Blockchain-based cryptocurrencies and tech platforms have their uses, but it doesn't always make sense to rely on them instead of conventional solutions just because it's possible to. That was one of the recurring themes in a pair of crypto-related talks held at the Goldman Sachs (GS) Technology and Internet Conference in San Francisco this week.

The first talk was a solo appearance featuring Brad Garlinghouse, CEO of payments-centric crypto startup Ripple (it relies on the Ripple/XRP cryptocurrency). The second was a panel discussion featuring execs from blockchain infrastructure provider Chain and a pair of online payment providers relying on blockchain to power their services, Circle and nanopay.

Bitcoin

While speakers praised Bitcoin's usefulness as a store of value and and its unmatched liquidity among cryptocurrencies, they were quick to argue its technical limitations - manifested in its very high transaction fees, as well as the long time it often takes for Bitcoin transactions to settle - made it relatively impractical as a payments solution. Whereas Bitcoin transactions presently carry a $3-plus average transaction fee (at one point in December, the figure was above $50) and a 37-minute average confirmation time, Garlinghouse asserts XRP transactions cost "a fraction of a cent" and take just 3 seconds to confirm.

"Bitcoin is worse than Visa (V) in every dimension that Visa cares about," said Chain CEO Adam Ludwin, noting the crpytocurrency's deficiencies in areas such as speed, processing efficiency and transaction fees. He granted that Bitcoin does deliver the benefit of censorship-resistance -- an immunity to potential government crackdowns and asset freezes, as well as an inability to alter transaction details once they've been added to the blockchain -- while adding that Visa doesn't care about this.

In some follow-up comments provided to TheStreet, nanopay CEO Laurence Cooke pointed out that Bitcoin's usefulness as a means of payment diminishes as its price rises. "Ironically, if you pay your ecosystem to use your ecosystem, then as the utility increases, so does the value of the token, which in turn limits the utility of the token, as it prices itself by being too expensive. Bitcoin utility only makes sense at a very low price."

Ethereum

Unlike Bitcoin, which only functions as a store of value or means of payment, Ethereum is also a platform -- relying on a cryptocurrency called Ether -- for executing smart contracts (a means of enforcing contracts for financial transactions with no intermediary) and distributed apps. Or as Ludwin put it, Ethereum, which now has quite a few corporate supporters, is "a decentralized application for creating decentralized applications."

And just as processing Bitcoin transactions is much less computationally efficient than processing traditional financial transactions, running apps via Ethereum, often mined using Nvidia (NVDA) and AMD (AMD) GPUs, is much less computationally efficient than doing so on a regular cloud server. But in return, users gain access to a computing platform without any gatekeeper or risk of censorship or downtime. Just as Visa isn't trying to replicate Bitcoin, Amazon.com's (AMZN) AWS isn't trying to replicate Ethereum, noted Ludwin, who deems the platform "an Internet counterculture."

But has a killer app emerged for this counterculture? Not yet, Ludwin admits. Though a slew of experimental Ethereum apps have arrived, none have truly blown up. As Ludwin pointed out, Cryptokitties -- digital collectibles whose reliance on the Ethereum blockchain makes them immune to counterfeiting -- are (amusingly enough) the closest we've gotten to an Ethereum app that's widely used by consumers.

Jim Cramer and the AAP team hold a position in Nvidia for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells NVDA? Learn more now.

Cross-Border Transactions

There was a lot of enthusiasm among speakers about using blockchain technologies to enable secure cross-border payments that (partly because no intermediary is needed to authenticate the transaction) carry far lower transaction fees than traditional approaches, and are also settled much faster. Garlinghouse also cited other advantages, such as greater transparency for transactions and the ability for individuals and institutions to easily move funds out of a less desirable currency to a more desirable one.

On the other hand, in an interview held at the Goldman conference, PayPal (PYPL) COO Bill Ready offered a more measured view of using blockchain for cross-border transactions. Namely, that it could make sense for transaction types that feature long settlement times and/or no trusted intermediary, but -- given their computational inefficiency -- less so for transactions that can be settled quickly and involve highly liquid markets. Thus while blockchain-based solutions could be useful for, say, converting Kenyan currency to Nigerian currency, they're less useful for converting dollars to pounds or euros. "Taking...a notion of distributed trust and applying it where there's a well-functioning central brokerage is not really what blockchain was meant for," Ready said.

Cryptocurrency Speculation

Plenty of cautious remarks were aired about the recent cryptocurrency boom -- both in terms of the parabolic price increases seen by some cryptocurrencies, and the speed at which the number of cryptocurrencies in existence has mushroomed. Garlinghouse is comfortable predicting that most cryptos in existence will eventually be worthless, given the lack of clear value propositions for them. "The long-term value of any digital asset will be dictated by the utility of that asset," he added.

For his part, Cooke thinks it's still "early days" for the top cryptocurrencies, but expects major declines for the others. "There are too many currencies in the world for them all to be relevant...It makes more sense to focus on the value of the top 10 cryptocurrencies and forget about the rest."

Initial Coin Offerings (ICOs)

There was also plenty of wariness regarding the current environment for ICOs -- sales by companies of new cryptocurrencies that typically give the buyer the rights to some kind of digital asset (for example, virtual currency for games), and for which payment is often made using an established cryptocurrency such as Bitcoin or Ether. "We haven't found one that we're actually ready to really get involved in," said David Ludwig, Goldman Sachs' co-head of Equity Capital Markets in the Americas.

Though optimistic about the broader use of blockchain technologies to change how capital markets function, Ludwig suggested Goldman wants to see more "maturity" in the ICO space before jumping in, and noted bad actors have been present within it. "I'm not sure...everyone knows exactly what they're buying," he added.

Ludwin also provided a cautious take on ICOs, arguing they're only disruptive to traditional venture capital-based funding if decentralized apps disrupt traditional apps. Cooke, on the other hand, thinks ICOs will help keep VCs honest. "VCs now have to show mutual alignment with founders which should eliminate the overly complex shareholder agreements designed to relieve founders of their companies."

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