Ethereum’s Vitalik Buterin Is Worried About Bitcoin Security For These Two Reasons.
Ethereum Founder is Worried About Bitcoin Security For Two Reasons, Expresses his Concerns About BTC Security Sustainability.
In an interview with former Bloomberg columnist Noah Smith that was released today, Ethereum founder Vitalik Buterin outlines two reasons why he is concerned about the security of Bitcoin in the future.
Firstly, Buterin worries that fees alone will not be enough incentive for miners to secure the network, which he believes has the potential to become a multi-trillion dollar system. It is worth noting that miners who play the role of transaction or block validators will only receive fees as rewards when all the Bitcoin has been mined. According to Buterin, it is unlikely that Bitcoin will be able to generate the level of fee revenue to sustain the system.
“First, in the long term, Bitcoin security is going to come entirely from fees, and Bitcoin is just not succeeding at getting the level of fee revenue required to secure what could be a multi-trillion-dollar system. Bitcoin fees are about $300,000 per day and haven’t really grown that much over the last five years,” Buterin writes in the interview conducted over email.
Secondly, Buterin asserts that there is a security flaw in the proof-of-work (PoW) consensus mechanism. According to Buterin, PoW provides much less security per dollar spent on fees than proof-of-stake (PoS). The Ethereum founder estimates that in a hypothetical future where there is about $5 trillion of Bitcoin, it could take only $5 billion of Bitcoin to carry out a successful attack on the system. According to Buterin, it is especially problematic as miners and maximalists are not willing to consider a switch to PoS.
“Second, proof of work provides much less security per dollar spent on transaction fees than proof of stake, and Bitcoin migrating away from proof of work seems to be politically infeasible. What would a future look like when there’s $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain? Of course, if Bitcoin actually gets attacked, I do expect that the political will to switch to at least hybrid proof of stake will quickly appear, but I expect that to be a painful transition,” Buterin writes.
It is worth noting that the Ethereum network founded by Buterin is less than two weeks away from migrating from PoW to PoS. The upgrade known as The Merge is expected between September 10 and 20. It promises to cut down on the network’s energy consumption and Ethereum supply.
Notably, Buterin is set to release a book about a month from now titled “Proof of Stake,” containing a compilation of essays from the Ethereum founder in the last ten years.
It bears mentioning that not everyone is on board with the switch to PoS. For example, some miners have created groups to push for a PoW hard fork of the Ethereum chain. In contrast, some users have expressed concern over a perceived vulnerability of the network to censorship should it migrate.
While Buterin concedes that the future of crypto is uncertain, noting it can “disappear or take over the world completely,” he does see a future where it can replace gold as a store of value and become the “Linux of Finance.”
Follow Us on Twitter and Facebook.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.