Bitcoin critics say that the cryptocurrency should never be regarded as a means of exchange because it’s mostly used for speculation. Fundstrat’s Thomas Lee disagrees with this statement, saying that most of the US dollars are used for speculation as well.
Almost 99% USD Activity is Speculation
Venture capital firm Castle Island Venture recently interviewed Tom Lee, Managing Partner and the Head of Research at Fundstrat Global Advisors. In the latest On the Bring podcast, Lee argued that only a small portion of US dollars are used to buy and sell goods or services, while the rest of it is used for speculating on other assets. Thus, it is not fair to attack Bitcoin.
For every dollar that you use to buy a good or a service, it’s used 95 five times to speculate on a financial asset
If we do the math, according to Lee’s logic, only 1% of the US dollars are used for payments.
Moreover, Lee said that the primary use of any currency is to speculate and try to make money on other assets. The Fundstrat’s executive explained that even stablecoins like Libra wouldn’t enjoy the function of a means of payment only. While some may use stablecoins to store value or buy Starbucks, their main goal is to speculate on other assets.
Even traditional markets like real-estate, stocks, and bonds are shrouded by price speculation. Thus, it doesn’t make any sense to point the finger at Bitcoin.
Bitcoin Has Intrinsic Value
During the one-hour interview, Lee also touched upon Bitcoin’s intrinsic value. He said argued that it’s incorrect to say that the cryptocurrency has no such value.
However, Lee said that Bitcoin had real network value, including based on the cost of production paid by miners. Also, the oldest cryptocurrency out there is still at its nascent stage, as only 0.5% of potential owners actually use it. When Bitcoin has a higher penetration, its valuation will almost certainly go up.
Do you find it a problem that Bitcoin is currently used for speculation? Share your thoughts in the comments section!
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