But was SBF right about blockchain? And what the hell is this blockchain? Blockchain can be thought of as essentially a decentralized database that’s maintained by offering incentives for people to keep the network up and running. In the case of Bitcoin’s blockchain, the incentive is Bitcoin, as that’s what all those “miners” are doing all day long when they’re using so much energy—they’re essentially maintaining a database of transactions in the sky and getting paid for it in Bitcoin.
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But would Enron have been kept more honest if its books were kept on the blockchain? Maybe. But it’s hard to imagine any company wanting all of its financial records stored in such a public manner. SBF suggests that “some pieces” of Enron’s books might have benefited from being on the blockchain, but that’s certainly not the case for any other large company in the real world.
In fact, most of those “we’re moving to blockchain” articles you read about a few years ago are completely outdated now. The companies who tried to use blockchain technology due to all the hype found actually moving to a blockchain database to be expensive and unnecessary.
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Ironically, FTX wasn’t keeping anything important on the blockchain when SBF was advocating for its use. It actually would’ve been useful to keep the company honest if there had been an accurate ledger of all the ways money was moving between FTX and Alameda. But that wasn’t happening within the company, and blockchain probably wouldn’t have been the answer.
Bitcoin’s blockchain can only process roughly seven transactions per second, which is just one of the reasons it hasn’t become a good way to pay for things. And while Ethereum is a little better at 20 transactions per second, that’s nothing when you take a look at our modern digital financial system. Visa can process 24,000 transactions per second, according to Crypto.com. And until crypto can get close to Visa’s numbers, people will still be using Bitcoin for little more than get rich quick schemes.