Michael J. Casey is CoinDesk's Chief Content Officer.

I want to clarify something: Speculation is not a dirty word.

Along with many others, I’ve lately called on the crypto community to emphasize real-world use cases. The way out of crypto winter, we’ve argued, is to discard the “number go up” mindset that underpinned so much pre-winter market activity and focus instead on solutions that bring real benefits to humanity – such as renewable energy projects. The argument is that if inflows into decentralized finance (DeFi) are to be more sustainable then the yields that attract investors must be based on services that deliver more tangible economic value.

But after I spoke to a gathering of credit union executives hosted by financial services provider Allied Solutions this week, I feel compelled to qualify that position. One audience member asked me how he can fulfill the demands of his credit union’s younger members that it provide crypto trading opportunities “without simply encouraging pure speculation.”

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On the surface, it sounded like a concern directly aligned with my “real-world use case” point. If we could just stop the speculators, there might be a better story of growth and purpose for this industry, rather than the get-rich-quick values that tend to be associated with “crypto bros.”

But as important as it is to build real value, the question contained a misconception on the worth and purpose of speculation. It is vital to a market economy. It is fundamental to how we determine, as a society, which ideas, projects or businesses win or lose. We need it.

Picking winners and losers

When it comes to nascent technologies that, on the one hand, hold potential for mass disruption but, on the other, run up against an especially ingrained and politically entrenched incumbent system, the speculative process is both drawn out and highly volatile. We saw this in the early days of the internet, as the dot-com boom pushed prices for web-based companies to unsustainable levels but also laid the groundwork for the boom of the Web2 era.

In crypto, the speculative furor is even more intense because of the degree of potential disruption and because the barriers to achieving that disruption are so high that the cycles of hope and disappointment are more extreme. Those factors also draw the period of speculation out longer because they extend the process a technology goes through before reaching mass adoption and full potential.

Consider what bitcoin (BTC) aspires to be. It’s not a new type of car, like the Tesla, or a better payment app, like Venmo. It’s designed to overhaul a centuries-old system of money. That contains unfathomable prospects for change – and profit – as well as daunting challenges in the resistance to that change. It’s a recipe for speculation and for volatility in price.

When economists dismiss bitcoin’s viability as a store-of-value to rival gold (because of its volatility), they are holding it to a ridiculously narrow standard.

How long do you think it took gold to become established in human consciousness as the embodiment of permanent, lasting value? (Note: There is nothing innate about gold’s value, even though the metal has qualities that support its convenience as a store of value; this value was socially constructed over time – a very long time.) Bitcoin has the capacity to be a superior, digitally native version of the same depoliticized form of money, but to expect it to immediately embody that status in the minds of everyone is to condemn it to failure and to deny it the process of testing that it must go through to achieve it.

The juries are still out on which crypto projects survive to prove their value propositions – bitcoin’s as “digital gold,” for example, the Ethereum blockchain’s as “world computer” – and their members deserve a decent amount of time to adjudicate. In the meantime, investors are inevitably going to speculate on whether each attains its relevant status.

Regulation lesson

That means, in this nascent, relatively illiquid period, prices are going to continue to rise and fall with a much larger variance than established asset classes.

We should shift our perspective on speculation. Regulators and self-regulators who are keen to tame crypto’s “wild west” nature don’t need to kill speculation per se, but to stop charlatans from exploiting that speculative environment by peddling falsehoods and frauds to investors.

Don’t quash the speculation. Quash the scammers.

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Michael J. Casey is CoinDesk's Chief Content Officer.