One of the leading lights of the crypto industry CEO of crypto exchange FTX Sam Bankman-Fried dropped a bomb on the crypto industry and you are going to want to hear what he said.
Many crypto fanatics want to believe that crypto will one day replace the precious American dollar as the global reserve currency.
Walk down the street for a Starbucks latte and dish out some crypto.
Take an Uber to a friend’s house, and dish out some more crypto.
Bill, please!
Well, Bankman-Fried filled us in and out of any person in the world, he understands what’s going on.
Bitcoin will not be the future payment network.
That’s not its use case.
Bankman-Fried cited the inefficiency and high environmental costs as a prohibitive step to adopting crypto as the de facto payment network for the world.
He later says that crypto has scaling problems.
His opinion is highly incongruous with the hopes and dreams of what crypto set out to be and even though it doesn’t change anything in one day, it could adversely affect the incremental investors at a time when crypto prices and system risk have been going in reverse.
Countries such as El Salvador and the Central African Republic have adopted Bitcoin as a legal tender. But recent research by academics in the US found that Bitcoin has scarcely been used for daily payments in El Salvador, despite the rollout of bitcoin ATMs and other measures to encourage its use.
The 30-year-old billionaire, who has expanded FTX into one of the world’s largest virtual asset exchanges, said an alternative type of blockchain known as proof of stake, or other technological innovations, would be required to create a functional crypto payments network.
Ethereum has been working to move to a proof of stake system, which is intended to be less energy-intensive.
This is the only way it will work if the are billions of payments every millisecond and the network will need to digest this right through.
Crypto, in its current form, is woefully unprepared to operate at that capacity.
Other sharp criticisms of Bitcoin stem from the serious environmental concerns about the amount of energy needed to run proof of work cryptosystems.
Crypto regulators around Europe have been sniffing blood in a region that taxes everything to smithereens.
Mining bitcoin consumes more energy than many countries, including Norway and Sweden, according to Cambridge university’s Bitcoin Electricity Consumption Index.
If crypto networks attempted to scale up to these billions of transactions per millisecond, costs would be uncappable and it could crash the network in one day.
Even if Bankman-Fried gave many investors the sour juice we didn’t want to drink, it’s highly positive to be real about what we are dabbling in.
Crypto isn’t the panacea investors are looking for and for the diehards, it won’t replace the US dollar and it won’t have a glorious network of daily payments.
Bankman-Fried alluded to the hope that Bitcoin could represent a safe store of value, but even saying that, look at what’s going in with stable coins and their values dropping by 99%.
There is a lot to sort out in the crypto world and the first six months have doled out a few crushing uppercuts.
I am highly bearish in the short-term on crypt assets and the altcoins is something nobody should touch as the stable coin fiasco could spill its other marginal coins.
BILLIONAIRE CRYPTO ENTREPRENEUR SAM BANKMAN-FRIED
