Vitalik Buterin said that Bitcoin’s transaction fees aren’t enough to maintain the security of the network for a very period of time.
The world’s second-largest crypto blockchain Ethereum is all set for the Merge upgrade this month. This would also be a major milestone toward the transition to Proof-of-Stake (PoS) network. But during his latest interview, Ethereum co-founder Vitalik Buterin expressed doubts over the long-term security of the Bitcoin blockchain. Buterin gave two reasons for his concerns over Bitcoin while speaking to economics writer Noah Smith.
Buterin Speaking on Bitcoin
He expressed concerns about the drop in the mining rewards every four years due to Bitcoin halving. The Ethereum co-founder said that Bitcoin’s security will shift from mining rewards to transaction fees. But he further added that the current transaction fees are not high enough to provide the required security to the Bitcoin blockchain. Speaking on the matter, Vitalik Buterin said:
“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”.
Buterin added that the Bitcoin network roughly sees around $300,000 in fees per day. This figure hasn’t grown much over the last five years. On the other hand, Bitcoin miners currently earn $18.5 million per day.
Will Bitcoin Switch to Proof-of-Stake?
In his second argument, the Ethereum co-founder said that Proof-of-Stake (PoS) is a more efficient way to provide security to the blockchain network than Proof-of-Work (PoW). As stated, Ethereum is already on the verge of this transition, but the same happening to Bitcoin could be difficult.
A majority of the Bitcoin proponents have expressed strong opposition to it. However, the Ethereum co-founder remains optimistic that this could be a possibility. Speaking on this matter, Buterin said:
“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”.
Choosing between the proof of work and proof of stake, Buterin said that the latter has stronger centralization pressure. “These are definitely things that I worry about, though I think people overstate them,” he said. Buterin further added that “the highly democratized early proof of work era was a beautiful thing, and it helped tremendously in making cryptocurrency ownership more egalitarian, but it’s unsustainable and it’s not coming back.”
In addition to sharing his opinions on Bitcoin, the Ethereum co-founder also spoke about the current state of staking and withdrawals not being enabled yet. But Buterin says that they would fix it within the next year.
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