SBF Clears the Air on Bitcoin’s Potential for Payments
FTX CEO Sam Bankman-Fried (SBF) issued another statement on Thursday regarding his opinion on Bitcoin’s scaling potential. He believes the network itself is not designed to handle massive volumes, but that various neighboring technologies can help Bitcoin – as an asset – be used for global trade.
Asset Can Scale, Network Cannot
As tweeted by the CEO, BTC can “absolutely” function as a payment asset, through the lightning network, “wrapped Bitcoin”, or other layer 2 technologies. Bitcoin’s base-layer, however, is unable to scale for global payments.
The Bitcoin network has only ever been able to process approximately 7 transactions per second. That pales in comparison to the throughput of legacy payment systems like VISA, which boast speeds of up to 1700 transactions per second.
Were Bitcoin used for global payment processing like VISA or Mastercard in its current form, it would be plagued by slow processing and high transaction costs. Ethereum has already run into a similar problem, facing significant blockchain bloat as it manages stablecoin transfers and smart contract processing.
That’s why various scaling solutions have emerged that don’t directly involve changes to either blockchain. For Ethereum, that includes layer two technologies and side chains such as Optimism and Polygon respectively.
Bitcoin also has “side-chains,” such as Liquid network and Rootstock. Each of these chains is tied to the original blockchain in some way – most notably in their use of Bitcoin as their base asset (LBTC / RBTC). They’re also designed with increased functionality similar to Ethereum – like smart contracts and tokenization – alongside enhanced scalability.
However, the reliance of such solutions on more centralized, bridge-based solutions has led some to be skeptical of their security. Instead, the most popular long-term scaling solution for Bitcoin right now is the lightning network.
SBF’s Disregard of Lightning
The lightning network is a scaling solution that allows for virtually instant and free Bitcoin payment settlement off-chain. It is currently used in El Salvador and is being developed by companies such as Strike and Jack Dorsey’s Block.
Dorsey criticized SBF weeks ago for having failed to mention lightning as a scaling solution for Bitcoin in an interview with the Financial Times. SBF claimed that his comments only seemed exclusive due to selective editing and interview troubles.
The CEO stated that he will be entering another similar interview today, and therefore chose to clarify his Bitcoin position in advance.
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