Sam Bankman-Fried, CEO of FTX, a cryptocurrency exchange, told the Financial Times that Bitcoin has no future as a payments network because of its high energy consumption.
He blamed the inefficiency on the reliance on proof-of-work (PoW) which bitcoin has used since its launch in 2009.
“The Bitcoin network is not a payments network and it is not a scaling network,” said the FTX chief.
Bitcoin uses PoW that relies on computational power to validate transactions and mine new coins. While the concept was hailed as ingenious, it has drawn criticisms for high energy consumption and environmental impacts.
Bitcoin is said to use more energy than Norway and Argentina, and in response, European regulators are mulling over an outright ban on PoS systems.
Other industry heavyweights like Chris Larsen, the co-founder of Ripple Labs, have proposed that Bitcoin change its code to a Proof-of-Stake (PoS) model and gone the extra mile to launch a new campaign called “Change the Code, Not The Climate.”
“It has to be the case that we don’t scale this up to the point where we’re spending 100 times as much eventually as we are today on energy costs for mining,” said Bankman-Fried on reining Bitcoin’s mining impact.
FTX chief says proof-of-stake is the way to go
Bankman-Fried told the media that a PoS system is ideal for building an efficient crypto payments platform given its energy efficiency. “Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and [have] lower energy costs,” he said.
Ethereum (ETH), the second-largest cryptocurrency, has drawn up comprehensive plans to make the switch to PoS later this year. A series of successful test nets have gone live with ETH becoming the most staked crypto-asset according to data from stakingrewards.com.
Bankman-Fried still sees a ray of hope for Bitcoin
FTX’s chief did not write Bitcoin off completely as he believes that the largest cryptocurrency still has a place in the ecosystem.
“I don’t think Bitcoin has to go,” he told the Financial Times. He goes on to add that it has a role to play as “an asset, a commodity and a store of value” that is similar to gold. Bitcoin has risen by over 10,000% since 2013 and reached an all-time high of $64,789 in 2021.
Despite Bankman-Fried’s comments, El Salvador and the Central African Republic have adopted Bitcoin as legal tender but experts are still debating their suitability as a means of daily payments.