Billionaire Sam Bankman-Fried is one of the biggest names in crypto, largely because as the head of one of the world’s biggest cryptocurrency exchanges, his words carry weight.
He told the Financial Times on Monday that he doesn’t see Bitcoin as a payments network, but that doesn’t mean he never could.
Bankman-Fried, founder and CEO of FTX, told Coins2Day that Bitcoin (BTC) could be used as money and its blockchain could be a payments network in the future. However, he noted some conditions.
“I think that BTC could have a future as money [or] payments [network] *as long as it’s moving on Lightning, an L2, or another blockchain,*” Bankman-Fried said in an email.
Bitcoiners would argue that the blockchain is already a viable payments network because Lightning is already being used to clear transactions. Jack Dorsey even tweeted at Bankman-Fried about his comments to the FT: “and you didn’t bring up Lightning because…”
A few hours later, Bankman-Fried issued a response to Dorsey: “Honestly? It’s a big mouthful” to repeat every way Bitcoin can be transferred when he’s asked, “and I’m asked it a lot.”
Lightning is an “L2,” or layer 2, technology that’s built atop Bitcoin’s blockchain. It improves network speed by moving Bitcoin transactions off of its main blockchain and across the L2 instead.
The subjects of Lightning or L2 aside, Bankman-Fried had another criticism of Bitcoin’s ability to handle a huge scale of transactions.
He told the FT that proof-of-work is “not capable of scaling up to cope with the millions of transactions that would be needed to make the cryptocurrency an effective means of payment.”
Under proof-of-work, miners must complete complex puzzles to validate transactions. This process requires a huge amount of computer power and is often criticized due to its environmental impact.
Other blockchains have different processes. Some use proof-of-stake, where users validate transactions according to how many coins they contribute, or stake, to the network.
“Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost. Proof-of-stake networks are,” said Bankman-Fried.
However, Bitcoiners would disagree. They criticize proof-of-stake, saying it’s less secure than proof-of-work, among other things.
Nonetheless, Bankman-Fried told Coins2Day that he does think that Bitcoin has a “future” as a “store of value,” or an asset that retains its value over time .
Sign up for the Coins2Day Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.