CEO of cryptocurrency exchange FTX believes that Bitcoin has no future as a payments network

Tudor Cibean

Posts: 98   +6
Staff
TL;DR: Sam Bankman-Fried said that he doesn't believe Bitcoin can work as a payments network, criticizing the high energy costs of its proof-of-work algorithm and claiming it can't sustain millions of transactions per second. He does, however, think that it has potential as a store of value.

In a Monday interview, crypto billionaire Sam Bankman-Fried said that he doesn't see a future for Bitcoin as a payments network. Bankman-Fried is the founder and CEO of FTX, one of the most popular cryptocurrency exchanges in the world.

The thirty-year-old billionaire criticized Bitcoin's underlying proof-of-work system, used to verify transactions, for its high environmental costs and inefficiency. He argued that the network isn't capable of handling millions of transactions per second. However, he did mention that users can transfer Bitcoin to layer two payment protocols such as Lightning. He also noted that proof-of-stake networks solve these issues.

Switching Bitcoin over to a proof-of-stake algorithm would be no easy feat. As a reminder, Ethereum developers have been planning a shift to PoS for several years, although it's been met with several delays.

While Bankman-Fried doesn't believe in Bitcoin as a viable currency for payments, he did mention that it has potential as an asset, a commodity, and a store of value, similar to gold.

Last week, the entire crypto market saw a massive crash after stablecoin Terra collapsed. Bitcoin has recovered slightly since then but is still down over 50 percent since its peak in November.

Permalink to story.

 

Thanthan

Posts: 77   +164
As long as a bigger fool is someday available to cash you out, sure bitcoin is a good way to store value. If someday those fools should dry out…We’ll you literally wouldn’t be capable of exchanging your bitcoin to anything actually valuable…
 

Dimitriid

Posts: 2,212   +4,262
"A store of value" Sure, that's one way of putting it.

Another one would be "The main vector for financial fraud" and in my opinion that would be more representative of the present of cryptos and likely it's only future: It's going to be the domain of the Prince of Nigeria for years to come and that's the best case scenario, the worst one being propped up as a money laundering operation for actual organized crime.

Now it's unlikely that organized crime will bother too much with it on it's own since the entire point is for them to cash out from say, drug money to crypto and then to legal tender. But hey as long as there's people running NFT scams or new versions of them based on crypto to keep a steady flow of people being scammed into putting legal tender into crypto it remains ideal as very hard to trace funds for crime.

Good news is that the vast amounts of energy consumption will likely die down quite a bit now that the mainstream craze is over.
 

bviktor

Posts: 855   +1,271
Bitcoin was never useful for anything. It's a pure speculation tool.

There are other crypto assets that are actually useful for payments, like stablecoins on say, Stellar. Bitcoin just isn't one of them. It's inconvenient, risky, slow, and expensive.
 

kiwigraeme

Posts: 1,052   +780
Bitcoin is the only true path to financial freedom.

Ah the One True Path

let's forget Death setting you free
Let's forget birthright to fortune
Let's forget reframing what is Financial Freedom - really it's no being able to buy unlimited junk - it's choice not to have to compromise yourself - for some that may only be $5000/year living in quiet life in the backwoods

Anyway I think you were being facetious
 

emmzo

Posts: 614   +770
When Bitcoin is starting to have some problems, all these people that used to say "the future is here, financial freedom, 100k soon, a million one day" are "suddenly" in a new revelation: "Bitcoin is junk, worthless, broken, a speculation tool". This guy runs an exchange so, he can only say so much.
 

Mister_K

Posts: 2,163   +862
As long as a bigger fool is someday available to cash you out, sure bitcoin is a good way to store value. If someday those fools should dry out…We’ll you literally wouldn’t be capable of exchanging your bitcoin to anything actually valuable…

People are already trading with BTC to BTC transactions over fiat to BTC. Soooo...
 

Puiu

Posts: 5,565   +4,532
TechSpot Elite
People are already trading with BTC to BTC transactions over fiat to BTC. Soooo...
With huge taxes and very SLOW transactions. The tech just isn't scalable. And he was obviously referring to people bailing out and you loosing all or over 90% of your bitcoin value, which isn't that hard to achieve.
 

Nobina

Posts: 3,784   +4,214
People into crypto say they like the technology behind it but they're full of sht. They're just looking for quick profits or believe it's gonna make them rich one day without any work.
As long as a bigger fool is someday available to cash you out, sure bitcoin is a good way to store value. If someday those fools should dry out…We’ll you literally wouldn’t be capable of exchanging your bitcoin to anything actually valuable…
Fools will never dry out as they've been wet for thousands of years.
 

Kuifje

Posts: 6   +10
What the heck kind of name is Bankman-Fried? That sounds like a crypto hacker's handle.
thank you for the laugh, I lol’ed, cuz its true it does sound like a handle.

On a pragmatic note, to answer your rhetorical question;

Likely of germanic origin (not to be confused as germany) like shoemaker popularly known as Schumacher the F1 racer.

furthermore its a joint last name denoting both his parents last name or in some cases spouses which can be identified with a hyphen and is used frequently when you want to show your lineage from both branches of the family tree.
 

Thanthan

Posts: 77   +164
Fools will never dry out as they've been wet for thousands of years.

While this is undoubtedly true the reliance on fools is still an issue for people looking to cash out. Firstly you are reliant on these fools having enough money to cash you out, at the very least to the sum of whatever investment you made to be the first mover fool. Secondly you are reliant on the fools not moving on to the next fools gold before you manage to cash out. No one knows when crypto is going to be last year, but the people who have large ‘investments’ in it when something new and shiny grabs all of its attention will have a significantly reduced base of people to cash them out.

 

NightAntilli

Posts: 903   +1,179
Let me clarify a few things... Because once again, there are many misconceptions, misunderstandings, and blatantly false statements being posted here.

First thing's first. Sam is a huge backer of Solana. It is in his own interest to push the environmental concern narrative as well as a high transaction per second. There have been multiple Proof of Stake Bitcoin forks. None became popular or have made it.
The idea to transition Bitcoin to Proof of Stake is a mainstream narrative to try and put Bitcoin in a bad light, because the ones in control of the current financial system don't like the competition that Bitcoin brings. They can't shut it down through the law or brute force, so they use smear campaigns.

The general concept of money is to store the value of your labor in a form that can be used later. It is a problem when what you store is being devalued, which is what happens with every fiat currency. They all trend down over time. Bitcoin might be volatile, but its general trend is up, meaning, what you stored not only retains its value but increases over time.

People tout Visa as having 50k+ transactions per second. This might be true, but it is not directly comparable in this way. Settlements of payments happen after a month. That's why you get a month to pay off your credit card without needing to pay interest. Bitcoin settles every 10 minutes on average. The settlement is FASTER than any existing non-crypto payment network on the planet.

For day to day transactions, Sam is correct; The Lightning Network, a Layer 2 solution that works similarly to Proof of Stake, can easily handle day to day transactions. It still uses Bitcoin as the settlement layer. Bitcoin is paramount for this system and this solution is better than the likes of Visa. No down time, no one to confiscate or freeze your money, increased privacy and easy to use without requiring much more than a cell phone.

Bitcoin is immutable. Since everything is visible on the blockchain, tracking fraudulent transactions is extremely easy. Bitcoin being used for illicit activities is nonsense. This is another example of the smear campaign. Bitcoin enables freedom of transaction to the ones that need it. The Canadian Freedom Truckers come to mind. An even better example, imagine a child needing food in a sanctioned country. There is a reason that Nigeria has the largest Bitcoin adoption; the people have adopted it to retain their basic rights. They can eat if they use Bitcoin, because there is no way to sanction that. You never hear that part. You only hear the nonsense "illicit activity" argument, even though that happens not nearly as much with Bitcoin as it happens with US dollars or other fiat currencies.
 

Reallyhow

Posts: 79   +159
Let me clarify a few things... Because once again, there are many misconceptions, misunderstandings, and blatantly false statements being posted here.

First thing's first. Sam is a huge backer of Solana. It is in his own interest to push the environmental concern narrative as well as a high transaction per second. There have been multiple Proof of Stake Bitcoin forks. None became popular or have made it.
The idea to transition Bitcoin to Proof of Stake is a mainstream narrative to try and put Bitcoin in a bad light, because the ones in control of the current financial system don't like the competition that Bitcoin brings. They can't shut it down through the law or brute force, so they use smear campaigns.

The general concept of money is to store the value of your labor in a form that can be used later. It is a problem when what you store is being devalued, which is what happens with every fiat currency. They all trend down over time. Bitcoin might be volatile, but its general trend is up, meaning, what you stored not only retains its value but increases over time.

People tout Visa as having 50k+ transactions per second. This might be true, but it is not directly comparable in this way. Settlements of payments happen after a month. That's why you get a month to pay off your credit card without needing to pay interest. Bitcoin settles every 10 minutes on average. The settlement is FASTER than any existing non-crypto payment network on the planet.

For day to day transactions, Sam is correct; The Lightning Network, a Layer 2 solution that works similarly to Proof of Stake, can easily handle day to day transactions. It still uses Bitcoin as the settlement layer. Bitcoin is paramount for this system and this solution is better than the likes of Visa. No down time, no one to confiscate or freeze your money, increased privacy and easy to use without requiring much more than a cell phone.

Bitcoin is immutable. Since everything is visible on the blockchain, tracking fraudulent transactions is extremely easy. Bitcoin being used for illicit activities is nonsense. This is another example of the smear campaign. Bitcoin enables freedom of transaction to the ones that need it. The Canadian Freedom Truckers come to mind. An even better example, imagine a child needing food in a sanctioned country. There is a reason that Nigeria has the largest Bitcoin adoption; the people have adopted it to retain their basic rights. They can eat if they use Bitcoin, because there is no way to sanction that. You never hear that part. You only hear the nonsense "illicit activity" argument, even though that happens not nearly as much with Bitcoin as it happens with US dollars or other fiat currencies.
Let me clarify a few things... Because once again, there are many misconceptions, misunderstandings, and blatantly false statements being posted here.

First thing's first. Sam is a huge backer of Solana. It is in his own interest to push the environmental concern narrative as well as a high transaction per second. There have been multiple Proof of Stake Bitcoin forks. None became popular or have made it.
The idea to transition Bitcoin to Proof of Stake is a mainstream narrative to try and put Bitcoin in a bad light, because the ones in control of the current financial system don't like the competition that Bitcoin brings. They can't shut it down through the law or brute force, so they use smear campaigns.

The general concept of money is to store the value of your labor in a form that can be used later. It is a problem when what you store is being devalued, which is what happens with every fiat currency. They all trend down over time. Bitcoin might be volatile, but its general trend is up, meaning, what you stored not only retains its value but increases over time.

People tout Visa as having 50k+ transactions per second. This might be true, but it is not directly comparable in this way. Settlements of payments happen after a month. That's why you get a month to pay off your credit card without needing to pay interest. Bitcoin settles every 10 minutes on average. The settlement is FASTER than any existing non-crypto payment network on the planet.

For day to day transactions, Sam is correct; The Lightning Network, a Layer 2 solution that works similarly to Proof of Stake, can easily handle day to day transactions. It still uses Bitcoin as the settlement layer. Bitcoin is paramount for this system and this solution is better than the likes of Visa. No down time, no one to confiscate or freeze your money, increased privacy and easy to use without requiring much more than a cell phone.

Bitcoin is immutable. Since everything is visible on the blockchain, tracking fraudulent transactions is extremely easy. Bitcoin being used for illicit activities is nonsense. This is another example of the smear campaign. Bitcoin enables freedom of transaction to the ones that need it. The Canadian Freedom Truckers come to mind. An even better example, imagine a child needing food in a sanctioned country. There is a reason that Nigeria has the largest Bitcoin adoption; the people have adopted it to retain their basic rights. They can eat if they use Bitcoin, because there is no way to sanction that. You never hear that part. You only hear the nonsense "illicit activity" argument, even though that happens not nearly as much with Bitcoin as it happens with US dollars or other fiat currencies.

The "Freedom" truckers didn't need it. You don't give terror cells money.
 

NightAntilli

Posts: 903   +1,179
A prime example to cite. 🤣

The "Freedom" truckers didn't need it. You don't give terror cells money.
They are not "terrors". They were protesting against vaccine mandates to be allowed to work. That is a good thing. The moment you give your bodily autonomy away, bad things happen. The media said something else, because, you know, smear campaign for anything that doesn't fall into the line of the mainstream narrative.

It's why people like Jordan Peterson, that generally tries to help people, gets slandered, and someone like Justin Trudeau, which openly praises China's oppression of its people and tries to imitate their systems, is praised and lauded.
 

Enaks

Posts: 9   +23
They are not "terrors". They were protesting against vaccine mandates to be allowed to work. That is a good thing. The moment you give your bodily autonomy away, bad things happen. The media said something else, because, you know, smear campaign for anything that doesn't fall into the line of the mainstream narrative.

It's why people like Jordan Peterson, that generally tries to help people, gets slandered, and someone like Justin Trudeau, which openly praises China's oppression of its people and tries to imitate their systems, is praised and lauded.

Goes on to cite Jordan Peterson 🙄

Quit digging buddy…
 

Gezzer

Posts: 259   +134
You can make things with gold. That's where it's worth comes from, not as a "store of value". So while it's worth in essence is manipulated by speculative market forces, it will always have some worth. Crypto has no worth other than due to speculative forces. If everyone holding crypto decided to cash out all at once, it's worth would plummet to zero so fast that half the speculators would get nothing. Holding crypto is like playing high stakes poker. Every crypto player with any brains is simply calculating when to exit the market with the most fiat currency they can. It's a game of financial chicken... nothing more.