Bitcoin does not scale up to handle millions of transactions, per Sam Bankman-Fried

According to a report from the Financial Times, Sam Bankman-Fried (sometimes referred to by his initials, SBF), cryptocurrency founder and CEO, FTX, does not see Bitcoin's future as a payment network because Bitcoin's "proof of work" system will not be able to handle millions of transactions. Furthermore, Bankman-Fried criticized major cryptocurrencies for their inefficiencies in transaction validation and for their high energy costs impacting the environment. He further told the Financial Times that the Bitcoin network is not a payments network or a scaling network. However, a proof-of-stake network would enable millions of transactions per second in an efficient, lightweight system while reducing energy costs.

Proof of stake and proof of work are reportedly the two key ways crypto networks can verify transactions. The first method enables users on the network to deposit currency as collateral, or require a "share", to approve new blocks on the chain. The second requires a high-performance computer that competes to solve the puzzles it participates in.

According to reports, the proof of work mechanism has been criticized for its energy consumption. Greenpeace and other environmental activists have labelled Bitcoin as an outdated technology that consumes large amounts of energy and is a huge source of climate pollution. Top financial market regulators in Europe called for a ban on proof-of-work Bitcoin mining in January 2022, stating that this has become a national issue.

Ethereum, the closest rival of major cryptocurrencies, illustrated that it is not easy for Bitcoin to move from proof-of-work to proof-of-stake. The Ethereum shift has taken seven years and has endured multiple delays as the merger approaches. Bankman-Fried commented that Bitcoin may not be suitable for payments, but it has a place in cryptocurrency as an asset and a store of value like gold.

According to CoinMarketCap, Bitcoin recovered somewhat today after the huge plunge in the crypto market last week, specifically shown from the substantial decreases from Ether, Terra, Tether, etc. Additionally, today Bitcoin rose 0.3% to $29,866 after falling below $25,500 last Wednesday.

Chile to advance the launch of a “digital peso” CBDC

As central banks around the globe race towards meeting the needs of the digital population through central bank digital currencies (CBDCs), Chile has now announced that it will join this trend after previously stating they would delay. They have also detailed how the CBDC will work after its launch.

Banco Central de Chile has reportedly stated that the bank will focus on the benefits and risks of a CBDC. The central bank was optimistic about the launch of this product, stating that it could promote economic growth and consumer protection. Additionally, the bank says that the CBDC will help build a competitive, innovative and integrated payment system that is comprehensive, resilient and protects people's information.

Reports indicate that the central bank claims a digital peso can be used as an alternative digital currency for private cryptocurrencies such as Bitcoin. According to the bank, private cryptocurrencies are at high risk of being used for illicit activity. Furthermore, issuing the CBDC may also be a good alternative to face the challenges associated with “so-called currency massification”. Although it plays a negligible role in the payment system, it may potentially change the functioning of financial markets and the transmission of monetary policy if their use becomes widespread, stated the central bank.

Rosanna Costa, Governor, Banco Central de Chile, said the product could work both online and offline after its launch. She also stated that Chilean authorities need to create a system that can track CBDC transactions. Additionally, the Chilean digital pesos should also be converted into cash and must provide security for transactions.

The development of CBDC has become a priority for many central banks around the world. According to a recent report by the Bank for International Settlements (BIS), 90% of the world's central banks are working on this product. About 50% of these banking institutions are currently in the development or testing phase of this product.

Fintech Token to expand open banking via $40M series

Token, an open banking platform that supports the shift from card to account bank payments across Europe, has raised USD $40 million through a Series C round co-led by Cota Capital and TempoCap. Token will reportedly use the funds to further expand open banking connections across Europe, in addition to launching APIs for variable recurring payments and open finance apps. Kevin Jacques, partner, Cota Capital, stated that payments present the biggest disruption and opportunity in open banking.

Todd Clyde, CEO, Token, commented that the global value of open banking payments is expected to exceed $116 billion over the next four years, with Europe comprising 75% of all transactions. Clyde stated that this investment will also help push functional boundaries beyond regulatory requirements to make A2A payments the mainstream payment method.

Clients that plug and play, white-label or have used Token.io’s open banking infrastructure to implement their own services reportedly include BNP Paribas, HSBC, Mastercard, Nuvei, Paysafe, Ecommpay, Rewire, Coingate, Sonae Universo, Volt and Vyne.

Token currently has offices in London, Berlin and San Francisco, claiming to process tens of millions of open payments annually to more than 80 different payment service processors, gateways, banks and major merchants. Adam Shepherd, Investment Partner, TempoCap, stated that Token's A2A payment offering provides faster and more secure payments at lower costs than traditional methods. Token technology enables payment providers to provide merchant customers, or end users, with a seamless experience.

Enhanced embedded finance through FIS and Treasury Prime Partnership

Embedded finance is a major trend in the financial industry that enables any company to complement their financial services capabilities through features such as banking, credit, payments, insurance and investment through APIs. FIS has partnered with Treasury Prime to roll out a new embedded financial service designed to meet the needs of community and regional banks seeking to offer cutting-edge digital capabilities and open up new distribution channels.

The API-based offering developed in partnership with Treasury Prime reportedly provides FIS banking customers and businesses with new ways to manage deposits, accounts payables and other important banking processes digitally and remotely. It was reported that Grasshopper, a digital merchant bank, is the first financial institution to take advantage of FIS's embedded financial services.

According to Kelly Beatty, Head of Payments, FIS, embedded finance is a growing trend in the market because it enables companies to quickly bring innovative ideas to market by combining financial services and user experience where they are needed. Additionally, embedded finance extends the seamless convenience of in-app purchases for commercial uses such as lending, bill payment, contractors and insurance. The integration of financial services into business software aims to meet the expectations of these consumers in new channels and expand the breadth of financial services.

Banks using embedded services now have the opportunity to become the foundation of a new generation of financial institutions, stated Chris Dean, co-founder and CEO, Treasury Prime. Additionally, banks are recognizing the potential revenue streams that embedded finance brings as well as providing a seamless process in security and integration.