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, is not capable of scaling up to cope with the millions of transactions that would be needed to make the crypto token an effective means of payment.

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

His comments came as the fast-growing cryptocurrency market was hit by a punishing sell-off that left Bitcoin down by more than 35 per cent since January, at its lowest level since late 2020.

Bitcoin is still seen by some crypto enthusiasts as a way to conduct everyday transactions.

Countries such as El Salvador and the Central African Republic have adopted Bitcoin as a legal tender. But recent research by American academics 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, will 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.

“Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost. Proof of stake networks are,” said Bankman-Fried.

His criticisms of Bitcoin underscore serious environmental…