The proof-of-work (POW) mechanism for confirming transactions on the Bitcoin blockchain, according to Sam Bankman-Fried, creator of the FTX crypto exchange, is limited when it comes to scalability. Especially when it comes to processing millions of transactions almost simultaneously. This makes it an unviable payment method.
“The bitcoin network is neither a payment network nor a scalable network”said Mr. Bankman-Fried.
His remarks come after the booming cryptocurrency sector was rocked by a brutal selling spree, with Bitcoin down more than 37% year-to-date.
And as a store of value?
If Bitcoin is not very reliable as a method of payment, it may well be a store of value. the salvadorfor example, made Bitcoin legal tender.
However, despite the deployment of Bitcoin ATMs and other initiatives to promote its use, a new study by US researchers indicates that Bitcoin is rarely used for payments in El Salvador.
The 30-year-old millionaire, who made FTX one of the world’s largest digital asset exchanges, said an efficient payment system cannot rely on a proof-of-stake (POS) blockchain. Or on even more evolutionary versions.
Ethereum is working on transitioning to a proof-of-stake method that is less energy-intensive.
“Systems that handle millions of transactions per second must be incredibly efficient, lightweight and energy efficient”said Mr. Bankman-Fried.