Bitcoin has no future as a payments network, says FTX chief

[bbc.reporter]

Are we witnessing the emergence of the biggest bitcoin antagonist in the cryptospace? I think Sam Bankman-Fried is one of the most intelligent founders in the cryptospace, however, I am starting to be more skeptical about his agenda. In the article, he mentioned that bitcoin may have a future as an asset, a commodity or a store of value. I am scratching my head on what he might be implying in his statement. Is he telling us that bitcoin will not forever be no.1 in market capitalization?

Skeptical. I do not know if he is making an honest assessment on bitcoin or if this is the beginning of their new agenda to remove bitcoin from being no.1.



Bitcoin has no future as a payments network because of its inefficiency and high environmental costs, according to one of crypto’s most influential chief executives.

Sam Bankman-Fried, founder of the digital asset exchange FTX, said the proof of work system of validating blockchain transactions, which underpins bitcoin, was 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.

“The bitcoin network is not a payments network and it is not a scaling network,” said Bankman-Fried.

But despite his views on bitcoin, Bankman-Fried said he still believed the world’s biggest digital asset had a place in the crypto market.

“I don’t think that means bitcoin has to go,” he said, adding that the token may still have a future as “an asset, a commodity and a store of value” akin to gold.

Read in full https://www.ft.com/content/02cad9b8-e2eb-43d4-8c18-2e9d34b443fe

[Darker45]

I don’t want to make a mountain out of this mole hill. In the first place, the FTX chief is not the only person who has been frank about Bitcoin’s potential as a payment network. There have been issues about it. As a matter of fact, even the supposed solution which is the Lightning Network is not even as welcomed as Bitcoin itself. There are definitely fans of Bitcoin who are not fans of this different protocol.

However, saying that it doesn’t have a future as a payment network is a little bit too much. It will, of course, not replace fiat but it will certainly remain as a better alternative to fiat in certain respects.

Finally, it is a misnomer to call Sam the biggest Bitcoin antagonist; he is pro-Bitcoin.

[TravelMug]

Not sure if he has some narrative behind by attacking bitcoin as a payment network. Of all the people, he should understand that bitcoin can still be a good payment scheme if big retailers are going to used it.

But what will be the best crypto payment network now? Doge? ETH? doubt that as well. We still need to give LN some time to developed and mature and then we will see how it goes.

[jackg]

Bitcoin should be attacked for its lack of dynamic scalability protocols. Whether it needs them or not in the immediate term, it doesn't actually have any way to adapt to a high throughput of transactions if that's necessary (and I don't think the community has goals on making that possible - I don't think many coins can adapt well to this yet though either and fully prevent spam attacks).

Saying you can use the lightning network for enabling more transactions is starting to feel a bit like saying you can use litecoin and doge for them (you can, for sure use those, but you're going to have to do something different still - maybe open a channel). The lightning network has a gain in being backed by bitcoin's blockchain but it relies on trust, not naively but not elliquently either from what I understand of it.

[fortuner]

That's a crazy assessment in my opinion and no one has been able to remove bitcoin from the first order because so far bitcoin has remained the main coin among other altcoins.
And talking about bitcoin having no future is impossible because there are a lot of changes in people that we see after they introduced bitcoin.
Even though bitcoin is considered to have no future as a payment, we can still use it as an exchange with others so that we can continue to feel the results of bitcoin.

[bittraffic]

Being one of the richest in crypto, he obviously sounded like what most rentseekers do. He could be saying the truth but with the layers being developed on top of Bitcoin, its very possible.  He just have to look at lightning network and taro and whats coming.

But he must have been banking of some altcoins he invested. Its crazy times though so anything to say for weak hands to sell is something.

[Poker Player]

Well, about the future I do not dare to predict, but what he says I think it is not only because of the problem of scalability, but also because Bitcoin is a deflationary scarce resource and, if people buy it expecting it to be more valuable as time goes by, as it is logical due to its nature, it is normal that it will not be used massively for payments and other systems will be used.

I only see it being used massively for payments if all fiat and shitcoins disappear, and that is not going to happen.

[mk4]

He already cleared his stance via Twitter, claiming that the journalist just nitpicked a specific quote (which is typical with journalists).

His stance: https://twitter.com/SBF_FTX/status/1526098754163687424

^I suggest reading his conversation with Jack Dorsey.

[Zlantann]

Although I was not able to read the full article in Financial Times because I am not not a subscriber, but his points are well highlighted in this post. Sam Bankman-Fried is well grounded in the crypto space and has a lot of experience. His concerns might be genuine but his predictions is too harsh and stereotyped.

He should understand that Bitcoin operations can be upgraded or redesigned to overcome these challenges he mentioned. His concerned about high environmental costs is being tackled by Bitcoiners. It is important to not that energy usage is not equivalent to carbon emissions. The amount of energy consumed can be easily determined but it is more difficult to determine its carbon emissions. Hence, analysts always publish how much energy Bitcoin consumes but less has been said of how much carbon the operations emit. But generally, the Bitcoin market is pushing North American energy sources to get greener because Bitcoin mining in the U.S. is more than 50% powered by renewables.https://www.cnbc.com/2021/07/20/bitcoin-mining-environmental-impact-new-study.html

But I see his observations and predictions as a wakeup call for the Bitcoin community to study his reservations and make necessary amends.

[mikeywith]

Which parts do you disagree with? what he says is true, it's simple history;

bad money drives out good

Gresham's law

People think that the transaction fee and the block time are the only reason why isn't bitcoin being used for daily payments like Visa or Cash, but that is not exactly true, even if you had an instant and free transaction, would you rather pay for dinner using bitcoin or using your ever-inflating currency? unless you think Bitcoin will magically cancel every other payment method - then BTC can't be the largest payments network for centuries to come.

It really doesn't matter what Satoshi called it in the white paper, the consensus surrounding BTC is that it's a store of value more than electronic cash, it turns out that people needed a decentralized, autonomous, pseudonymous store of value asset more than a payment system to use for their daily purchase.

[tbct_mt2]

Why not if people can use very cheap fee at 1 satoshi/ vbyte. To have it, they must use non custodial wallet, not exchange wallet (custodial).

In addition, they can use Lightning network that can help them to make transactions with fees are in peny.

The growth of Lightning Network since 2020 is a good signal for Bitcoin as a payment method. Important to note, fee is not what most important, secured, health of a network is most important. With Bitcoin, you have it, not with altcoins.

[vv181]

Are we witnessing the emergence of the biggest bitcoin antagonist in the cryptospace? ~snip~ Is he telling us that bitcoin will not forever be no.1 in market capitalization?

Skeptical. I do not know if he is making an honest assessment on bitcoin or if this is the beginning of their new agenda to remove bitcoin from being no.1.

The antagonist and the agenda are came from the media, as it always has been to keep spreading FUD. As already been addressed above, SBF has given a clarification regarding that news, which actually is just simply he being misrepresented.

Although I was not able to read the full article in Financial Times because I am not not a subscriber

You can always try using an archival website to browse paywalled news: https://archive.ph/zsJjb.

[PrivacyG]

Bitcoin has no future as a payments network because of its inefficiency and high environmental costs, according to one of crypto’s most influential chief executives

Stop right there.  When do we stop giving attention to and caring about these people?  Global warming becomes trendy, we are all of a sudden supportive for it.  Bitcoin crashes, we were suddenly right all along that it may or may not have a future even if we have always been publicly bullish about it.  Bitcoin's price goes for an All Time High?  We were always bullish to begin with!

I have a particular disgrace for those who always keep up with trends even if they most of the time simply contradict themselves by doing so.  Just stop caring about them.  Of course there will always be bullish and bearish voices.  I do not say the voices that do not align with my vision shall be silenced.  I just think there is no point in caring about someone who just repeats a narrative that has been proven wrong multiple times.  Bitcoin is scalable for a reason.

-
Regards,
PrivacyG

[pooya87]

I think Sam Bankman-Fried is one of the most intelligent founders in the cryptospace,
Sam Bankman-Fried, founder of the digital asset exchange FTX, said the proof of work system of validating blockchain transactions,

This very "intelligent" person doesn't still know that proof of work has nothing to do with validating transactions

In any case I'm very curious about what alternative he is supporting and whether his centralized exchange is introducing yet another centralized shitcoin like their counterparts that is supposedly "better than bitcoin"...

[Leviathan.007]

In my opinion, there are many solutions for what said, maybe bitcoin cannot be a good payment system because of the costs and many other factors but still there are many solutions, for example, the lightning network, regardless of being a successful solution or not but I guess a year later there will be more and better solution and increasing the interest of using bitcoin as a payment system for people. But regardless of all that, many people do not use bitcoin as a payment system but they will save it and hold it as an investment option to be safe from the inflation rate. However, I'm not sure what's behind these speaks when they start attacking bitcoin sometimes periodically.

[NeuroticFish]

While I do believe that the journalist has probably nitpicked/twisted the words, it's pretty much common knowledge that on-chain transactions are somewhat limited and slow. So I don't know what's the news here.
And LN is seen by many as not being Bitcoin (maybe a plug-in for Bitcoin, but not bitcoin itself). So again, nothing spectacular here.

I don't want to take his side, he may be only after profits and not a believer in bitcoin, but it doesn't matter here, he is not as wrong as some see it.

[_act_]

I read this news few days ago and it made me laughed, but what I am just disappointed at is that I did not believe someone that created one of the leading exchanges can say such trash and mislead people. Bitcoin fee is still cheap than thought and there is lightning network which has low fee and help mempool to maintain not being congested to some level.

If bitcoin withdrawal fee on FTX is huge, then another means to let people to think it is bitcoin fee that is costly, not knowing it is the exchange withdrawal fee.

I don't want to take his side, he may be only after profits and not a believer in bitcoin, but it doesn't matter here, he is not as wrong as some see it.

All I know is that he is absolutely wrong and one of the people that is misleading people about bitcoin transaction fee. Exchanges are the idiots that is making people to think bitcoin fee is high. When many exchanges are supporting lightning network now, FTX has not yet supoort it. I have begin to dislike this FTX exchange, we do not want criticism but to support lightning network and reduce bitcoin withdrawal fee.

[NotATether]

Eh. He has a point in at least part of that statement.

While the environmental factor is by no means an inhibitor of Bitcoin's becoming a payment network - most mining farms are on renewable energy (especially hydroelectric) and that particular concern only exists in the minds of industrialists and environmental concerns - there is some truth to the scalability question.

Of course, you cannot increase scalability by increasing the block size - people tried that 5 years ago, has never worked out.

But there is a future in a L2 network (most likely LN) being the primary form of payment and, exactly *how* the mass-adoption of such a network is to be executed still remains an open question. At any rate, L1 will be reserved for batching these several transactions. This will cause tx fees to soar, which in turn will push people to L2 (the tx fees will be paid from the profits of the LN relays).

Of course, the prevalence of LN cannot occur if there are two or more competing implementations of it. There must be only one dominant implementation, like bitcoind is for L1.

[NeuroticFish]

All I know is that he is absolutely wrong and one of the people that is misleading people about bitcoin transaction fee. Exchanges are the idiots that is making people to think bitcoin fee is high. When many exchanges are supporting lightning network now, FTX has not yet supoort it. I have begin to dislike this FTX exchange, we do not want criticism but to support lightning network and reduce bitcoin withdrawal fee.

The fact that you or me may send transactions mostly Saturdays with lowest tx fee is not the topic here.
The fact that in most days tx fees are far from big is not the topic here.
The fact the exchanges steal people's money as withdrawal fees and claim it's tx fee is also not the topic here.

The topic is, imho, that if we want to have half of the world pay in the supermarket with Bitcoin, on-chain, it's not possible, because the next block may come in a minute or in an hour and because if so many people would transact so much the fees would go over the roof.

LN is off-chain and, as I said, it's easily seen as a plugin to Bitcoin, not Bitcoin itself, hence the statements is not about LN.
I see his statement like "LN can be the payment channel and Bitcoin itself can be the store of value". Better?


Edit: I can agree though that he could have better skills in telling the things in order to not scare off the average Joe.

[_act_]

The fact that you or me may send transactions mostly Saturdays with lowest tx fee is not the topic here.

Bitcoin transaction fee can be cheaper on Saturdays and Sundays if the mempool is congested. I send during weekdays and the fee is low. The last time I remember the fee to increase was when whales were moving their coins to exchanges to sell recently, that was when bitcoin price fell below $30000 recently. After that, the meepool is not congested again. The mempool congestion did not even surpass 20 to 30 sat/vbyte and it was not for long time.

I checked the mempool now and this is weekday, the fee is very low.

https://mempool.space/

1 sat/vbyte, $0.04 for transaction fee, that should be for 1 input and 2 outputs transaction.

The fact that in most days tx fees are far from big is not the topic here.

The fee is not big, memory pool congestion does not happen often.

The topic is, imho, that if we want to have half of the world pay in the supermarket with Bitcoin, on-chain, it's not possible, because the next block may come in a minute or in an hour and because if so many people would transact so much the fees would go over the roof.

It is possible, it depends on the approach used, setting a fee that can make confirmation fast and making the transaction not to be RBF.