According to one of the most prominent names in the crypto space, Sam Bankman-Fried, Bitcoin has no future as a payment network because of its inefficiency and heavy environmental impact.
Sam Bankman-Fried, who founded asset exchange FTX, said the proof-of-work system of validating blockchain transactions was not capable of evolving to cope with the ever-growing amount of transactions that are needed to make the cryptocurrency both a mainstream and efficient method of payment.
Bankman-Fried is quoted saying, “The bitcoin network is not a payments network and it is not a scaling network.”
His comments come as the majority of the cryptocurrency ecosystem is being hit by a massive sell-off. Bitcoin’s hurt is obvious, with its current overall value being down more than 50% from its price in November of 2021.
Bitcoin is still seen as the main means of financial transaction on the blockchain for many crypto enthusiasts.
A few countries have embraced Bitcoin as a real-world currency and legal tender, such as El Salvador and the Central African Republic. Although, recent research shows that Bitcoin has not been completely adopted by the El Salvadorian people, in spite of a massive Bitcoin ATM rollout across the country and other measures meant to encourage its use
The 30-year-old billionaire, who has successfully expanded his company FTX into one of the world’s largest virtual asset exchanges, believes that in order for a functional crypto payment network to work, an alternative type of blockchain known as proof-of-stake, or any other alternative technology, would have to be implemented.
Ethereum 2, the descendant of Ethereum, has been in the works to move the Ethereum blockchain onto a proof-of-stake system. The intention is to make transactions cheaper, faster, and less energy-intensive.
The CEO goes on to say, “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 remarks emphasized the immediate negative environmental effect that blockchains that run on proof-of-work systems cause. Some governments around the world are calling for the illegalization of proof-of-work due to its environmental consequences. The mining of Bitcoin consumes vast amounts of energy, more than some countries entirely, like Sweden and Norway.
If mass adoption were to happen the environmental costs would be not only unethical but also unsustainable.
“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,” says Bankman-Fried.
His company, FTX, has previously used carbon offsets to make-up for the company’s emissions, although he does not consider that a solution “because you run our of things to offset at some point.”
In spite of the criticism, Bankman-Fried says he still does believe in Bitcoin and that it has a place in the market.
“I don’t think that means Bitcoin has to go”, says the CEO as he goes on to add that the future of Bitcoin may see a future as “an asset, a commodity and a store of value”