Ethereum Foundation researcher Justin Drake has warned about the security of the Bitcoin Network. Drake shared his view on X, noting that the Bitcoin Proof of Work (PoW) consensus mechanism is a ticking time bomb.
The blockchain security expert, one of the masterminds behind the Merge, i.e., Ethereum transition from PoW to Proof of Stake (PoS), identified Bitcoin’s low fees as the major risk to its security.
According to Drake, Bitcoin fees have fallen for 13 years, with miners generating less than 10 BTC in daily fees. He believes that this low fee represents a disincentive for most miners who are the ones securing the network and could eventually affect the network, a contagion risk for the whole crypto industry.
He said:
“Bitcoin’s security model is broken. If Bitcoin gets taken over, the fallout could take the entire crypto ecosystem. The systemic risks can’t be ignored.”
The researcher noted that Bitcoin fees have constantly declined for over a decade despite halving and reducing the issuance rate. In fact, the fees are falling faster than the issuance rate on the network, with a 30-day moving average (MA) of Bitcoin transaction fees currently at 6.5 BTC per day.
Bitcoin Transaction Fees.(Source: X/Drake)
This meant that fees only account for around 1% of miners’ revenue over the years, and Bitcoin miners could see a 100% decline in their revenue once the complete 21 million BTC have been mined.
However, Category Labs researcher Kushal Babel disagreed with the argument, noting that denominating fees in BTC to say it is at an all-time low is wrong. According to him, the whole argument might change if BTC fees are denominated in US Dollars.
Babel argued that Drake’s opinion that the ratio of BTC market cap to the amount securing it makes the network vulnerable to a 51% attack is a weak argument at best, and the focus should be on the cost of an attack in dollars.
Higher prices may not save the Bitcoin network from attack
Meanwhile, Drake added that a rise in Bitcoin prices could be inimical to network security because it would make it harder to sustain the BTC-denominated fees. In order to explain this, he described a scenario where Bitcoin price increases but fees stay unchanged, noting that fees at the time will only cover around 10% of the security cost for the network.
He said:
“Let’s be optimistic and say BTC rises to $1M, and today’s 6.5 BTC/day in fees is maintained: $6.5M/day in fees, 10% of today’s security budget. Bitcoin would be a $20T asset secured by 1/10th of today’s hashing infrastructure.”
Thus, he believes that the cost of attacking the Bitcoin network will not increase even as the price of BTC increases. This could make it possible for a 51% attack on the Bitcoin network to cost as little as $20 billion, even if the network has a market cap of $200 trillion tokens.
Drake further debunked the presumption that Bitcoin fees will increase, noting that this has not happened in the last 13 years. He added that all previous attempts to boost Bitcoin fees by increasing its utility as a transaction layer have failed to achieve sustainable long-term gains, with projects such as Ordinals, Liquid, Omni, Babylon, and others only creating short-term spikes.
Potential solutions to Bitcoin’s fragile security
With Drake highlighting Bitcoin’s risks, he proposed two solutions that could work for the network if fees do not increase. According to him, the solution is for Bitcoin to expand the total supply beyond the 21 million cap or for the network to switch to Proof of Stake.
Unsurprisingly, he acknowledged that these two proposed solutions are unlikely to be implemented, given that they are completely against the conventional ethos of the Bitcoin community.
However, he insisted that creating a Bitcoin Virtual Machine or Proof of Authority, where the major mining pools will secure the network, is unlikely to work. Still, he called on anyone who could explain how the PoA will function to do so.
Interestingly, other users have proposed more potential solutions. Ethereum Foundation researcher Ansgar Dieetrichs recommended that Bitcoin developers end congestion pricing and increase the fee floor with the hope that the revenue is enough.
He noted that this is likely the best solution for the network, but added other options, such as Bitcoin becoming a Layer-2 on a secure PoS chain or becoming an ERC-20 token. Other solutions include mining at a loss or allowing centralized custodians and large BTC holders to donate to on-chain security.
Unsurprisingly, not everyone welcomed the opinion, especially among Bitcoin supporters. Bitcoin maxi Udi Wizardheimer criticized the opinion, noting that Drake is concerned about a security problem that Ethereum might have in 100 years, when Ethereum is struggling presently.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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