The founder of the digital asset exchange FTX, Sam Bankman Fried believes that bitcoin does not have a future. As a payment network for daily use, its inefficiency and high energy usage make it useless. To become an effective means of payment for everyday use, bitcoin would need to perform millions of transactions. Bankman Fried believes that the proof of work system does not have the means to support the millions of transactions that would be needed. In Bankman’s words, “The bitcoin network is not a payments network, and it is not a scaling network.”
The fall in value
These comments came after bitcoin struggled to crawl back up from its 35% drop in January. Some countries have made bitcoin legal tender, such as El Salvador and the Central African Republic. Some experts still consider bitcoin as an option for everyday transactions. Despite the bitcoin ATMs and other initiatives to encourage its usage, experts in the United States have seen that purchases done in bitcoin are rare in El Salvador.
To build a working crypto payments network, the 30-year-old billionaire, who has turned FTX into one of the world’s largest virtual asset exchanges, claimed an alternate sort of blockchain. It is the proof of stake which he believes would be necessary for an efficient crypto payment system. Ethereum, the second-largest cryptocurrency after bitcoin, is looking to move to a proof of stake system in the future. Bankman Fried said, “Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost. Proof of stake networks are.”
His bitcoin criticisms were focused more on the environmental issues about the amount of energy required to run proof-of-work cryptosystems. Because of their carbon emissions, several European regulators have advocated for a ban on the systems. According to Cambridge University’s Bitcoin Electricity Consumption Index, mining bitcoin uses more energy than several countries. Countries such as Norway and Sweden.
Bankman went on. “It has to be the case that we don’t scale this up to the point where we’re spending 100 times as much eventually as we are today on energy costs for mining because you just run out of things to offset at some point.”
Although he has shared his criticism of bitcoin, he doesn’t believe it’s over. He said, “I don’t think that means bitcoin has to go.” Bankman believes bitcoin has a future “as an asset, a commodity and a store of value” similar to gold.
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