FTX CEO Claims Bitcoin is ‘Not a Payments Network'
The CEO of one of the largest crypto exchanges globally, Sam Bankman-Fried, has stated that Bitcoin is not a sustainable payment network, splitting the industry between those who agree and those who don’t.
“The Bitcoin network is not a payments network and it is not a scaling network,” he told the Financial Times on Monday.
His main point in calling out the coin is its proof-of-work (PoW) consensus algorithm, which verifies Bitcoin transactions on the network.
Popular coins like Bitcoin are proof-of-work meaning they’re generated by using machines competing to solve complex problems to “mine” coins and digital assets.
With the industry becoming larger more miners have started to crop up leading to a significant amount of computers being utilized to keep the network running.
These miners have come under scrutiny and in turn Bitcoin due to many criticisms citing the sheer amount of energy being lost to keep it going.
Environmental footprint aside, many who've interacted with the blockchain can tell you it's not the fastest on the market. According to Blockchain.com, the average number of transactions per second (TPS) over the past 30 days has been 2.58.
Comparing this to regular payment networks, like Mastercard or Visa, Bitcoin moves as fast as a sloth.
Nevertheless, Mr. Bankman-Fried gives credence to the fact that Bitcoin could be perfect for something else.
“To be clear I also said that it does have potential as a store of value,” he tweeted in reference to the Financial Times report. “The [Bitcoin] network can't sustain thousands/millions of TPS, although BTC can be [transferred] on lightning/L2s/etc.”
The Lightning Network is a second-layer solution, helping speed up Bitcoin transactions, while reducing costs for users, with the goal being to make it an easy experience to spend using Bitcoin.
Sam went on to muse about the potential alternative being proof-of-stake (PoS) crypto networks, and how they require less energy and have more timely transaction speeds.
“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,” Bankman-Fried said.
These comments from one of the most respected voices in the industry have led many to take to Twitter and either show their support, or poke holes in Sam’s logic. These statements in no way are an attack on the leading cryptocurrency but a pointing out reality, while smartly offering solutions.