Ethereum Foundation researchers warn that Bitcoin's fee structure could undermine long-term security

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Justin Drake, a researcher on the Ethereum Basis, has issued a warning about Bitcoin (BTC) long-term safety.

In an in depth put up on Could 29, Drake argued that buying and selling charges on the Bitcoin community might turn out to be more and more weak to assaults of 51%.

Bitcoin charges shall be lowered

In response to Drake, Bitcoin's payment construction couldn’t evolve together with half that schedule.

He famous that three latest harving occasions have lowered block rewards over the previous eight years, however buying and selling charges haven’t risen sufficient to offset the decline.

He mentioned the charges presently contribute only one% of miners' complete income, down from earlier ranges, hovering close to the 13-year low of round 6.5 BTC per day.

Bitcoin Community Transaction Charges (Supply: Alphractal)

With this in thoughts, Drake states:

“Bitcoin's safety mannequin is damaged. If Bitcoin is taken over, fallout might use all the crypto ecosystem. Systematic threat can’t be ignored.”

Drake additionally challenged the long-standing assumption that charges naturally improve and in the end substitute block rewards.

Quite the opposite, he argued that charges had been shrinking and that if miners needed to resort solely to expenses, their revenue might plummet 100 instances. This reduces the hash energy of Bitcoin to only 1% of its present power.

In response to Drake:

“That's the trajectory we're in. The 21m cap breaks safety. It's self-destructive. Now it's clear that Satoshi has made oopsie.”

Value will increase received't prevent Bitcoin

Drake dismissed the concept a spike in Bitcoin costs might remedy the issue.

He outlined a situation the place Bitcoin reaches $1 million per coin, but when the speed ranges stay unchanged, it solely covers 10% of right this moment's safety prices.

He identified:

“As we speak, Bitcoin is protected by 20 GW (20 GW equal to a 10m area heater). If miners' income is lowered by 90%, it will likely be lowered to 2 GW of safety (1m area heater). Within the context, we’ll produce 80 GW in Texas alone.

Even when Bitcoin had hit $10 million per coin or a $200 trillion community, Drake argued that the price of mounting a 51% assault stays trivial in comparison with market capitalization.

He estimated that constructing a 20 GW hash infrastructure would value simply $20 billion, and would value simply 0.01% of Bitcoin's hypothetical $200 trillion value.

Resolution?

Drake concluded that Bitcoin's present proof-of-work mannequin will not be viable in the long term with out structural changes.

So he proposed a number of options, together with revisions to the fare market and the introduction of tail issuance. The latter includes lifting up the 21 million coin provide cap of Bitcoin to take care of ongoing miners' incentives.

Moreover, he proposed a transfer to Proof-of-Stake (POS), a system already utilized by Ethereum to safe a community.

Nonetheless, Drake acknowledged that his concepts confronted severe resistance inside Bitcoin's cultural and ideological framework.

In the meantime, he additionally emphasised that some neighborhood members are proposing obscure recommendations that BTC can undertake proof of approval by way of a consortium of mining swimming pools. Nevertheless, he identified that there’s little element about it.

Taking this into consideration, Drake concluded:

“Bitcoin is meant to be rebellious. However the elephants within the room usually are not handled. They’ll burn their heads within the sand. However the fundamentals are getting larger.”