Bitcoin has no future as a payment network due to its inefficiency and high environmental costsaccording to one of the most influential CEOs in cryptocurrencies.
Sam Bankman-Friedfounder and director of FTXthe world’s third-largest cryptocurrency exchange, told the Financial Times that the proof-of-work system to validate the transactions of the blockchainwhich supports bitcoin, could not cope with the million transactions that would be needed to make cryptocurrency an effective means of payment.
“The bitcoin network is not a payment network and it is not a scalable network”dijo Bankman-Fried.
His comments came as the cryptocurrency market was hit by a sell-off that left Bitcoin down more than 35 percent since January, at its lowest level since late 2020.
Some cryptocurrency enthusiasts still see Bitcoin as a way to conduct everyday transactions.
countries like The Savior and the Central African Republic they have adopted Bitcoin as legal tender. The Salvadoran President Nayib Bukele since 2021 has invested some USD 100 million of Salvadoran public funds in buying Bitcoin despite the fact that the price of the cryptocurrency has been falling for 7 months. It is estimated that he has already lost 40 million USD.
Sam Bankman-Friedwho at just 30 years old has built FTX into one of the world’s largest virtual asset exchanges, said an alternative type of exchange would be needed. blockchain known as proof of stake other technological innovations to create a functional network of crypto payments.
“Things that you’re doing millions of transactions per second with have to be extremely efficient, lightweight and lower energy cost. Proof-of-stake networks are., dijo Bankman-Fried.
“It has to be the case that we don’t ramp this up to the point where we eventually spend 100 times what we spend today on energy costs for mining.”Bankman-Fried explained.
Some cryptocurrencies are already following that path. Ethereumfor example, has been working to move to a system of proof of stakewhich is intended to consume less energy.
For its part, FTX has used carbon offsets to offset company emissionswhich Bankman-Fried said was worthwhile but not a complete solution “because at some point you just run out of stuff to make up for it.”
On the other hand, Bankman-Fried said that he still believed that Bitcoin had a place in the crypto market.
“I don’t think that means Bitcoin has to go,” he said, adding that the token may still have a future as “an asset, a commodity, and a store of value” similar to gold.
His criticism of bitcoin they underscored serious environmental concerns about the amount of power needed to run cryptographic systems of proof of work. Some European regulators have called for the ban on the systems due to their carbon emissions.
Bitcoin mining consumes more energy than many countriesincluding Norway and Sweden, according to the Cambridge University Bitcoin Electricity Consumption Index.
Former Wall Street broker and gifted mathematician, Bankman-Fried entered the crypto world to carry out his philosophy of “effective altruism” and earn as much as possible, to donate as much as you can. It is estimated that his fortune amounts to USD 26,500 million. As he said in an interview, he plans to give away 99% of his earnings.