FTX CEO sees no future in Bitcoin payments and the crypto community responds

FTX CEO sees no future in Bitcoin payments and the crypto community responds

Sam Bankman-Fried, founder of cryptocurrency exchange FTX, has criticized the effectiveness of Bitcoin (BTC) as a payment network, to be met with harsh criticism from the crypto community.

During an interview with the Financial Times, Bankman-Fried fueled environmental concerns related to the Bitcoin network’s proof-of-work (PoW) mining consensus, stating that it is not scalable enough to handle millions of transactions.

He advocated the use of proof-of-stake (PoS) mining consensus instead and stated that it is more suitable for blockchain payment networks. He said:

“Things that do millions of transactions per second have to be extremely efficient and lightweight and have lower energy cost. Proof-of-stake networks are that.”

Bankman-Fried’s comments coincide with recent calls for an outright ban on PoW by a billionaire lobby group made up of the Ripple co-founder and several other environmental groups. However, Bitcoin advocates have been actively fighting the ongoing narrative calling for a change to the Bitcoin network’s mining consensus code.

People like Jack Dorsey have already made it clear that proof-of-work is more centralized and less secure consensus than proof-of-work.

The cryptocurrency community was not very pleased with the recent comments from the CEO of FTX. Many claimed that the Bitcoin network is not intended to be a payment network, but rather a layer 2 (L2) and settlement solution, like the Lightning Network, to act as the primary payment gateway. One user wrote:

“Either SBF or FT is lying. What about the (Lightning Network) layer? The Bitcoin Lightning Network processes up to 1,000,000 transactions per second!”

Others reminded him of the high centralization and concurrent closures of PoS networks like Solana (SOL). A user wrote: A user wrote:

“Thank God we have Soylana that we can turn off and on every two weeks!”

Another Reddit user wrote:

“You have no fucking idea what you’re talking about (or the journalist interviewing you doesn’t). Scaling has NOTHING to do with the consensus algorithm and therefore whether it’s POW or POS is completely irrelevant for scaling problems.

The FTX CEO took to his Twitter account to clarify his comments, saying that he had also discussed the potential of the Bitcoin network as a store of value. He said:

“To be clear I also said that it does have potential as a store of value. The BTC network cannot handle thousands/millions of TPS, although BTC can be transferred in Lightning.”

The PoW vs. PoS debate began last year when the Ethereum network outlined its plan to move to PoS mining consensus. The likes of Elon Musk fueled the sentiment that BTC needs to use more clean energy to be a viable option. However, in 2022, the debate seems to have shifted towards a complete turnaround of the mining consensus on the BTC network.

Read:  bitcoin in free fall and network hashrate grows

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