Bitcoin’s proof-of-work methodology for validating blockchain transactions, according to FTX founder Sam Bankman-Fried, cannot handle the millions of transactions required to make the cryptocurrency an efficient payment method.
According to one of the most powerful figures in the crypto industry, Bitcoin has no future as a means of making payments due to its inefficiency and severe impact on the environment.
A new report says, Bitcoin’s proof-of-work methodology for validating blockchain transactions, according to FTX founder Sam Bankman-Fried, cannot handle the millions of transactions required to make the cryptocurrency an efficient payment method.
Banking and scalability are not the functions of the Bitcoin network, according to Bankman-Fried. But he also later clarified in Twitter that “it _does_ have potential as a store of value.”
A brutal sell-off has hammered the fast-growing cryptocurrency sector, sending bitcoin down 35% since January and to its lowest level since late 2020 as a result of his remarks.
Some cryptocurrency devotees still view Bitcoin as a viable means of making day-to-day purchases.
El Salvador and the Central African Republic are the only two countries that have made Bitcoin legal tender. Academics in the United States have determined that despite the rollout of bitcoin ATMs and other initiatives to encourage its use, Bitcoin is rarely used for daily payments in El Salvador.
According to FTX’s 30-year-old millionaire founder and CEO, proof of stake (PoS) or other technological advancements would be necessary to develop a working crypto payments network. FTX is one of the world’s largest virtual asset exchanges.
In order to reduce energy consumption, Ethereum has been working on a proof of stake method. In order to handle millions of transactions per second, devices must be incredibly energy-efficient while also being lightweight. According to Bankman-Fried, “Proof of stake networks are.”
Because of his concerns about the amount of energy required to run proof-of-work cryptosystems, his criticisms of Bitcoin have raised severe environmental issues. Because of their carbon emissions, several European regulators have advocated for a ban on the systems.
According to Cambridge University’s Bitcoin Electricity Consumption Index, mining bitcoin requires more energy than many countries, such as Norway and Sweden.
According to Bankman-Fried, “It must be the case that we don’t scale this up to the point where we’re spending 100 times as much on energy expenditures for mining.”
FTX has utilized carbon offsets to make up for its emissions, which Bankman-Fried said was worthwhile but not a perfect answer because “you just run out of things to offset at some point,” he added.
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