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Bitcoin: SBF critical of Bitcoin’s value proposition?

SBF, the head of FTX, was pessimistic about the use of Bitcoin as a payment network in a recent interview.

In an interview with the Financial Times, Sam Bankman-Fried, more commonly referred to as SBF, spoke about his view of blockchain and crypto currencies. He is critical of certain ideological postures, but also of the value proposition of Bitcoin.

Philanthropic by nature, SBF plans to give away 99% of his wealth as fast as he can. He states in this interview that he has given away, through his various activities, nearly €100 million since the beginning of the year. Indeed, his view of the sector is strongly influenced by his personal convictions, but let’s look at what he says about Bitcoin.

SBF is not convinced by Bitcoin for everyday use

When asked what he sees in the world of blockchain, SBF offers an optimistic answer. He sees the value of the crypto-currency market resting primarily on the potential of blockchain to build a coherent and humane financial system. In concrete terms, he aspires to see the economy no longer monopolised by a wealthy elite, but jointly organised by the population.

To illustrate his thinking, SBF uses the simple example of a money transfer. Thanks to the blockchain, this transaction will necessarily be faster, cheaper and with a much higher success rate. Nevertheless, he believes that Bitcoin is wrongly seen as the future of money.

According to him, Bitcoin must necessarily be compared to gold. Moreover, such an alternative is favoured by part of the community. He believes that this comparison is legitimate both in terms of the asset that Bitcoin represents and the store of value that it aspires to become.

However, in his mind, the daily use of Bitcoin by the population should be compared to paying for a loaf of bread with gold. He sees little sense in this because of the environmental cost of using proof of work and the fact that the scalability of the bitcoin network is not up to the challenge of an international payment network.

A heated exchange with the community following the publication of the interview

Specifically, it considers that the transaction validation system of the protocol issued by Satoshi Nakamoto is unable to cope with the millions of daily transactions of users. This statement is certainly true, but SBF seems to ignore the existence of the layer 2 Lightning network to relieve the bitcoin network.

In a tweet, he confirmed that his words were not accurate as he clarified this nuance. He still believes that the BTC network cannot handle millions of transactions per second, but that the presence of the Lightning network could change that.

Jack, the former CEO of twitter, did not fail to react to this tweet by ironically asking why SBF had not mentioned this possibility during his interview with the Financial Time.

After a cordial but tense exchange, SBF explained that he usually talks about lightning networks, but that in the context of such an interview, it is difficult for him to perfectly manage what the journalist will report in his final article.

Finally, the community was alarmed by his opinion on the use of proof of stake. Indeed, he considers this protocol as more efficient, lighter and less energy consuming. However, this opinion seems to be flawed since he adds that “we cannot increase the transaction speed to the point where we have to spend 100 times more energy on mining”. However, the energy consumption of bitcoin is not related to the number of transactions.

The SBF interview is highly controversial. However, it is worth remembering that the field of blockchain and crypto-currencies is so vast and complex that a simple interview does not allow for the precision required. The best way to really get to know someone’s innermost thoughts is to be able to listen or read them without an intermediary.

The most important thing is undoubtedly to be able to debate in complete serenity. SBF seems to be open to this debate as, in response to criticism, it has suggested that integrating the Lightning Network into FTX would be a good idea.

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