Sam Bankman-Fried, founder of the digital asset exchange FTX, sees bitcoin as having no future as a payment network due to its inefficiency and high environmental costs.
Bankman-Fried, one of the most influential CEOs in cryptocurrencies, said that the proof-of-work system for validating blockchain transactions, which supports the cryptocurrency, was not capable of scaling up to cope with the millions of transactions that are needed to make it an effective means of payment.
“The bitcoin network is not a payment network and it is not a scalable network,” Bankman-Fried said in a Financial Times newspaper note.
El Salvador adopted bitcoin as legal tender since last September, but recent research by the US National Bureau of Economic Research (NBER) found that its use is minimal.
Of the people who downloaded the Chivo state wallet with a $30 bonus granted by the state, only 20% of users continued to use it after spending their registration bonus and according to data from the Central Reserve Bank (BCR), until March only. 1.6% of the remittances received in the country were through a cryptocurrency wallet.
Bankman-Fried’s criticism of bitcoin underscores serious environmental concerns about the amount of power needed to run proof-of-work crypto systems.
Bitcoin mining is estimated to consume more energy than many countries, including Norway and Sweden, according to the Cambridge University Bitcoin Electricity Consumption Index.
“It has to be the case that we don’t ramp this up to the point where we eventually spend 100 times what we spend today on energy costs for mining,” Bankman-Fried added.
But despite his views, Bankman-Fried added that he still believed the world’s largest digital asset had a place in the crypto market. “I don’t think that means bitcoin has to go away,” he said, adding that the token may still have a future as “an asset, a commodity and a store of value” similar to gold.