(24 May 2022 – The Bahamas) Cryptocurrency exchange founder and CEO Sam Bankman-Fried asserts that Bitcoin will have limited application as a payments network until it addresses the two major challenges of its inherent inefficiency and inhibitive environmental costs.
The founder of the digital asset exchange FTX declared the proof of work system of validating blockchain transactions, which underpins bitcoin, was not capable of scaling up to cope with the millions of transactions that would be needed to make the cryptocurrency an effective means of payment.
An alternative to the system is called the “proof of stake” network, where participants can buy tokens that allow them to join the network. The more tokens they own, the more they can mine. Ethereum, which supports the second-largest cryptocurrency ether, has been seeking to solve these key issues weeks by performing the “merge”, a transformative June upgrade of its blockchain Ethereum to make it faster, cheaper and less power intensive, holding out the prospect of a greener and more efficient crypto future.
“The bitcoin network is not a payments network and it is not a scaling network. I don’t believe bitcoin has to go as a cryptocurrency, it may still have a future as an asset, a commodity and a store of value like gold” said FTX Founder Sam Bankman-Fried.
“Proof of stake networks will be required to evolve crypto as a payments network as they are cheaper and less power hungry” Bankman-Fried added.
The European Central Bank (ECB) echoes Bankman-Fried’s concerns stating “Growing links between traditional financial-services firms and the Cryptoasset market could pose a threat to financial stability. At this rate, a point will be reached where unbacked Cryptoassets represent a risk.”