Bitcoin, not as efficient as it looks? – The CEO of FTX, Sam Bankman Fried (SBF), returns to an essential question concerning the use of Bitcoin (BTC). Cryptocurrency can serve as means of paymentbut not on its mainnet.
Bitcoin: a network that is over-lent and over-targeted?
Sam Bankman-Fried told the Financial Times in May 2022 that Bitcoin was neither “a payment network nor a scaling network”. Once again, he distributed clarifications to his statements, in a Tweeter of June 16, 2022.
The CEO of FTX actually pointed out there that BTC “can absolutely be a payment asset”. Thus, cryptocurrency can serve as a means of payment. However, it can only fulfill this role via Lightning, wrapped bitcoins, or other Tier 2 solutions.
On the other hand, Sam Bankman-Fried considers the base layer of Bitcoin as unsuitable for global payments. This layer cannot handle massive volumes of transactions. Indeed, the processing capacity of the main network is indeed lanyard to match that of traditional payment systems, such as VISA.
Using the BTC mainnet for processing a large number of transactions would then result in 2 problems main:
- The slowness in the processing of transactions;
- L’cost explosion of these.
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Proof of stake: future savior of the blockchain
Ethereum (ETH) encountered these scalability issues because of the concentration of decentralized finance on the network. The abandonment of proof of work in favor of the proof of stake was then to ensure the scalability of the blockchain.
For Sam Bankman-Fried, proof of stake is also the relevant solution for scaling. It can be executed “millions of transactions per second” on a network.
However, we will have to wait for the quantified results after the switch from Ethereum to POS to assess the actual level of effectiveness of such a solution.
Can the cryptosphere ever consider abandoning proof of work on Bitcoin to improve the processing capabilities of its mainnet? In any case, such a change presents another major advantage for the network. The activities of minors would no longer condition the normal operation of the blockchain. With proof of work, mining can gradually come to a standstill following Bitcoin’s capitulation. Such an event obviously happened network at risk.
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