Mike Novogratz, a billionaire investor and former hedge fund manager, has always defended bitcoin when it acts erratically, but he recently stated in an interview that the world’s most valuable digital currency will never be used for payments.

Mike Novogratz said bitcoin will not be used as a form of payment because the network can’t support thousands of transactions. In an episode of the Exchanges at Goldman Sachs podcast, the Galaxy Digital Holdings CEO played up bitcoin’s use case as a store of value and asset class, and not a new form of payment.

“Bitcoin’s not going to be payments. The system really isn’t set up for payments. It’s not fast enough for thousands and thousands of transactions,” he said.

Given that bitcoin and many of its cryptocurrency relatives were designed to replace credit cards and fiat currency, this is likely to be a major setback for bitcoin and crypto purists. Given how many stores and corporations are scared off by the commodity’s volatility, the idea that bitcoin will be utilized in the future not just as a speculative asset, but as a means of paying for products and services has been slowly fulfilled.

When something as volatile as bitcoin enters the market, shopkeepers are more inclined to raise an eyebrow rather than smile. Companies face risks from the currency since they risk losing money if they do not convert it to fiat cash quickly enough.

In a white paper published in 2008, bitcoin’s mystery creator, Satoshi Nakamoto, described bitcoin as a peer-to-peer cashless digital currency. However, crypto investors such as Novogratz believe that other digital currencies will take over the payment role in the future, and that bitcoin will become more analogous to digital gold.

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The investing argument for bitcoin, according to Novogratz, is that it is the world’s most distributed asset outside of the dollar and that it is a uniform store of value.

In the future, he believes bitcoin will serve as the ultimate hedge fund. He believes it will operate as a store of value, comparable to gold, and that many people will turn to it to keep their portfolios intact and their wealth stable and safeguarded in the event of economic turmoil, as it did last year during the coronavirus outbreak. He remarked:

“What’s unique about stores of value is they’re social constructs,” he added. “It has value because we say it has. 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.”

According to Novogratz, the current macroeconomic backdrop is “tailor crafted” for bitcoin ownership. The US government is likely to keep spending money as more Americans favor variants of universal basic income other fiscal spending initiatives like free college tuition, while other countries’ deficits are likely to expand as well.

“The treasury department and the government is financing everything we want to spend, and that’s happening in countries all over the world. So we had bad deficits before COVID. Now we have deficits that are insane. So as long as that macro backdrop, that political backdrop is giving us a tailwind and the market is being adopted, you’re crazy to get out,” Novogratz said.

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