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Recently, the co-founder of Ethereum, Vitalik Buterin said that he is “worried” about the future of Bitcoin. In a September 2 interview with economics writer Noah Smith, Vitalik said that Bitcoin’s fee model and Proof-of-Work (PoW) consensus mechanism could make Bitcoin vulnerable to future attacks. long-term.
Bitcoin is currently distributing coins to miners as a payment to secure the network. However, since the protocol only limits a hard supply to 21 million BTC, the network will ultimately rely solely on transaction fees for security. Buterin told Smith that this is a problem because Bitcoin “has failed to achieve the level of fee revenue needed to secure what could be a trillion-dollar system.”
The amount of fees that Bitcoin generates for other protocols has long been a hot topic of discussion in the crypto community. According to Crypto Fees data, Bitcoin averaged around $225,000 in fees over the past week, behind major DeFis like Aave and Uniswap. The Ethereum network raked in about $2.7 million in a week.
Vitalik says that he is also afraid of Bitcoin because PoW provides much less security per USD spent on transaction fees than PoS. At the same time, Vitalik suggested that if one day the BTC network is worth $5 trillion but unattractive to miners, it may only take $5 billion to attack the network. Vitalik also pointed out that it is not possible for Bitcoin to move away from PoW.
These things Vitalik shared before the time when the ETH network was about to undergo The Merge major update to merge the PoW network with the PoS network. The question is whether Vitalik is really worried about BTC or wants to rationalize and support ETH’s decision to switch the network. Unlike BTC, currently there is no maximum amount of ETH. Vitalik has oriented towards always needing more ETH to pay network fees and reward (current) miners or staking participants in the future so that they continue to protect the network.
Regarding assumptions and assumptions, Vitalik is based on the current number of transactions and fees collected. He does not consider that the number of transactions of the BTC network will increase later and be enough to attract miners to continue mining to protect the network.
In addition, the last BTC was mined in 2140, so there is still a lot of time to mine 21 million BTC. Every four years, the amount of BTC mined in each block decreases by 50%, which means the BTC supply is halved. This also contributed to the increase in the price of BTC. At that time, the BTC reward for miners decreases, but the reward value may still be higher than this time. So the BTC network remains attractive to miners.
Looking at the history of BTC, every halving occurs, the miner’s reward is immediately halved. However, they continue to dig and push the mining rate over the years to continuously create new peaks. And after the halving took place, the BTC price continued to rise and increased many times, which is also one of the motivations for miners to continue mining.
Technology evolves and miners add more current miners, mining more efficient and more energy efficient. They also have access to green energy sources and lower fees that reduce mining costs.
The views shared by Vitalik show us part of the trend. However, we also need to look at the other possibilities of the BTC network in a more objective and multidimensional way. BTC will have more next halvings, more efficient miners, and cheaper energy. These are the things that are still attractive for miners to continue to mine and protect the BTC network.
The concerns of Vitalik as well as the community about the mechanism of BTC have also been raised with Satoshi since the early days of BTC (2010). He also said that, in the next few decades when the block reward is too small, transaction fees will become the main reward for miners. Satoshi firmly believes that in 20 years, BTC will have a very large trading volume or no volume at all, which means BTC will fail completely or BTC will be very successful.
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