Justin Drake, a researcher on the Ethereum Foundation, has raised alarms over Bitcoin’s (BTC) long-term safety.
In an in depth post on Could 29, Drake argued that persistently low transaction charges on the Bitcoin community might make it more and more weak to a 51% assault, a situation through which a single entity positive factors majority management of the blockchain’s computing energy.
Bitcoin charges decline
In keeping with Drake, Bitcoin’s fee structure has did not evolve alongside its halving schedule.
He famous that whereas the three latest halving occasions have diminished block rewards over the previous eight years, transaction charges haven’t risen sufficient to offset the drop.
In keeping with him, charges now contribute simply 1% of total miner revenue, down from earlier ranges and hovering close to a 13-year low of roughly 6.5 BTC per day.
Contemplating this, Drake said:
“Bitcoin’s safety mannequin is damaged. If Bitcoin will get taken over, the fallout might take all the crypto ecosystem with it. The systemic dangers can’t be ignored.”
Drake additionally challenged the long-held assumption that charges would naturally improve and ultimately substitute block rewards.
Quite the opposite, he argued that charges are shrinking, and if miners needed to rely solely on charges, their income might plunge 100x. This would cut back Bitcoin’s hash energy to simply 1% of its present energy.
In keeping with Drake:
“That’s the trajectory we’re on. The 21M cap breaks safety, it’s self-destructive. It must be clear now Satoshi made an ooopsie.”
Rising costs gained’t save Bitcoin
Drake dismissed the concept that surging Bitcoin prices might resolve the difficulty.
He outlined a situation through which Bitcoin hits $1 million per coin, but nonetheless solely covers 10% of at this time’s safety value if charge ranges stay unchanged.
He famous:
“Immediately, Bitcoin is secured by 20 GW — the equal of 10M house heaters. A 90% minimize in miner income would convey that all the way down to 2 GW of safety — 1M house heaters. For context, Texas alone produces 80 GW. There’s no approach a $20T asset may be secured by 2 GW.”
Even when Bitcoin have been to hit $10 million per coin, making it a $200 trillion community, Drake argued the price to mount a 51% attack would stay trivial relative to its market cap.
He estimated that constructing 20 GW of hashing infrastructure would value simply $20 billion, solely 0.01% of Bitcoin’s hypothetical $200 trillion worth.
Options?
Drake concluded that Bitcoin’s present Proof-of-Work model is probably not viable over the long run with out structural changes.
So, he proposed a number of options, together with revising the charge market or introducing tail issuance. The latter would contain lifting Bitcoin’s 21 million coin supply cap to take care of ongoing miner incentives.
As well as, he steered a transfer to Proof-of-Stake (PoS), a system already utilized by Ethereum to safe its community.
Nonetheless, Drake acknowledged that his concepts face severe resistance inside Bitcoin’s cultural and ideological framework.
In the meantime, he additionally highlighted that some group members have proposed imprecise solutions that BTC might undertake Proof-of-Authority by means of a consortium of mining swimming pools. However he identified that there are few particulars on it.
Contemplating this, Drake concluded:
“Bitcoin is supposed to be antifragile. But the elephant within the room within the room is just not being addressed. We will burry our in heads within the sand. However the fundamentals are getting louder.”
