Bitcoin and other digital currencies are not "a fraud," the chief executive of app-based bank Revolut told CNBC, ahead of the start-up's plans to launch a range of services for cryptocurrencies.
"They are definitely not a fraud," Nikolay Storonsky said in an interview Tuesday. Revolut's co-founder said that, though people are less likely to use bitcoin in everyday transactions, the same could be said for commodities like gold.
"Real-world usage for gold is quite limited. But still there is a huge market, huge volumes that are being traded in the market, and these volumes determine the gold price," he said.
"The question, 'Where is the real gold price?' No one knows. It's the same with bitcoin. Volumes are increasing, the price is shooting up, there is no implication of bitcoin in the real world, it's quite limited."
He said that 99 percent of bitcoin transaction volumes are "speculation-driven," with just 1 percent of volumes involving everyday applications.
Some executives in the financial services sector have expressed concern about the volatile nature of bitcoin, however, with Credit Suisse's CEO Tidjane Thiam describing it as "the very definition of speculation and the very definition of a bubble."
But Storonsky, who is a former Credit Suisse trader, said bitcoin was similar to another commodity in this aspect — oil.
"If you look at the oil market, 90 percent of volume is speculation, 10 percent is real use case."