Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, has given his take regarding the future of Bitcoin’s usage. Bankman-Fried stated he doesn’t believe that Bitcoin will work as a payments network, due to its limited capability for scaling to fulfill this task. However, he believes it might become “an asset, a commodity, and a store of value.”
Sam Bankman-Fried: Bitcoin as a Payments Network
Sam Bankman-Fried, founder of FTX has shared his views on where Bitcoin is heading and what the true value of the structure. Bankman Fried criticized Bitcoin’s use as a network for payments in an interview that was published by Financial Times. For several reasons, Bankman-Fried stated that Bitcoin’s blockchain system would not work as an everyday payments system.
One reason is the perceived inability to scale the Bitcoin blockchain. The second reason, as stated by the executive, has to do the potential energy and environmental impacts of such hypothetical growth relative to other options. Bankman Fried compared bitcoin to gold in the sense that it is impractical for use. He said:
Why don’t we go to a store and pay with physical gold bars? This would first of all be insane and absurd. It would be outrageously expensive. And I’m sure it’d be bad for the climate.
He stated that PoS (proof-of-stake) networks were more efficient in accomplishing these tasks.
Things that you’re doing millions of transactions a second with (will) have to be extremely efficient and lightweight and lower energy cost. Stake networks can be shown.
Bankman-Fried believes that Bitcoin has other unique properties that make it good as “an asset, a commodity, and a store of value.”
Different Opinions
However, some views differ from Bankman-Fried’s opinions. Inception of Bitcoin Lightning Network (LN), a second layer (L2) expansion protocol that Bitcoin uses to make transactions cheaper, could be an answer to scaling issues that Bitcoin’s first generation blockchains face. Paolo Ardoino (CTO at Bitfinex), believes that Lightning could transform Bitcoin into an economically viable payment system. He said:
Bitcoin’s Lightning Network is quietly emerging to make manifest Satoshi Nakamoto’s prophecy of a decentralized, peer-to-peer payment network. A case in point is El Salvador where the country’s adoption of bitcoin as legal tender has made the nation a laboratory for Lightning usage with global corporations integrating the technology.
David Marcus, a former Chief Crypto Officer at Meta, has launched Lightspark recently, a VC-backed startup that explores the Lightning Network’s potential for payments.
The 2015 proposal for the protocol has yet to be accepted by mainstream finance. It is currently ranked 32nd on the decentralized protocols that have the highest value locked according to Defi Pulse.
What do you think about Sam Bankman-Fried’s opinion on Bitcoin as a payments network? Comment below.
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