Bitcoin Inefficient as Payments Network, Says FTX CEO

Daniel Attoe
Daniel Attoe

Updated · May 16, 2022

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The chief executive still sees some use cases for the world’s premier cryptocurrency, the Financial Times reported on Monday.

“Not a Payments Network”

The founder of cryptocurrency exchange FTX has said that Bitcoin has no future as a payments network. According to Sam Bankman-Fried, the digital currency has shown that it is ineffective in that regard. He also slammed the cryptocurrency’s environmental costs.

“The bitcoin network is not a payments network and is not a scaling network,” the chief executive said.

His scathing criticism comes amid a series of torrid weeks for Bitcoin and the crypto market as a whole. The world’s number one digital asset in terms of market cap has fallen to its lowest level since December 2020. It now currently trades at less than half of its all-time high.

Bankman-Fried’s view of Bitcoin stems from its Proof of Work (PoW) consensus mechanism which critics have tanked for being energy-intensive. In a bid to cut down on its high electricity costs, Kosovo placed a ban on Bitcoin mining early this year.

The 30-year-old billionaire advocates for an alternative mechanism instead.

“Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost,” he said. “Proof of stake networks are.”

Ethereum, the second-largest blockchain, is now moving to this system that does away with the electrical waste.

However, the crypto chief does not completely discount Bitcoin.

“I don’t think that means bitcoin has to go,” he said. In his view, the coin still has a place as “an asset, a commodity and a store of value”.

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Daniel Attoe

Daniel Attoe

Daniel is an Economics grad who fell in love with tech. His love for books and reading pushed him into picking up the pen - and keyboard. Also a data analyst, he's taking that leap into data science and machine learning. When not writing or studying, chances are that you'll catch him watching football or face-deep in an epic fantasy novel.

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