Shortly after bitcoin (BTCUSD) shocked investors with a rare drop of $30,000 last week the cryptocurrency rebounded quickly and has risen well above $40,000.
This sudden rebound has encouraged bitcoin bulls, but it also highlighted a concern among critics about the volatility of the most widely used cryptocurrency making it ineffective for buying and selling goods.
Pavan Sukhdev is the president of WWF International, an environmental advocacy group, and was previously the managing director at Deutsche Bank. He recently spoke out to Daily Reuters about the rejection of bitcoin being referred to as an alternative currency. He noted that its fluctuating price makes it almost impossible to use for transactions.
Sukhdev also stated that bitcoin is a speculative investment because there are not many uses for it. This makes it even more valuable than gold, which is primarily stored value.
Sukhdev says that Bitcoin is not a currency, but an asset.
He says, “When you have something as volatile as Bitcoin, which can go down from 60,000 to whatever 30,000 and back up to 40k in the span of sharp regions,” he said. Imagine if $1 was all you had to buy and sell your daily shopping, with a fluctuating value of 10%, 20%, and 30% each day. How happy would that make you?
Sukhdev is not the only one who fears the speculative nature of bitcoin.
Berkshire Hathaway (BRK–A, BRK–B) CEO Warren Buffett described bitcoin in 2018 as “rat poison.” A JPMorgan Chase survey last month revealed that only one-third of mainstream investment firms agreed with Buffett’s description.
Many bitcoin supporters believe the cryptocurrency can be used to transact and point out companies such as Overstock.com and Starbucks (SBUX), which offer bitcoin payment options. Speaking on a panel last week, Ark Invest CEO/CIO Cathie Wood said, “Right now high-value transactions take place over bitcoin and that is a very useful role.”
Buffett held similar reservations about the speculative quality of gold, saying in a 1998 speech at Harvard University that the precious metal had “no utility.” At the Berkshire Hathaway annual meeting two years later, he called gold “some piece of metal that people dig out of the ground in South Africa and then put back in the ground at Fort Knox.”
But in a turnabout last year, Berkshire Hathaway acquired more than 20 million shares of Barrick Gold Corp (GOLD). Some gold advocates argue that it can be used in jewelry, dentistry, and electronics.
Sukhdev stated to Daily Reuters that he believes bitcoin is more speculation than gold.
“I don’t think bitcoin is an alternative currency. He adds that he does see bitcoin as a speculative store value, similar to gold or other commodities. “In fact, it’s even more speculative than that.”
Born in India, and educated in England and Switzerland, Sukhdev worked for over two decades as a banker before turning to environmental advocacy. He was elected president of WWF International in 2017, an international environmental organization that has more than 6,000,000 donors.
Concerns about bitcoin’s impact on the environment have been rising in recent months. Elon Musk, CEO of Tesla (TSLA), announced that the company would no more accept cryptocurrency payments over the “use of fossil fuels to bitcoin mining and transactions.”
This decision was made just three months after the company had announced that it would accept bitcoin.
Sukhdev responded to a question about whether the company had changed its mind regarding accepting cryptocurrency due to environmental concerns.