Bitcoin (BTC) has been through a lot as it has gone through crash after crash while also being banned and receiving a lot of obituaries but still managed to survive.
However, a fresh caution has again caused a stir in the market. A well-known expert Justin Bons, the president of Cyber Capital and a researcher in crypto for a long time, thinks that BTC is walking on a very risky road. His statement is very sharp. He claims the presence of certain systemic security-related weaknesses might lead to the extinction of BTC within the next 7 to 11 years.
If there is one thing that can be said to summarize the whole argument, then that would be miner revenue. To be exact, Bitcoin miners are the ones who bring about and ensure the safety of the network. They receive their payments through a combination of block rewards and transaction fees.
However, this process is not as simple and straightforward as it sounds because there is a halving every four years which drastically reduces block rewards by half. Bons, therefore, predicts that this constant slipping will eventually lead to a crash.
BTC’s price, according to him, is not able to keep on doubling every cycle without the risk of going over the limit set by global GDP. In addition, transaction fees cannot be high indefinitely in the long run if the market remains competitive.
With a decrease in miner’s earnings, what Bons refers to as Bitcoin’s “security budget” also declines. If security is inexpensive, then it is easy for attackers to carry out their plans.
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According to Bons, the risk will come up rather silently. Attacks will be possible as soon as miner revenue declines to a level that is low enough. He thinks this is likely to happen within the next two to three halving cycles. By then, the cost of an attack on Bitcoin could be as low as several million dollars. However, the possible profit might be in the range of hundreds of millions or even billions.
Bons cautions that this kind of imbalance will only encourage censorship, manipulation, and resulting panics. He goes on to say that it is not the raw hashrate only that secures Bitcoin; what does matter is the amount of money required to attack the network. Once the cost drops, the resistance disappears.
Bons throws in the towel and offers two very unappealing alternatives instead. One of them is to increase the rigid supply of Bitcoin from 21 million to even more in order to provide better incentives for miners. Another one is to keep the limit and receive ongoing assaults, so to speak, as a bargain.
This forecast has not at all been bought by the Bitcoin community. A lot of people claim that Bons is not so good at judging BTC’s adaptation. They mention creativity, multi-layered solutions, and changing fee markets as the protective measures he does not consider.
Bitcoiners importantly mention that security comes from different sources. In addition, they consider energy expenses, location of miners around the globe and the agreement in society as the main factors determining the security of the BTC network. The warning of Bons is regarded by some as a theoretical issue rather than a practical one.
Bitcoin has always had its share of detractors. At present, it is still there. Whether the timeline put forth by Bons turns out to be a prophetic or misguided will be determined solely by time, and the next few halvings.
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