FTX's billionaire chief says bitcoin has no future as a payments network

CRYPTOCURRENCY exchange FTX’s founder has said that bitcoin has no future as a payments network and criticised the digital currency for its inefficiency and high environmental costs, the Financial Times reported on Monday (May 16).

Bitcoin, the world’s largest cryptocurrency, is created by a process called “proof of work” that requires computers to “mine” the currency by solving complex puzzles. Powering these computers needs large amounts of electricity.

An alternative to the system is called the “proof of stake” network, where participants can buy tokens that allow them to join the network. The more tokens they own, the more they can mine.

FTX founder and chief executive Sam Bankman-Fried told FT that “proof of stake” networks would be required to evolve crypto as a payments network as they are cheaper and less power hungry.

Blockchain Ethereum, which houses the second-largest cryptocurrency ether, has been working to move to this energy-intensive network.

Bankman-Fried also said he didn’t believe bitcoin had to go as a cryptocurrency, and it may still have a future as “an asset, a commodity and a store of value” like gold, the report said.

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Bitcoin touched its lowest since December 2020 last week after the collapse of TerraUSD, a so-called stablecoin.

FTX, which Bankman-Fried co-founded in 2019, was valued at US$32 billion in a February funding round, and Bankman-Fried himself is worth US$21 billion, according to Forbes. REUTERS