On Tuesday (14 August 2018), Bill Harris, a former CEO of Intuit and PayPal, and the founder of Personal Capital, who had previously called Bitcoin “The Greatest Scam in History”, appeared on CNBC's Fast Money, and engaged in a lively debate about Bitcoin (BTC) with crypto hedge fund manager Brian Kelly.
On a segment of Fast Money titled “The Great Bitcoin Debate”, Harris’s thesis statement was that the Bitcoin was going to decline in value because it had no use case (“there’s just no value there”).
Harris started by saying that his argument could be summarized as follows:
“The cult of Bitcoin makes many claims: that it is instant, free, scalable, efficient, secure, globally accepted, and useful. It is none of those things.”
Kelly:
“PayPal works great. I mean, the Russian hackers were able to buy all kinds of ads on Google with PayPal this year So, [it] works very well. And I agree with you. All your criticisms [are] 100% correct, but to me as investor, I say those are catalysts for the future. As those things improve — I mean, we are not going to stay at seven transactions per second — we’re going to be scale. We have to. Otherwise, it is going to go to zero like you said. But I guess my question for you is… Let’s step back from the trading of the token because what we are really looking there is liquid venture capital, it could be worth $6000, it could be worth $20,000. But the idea that Bitcoin or cryptocurrencies are a software program that allows you to disintermediate parts of financial services, do you find any value in that?”
Harris:
“No. I think the problem statement is correct. For instance, one of the things that Bitcoin who love Bitcoin or XRP [say] is look at how difficult it is to get money from one country across the border to another. It’s slow, it’s expensive, it’s all those things. Agreed. 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:
“And there’s some regulatory issues with that. But people are still using it for that case.”
Harris:
“Hardly ever. I mean this whole notion of broadly accepted, globally accepted … I dare you to find places where you can actually use it.”
Kelly:
“There’s about 200,000 places you can use it worldwide. There are also plenty of people who are using it internationally. Seagate Technology is using it to move money from their international subsidiaries to the U.S.”
Harris:
“But what percentage of the total global flows is it?”
Kelly:
“Well, it’s the investment opportunity. If it’s a huge portion of global flows, it’s less interesting to me: that’s old and boring.”
Harris:
“So, why in the world should people use it? What’s the advantage?”
Kelly:
“The advantage is… in the U.S., we don’t have a broken financial system, but if you are in a country that does have a broken financial system, that’s certainly the advantage. It could be the internet of money. If you are going cross-border, that’s one way to use it. I mean, there’s multiple use cases…”
Harris:
“But the largest countries out there, China and India, they have much better real-time payment systems than we do in the U.S. So does the EU. So does the UK. I mean, it’s not like we’ve got something functional and the rest of the world doesn’t. No, actually, they are ahead of us.”
Kelly:
“That doesn’t mean that Bitcoin doesn’t have a use case, that it goes to zero. Nobody uses gold anymore, and it’s worth $1200 an ounce as well… I mean, when we started Amazon, nobody thought that you’d be streaming movies to a handheld computer. It was an online bookstore.”
Harris:
“We’ve got digital currencies. And we’ve got digital currencies that are more stable, more widely accepted, and have intrinsic value. We’ve already got them: it’s called the dollar, the yen, you name it… It’s surely, not scalable. You said seven transactions per second…”
Kelly:
“I din’t say it wasn’t scalable. They are working on scaling solutions.”
Harris:
“Fine, they are working on that. Transactions per second… Visa does 50,000. AliPay does 250,000 transactions per second…”
Kelly:
“There are coins out there now that do 10,000… 20,000… this is the investment opportunity. I am surprised that coming from Silicon Valley, you are not seeing the investment opportunity.”
Harris:
“Yes, I believe there is a heck of a lot of investment opportunity within financial technology… But what we do is we build things that are useful, that are better than the alternatives, and I see absolutely no reason why Bitcoin is useful. I mean, listen, it’s volatility alone makes it useless as a payment mechanism, and it’s ridiculous as a store of value.”
Kelly:
“But I go back to ‘that’s the investment opportunity’…”
The segment concluded with Harris saying: “Bitcoin makes no revenue, no profitability…I am not saying that there aren’t some fabulous visions in the world that should be funded, will be hugely valuable, and have staying power and legs. But you can point to use cases and why they are competitively superior to the alternative. In Bitcoin’s case, I can’t come up with single case, with the exception of criminal activity.”
And The Winner Is:
Although Harris does make a good point, that for something to go up in value, it does not need to have at least one good use case, Kelly, in my mind, still wins the debate with his argument that Bitcoin is still at a very early stage in its development (just like Amazon was 20 years ago) and that it would be very short-sighted to just look at where things stand now and to ignore its enormous potential by declaring it a failed experiment.
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