Ethereum Researcher: Bitcoin Security Budget a ‘Ticking Time Bomb’

Justin Drake, an Ethereum Foundation researcher, claims that the security model of the Bitcoin network is broken, as transaction fees have failed to reach a significant fraction of the total network earnings, including the block subsidy.

Bitcoin Security Model at Risk, Proof-of-Work Not Sustainable, Says Ethereum Researcher

The security budget of the Bitcoin network is once again in the spotlight. Justin Drake, an Ethereum Foundation researcher, claims that Bitcoin, as it is now, is a ticking time bomb, as its current security budget is unsustainable without the current block subsidy delivered to miners.

Drake argues that transaction fees, which are expected to rise in the future as the block subsidy disappears, have failed to climb to support the network operation. Since 2016, fees have only represented 1% of all the revenue earned by miners per block.

If fees were the only source of miner revenue today, revenue and hashing infrastructure would also decrease 100 times, putting the network at risk of experiencing 51% attacks. Drake stresses that if bitcoin rises to $1 million with the same level of fees collected today, it would only represent 10% of what miners are receiving today, also opening the network to attacks. “Bitcoin would be a $20T asset secured by 1/10th of today’s hashing infrastructure,” he detailed.

Drake states that fees would have to rise 100 times to maintain today’s operability in the future. “So far, every attempt to produce transactional utility on Bitcoin has failed to drive sustained fee volume,” he remarked, considering this unlikely in the short term.

For bitcoin to survive in the future, Drake explains that the 21 million BTC limit would be lifted, adding tail issuance to the network, or simply changing from proof-of-work to proof-of-stake consensus.

“Bitcoin is meant to be antifragile. Yet the elephant in the room in the room is not being addressed,” he concluded.

Bitcoin Core developer James O’Beirne has also voiced concerns regarding the same issue. He stated that in the future, miners and the bitcoin community might have to introduce tail emissions, changing bitcoin’s supply schedule to compensate their dwindling income and undermining bitcoin’s property rights.

Read more: Bitcoin Core Developer: Erosion of Security Budget May Undermine Bitcoin’s Monetary Fundamentals