin.

Harris argued that many emerging and developing countries have “much better real-time payment systems” than the United States. He quoted the infrastructural developments conducted by countries such as China, India and the UK. To this, Kelly stated:

“That doesn’t mean that Bitcoin doesn’t have a use case and goes to zero. Nobody uses gold anymore and it’s worth $1200 an ounce as well. There’s more to this thing than a payment system worldwide. This is a way where you can have digital goods go from one place to the other.”

However, Harris still did not budge, as he stated that digital currencies already exist in the form of fiat currencies. He said:

“We’ve got digital currencies that are more stable, widely accepted and have intrinsic value. We’ve already got them, the dollar, the yen, you name it.”

Moreover, Harris also made comparisons to existing centralized payment systems such as Visa and AliPay, which can conduct up to 50,000 and 250,000 transactions per second respectively. Kelly responded to this by saying that there are currencies that do 10,000 and 20,000 TPS and that those held an investment opportunity. In response, Harris stated:

“There’s a heck a lot of investment opportunity within FinTech, We build things that are useful, that are better than the alternatives, and I see absolutely no reason why Bitcoin is useful. Volatility alone makes it useless as a payment mechanism and as a store of value.”

Kelly made an argument to help the volatility of Bitcoin. He stated:

“You look at oil. Oil’s speculation to use case is about 96 to 1. Bitcoin’s is 2.5 to 1. So as that speculation increases the volatility will decrease, just like every commodity and every currency out there.”

Harris stated that a “lot of things have increased dramatically in value”, and that it does not mean that everything will increase dramatically in value. He ended by saying:

“There has to be something underpinning it. It makes no revenue and no profitability. Why in the world should that be something of value? In Bitcoin’s case, I can’t come up with a single one [use case] with the exception of criminal activity.”

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