Justin Drake, a researcher at the Ethereum Foundation, posted a series of highly verbal tweets on the X platform (formerly Twitter), sharply criticizing Bitcoin’s Proof of Work (PoW) security model, stating directly that the model was like a “time bomb” and was gradually moving towards self-destruction.
Drake pointed out that Bitcoin has undergone several halving of block rewards. This mechanism aims to control the issuance speed of Bitcoin, keeping its total amount ultimately constant at 21 million. However, as the rewards continue to decrease, a serious problem has gradually emerged – the proportion of Bitcoin’s transaction fee income in the total income of miners still remains at an extremely low level of about 1%. At present, the average daily transaction fee of the Bitcoin network is less than 10 BTC, which has set a new low since the birth of Bitcoin 13 years ago.
In the economic system of Bitcoin, miners compete for the right to record transactions by solving complex mathematical problems. After successfully recording transactions, they will receive block rewards and transaction fees as rewards. The block reward has been halved over time, from 50 BTC per block initially to only 3.125 BTC per block after the halving in April 2024. According to the design of Bitcoin, it will halve approximately every four years. In the future, it will experience another 32 halvings until it is fully issued around 2140. At that time, the block reward will approach zero, and miners’ income will almost entirely rely on transaction fees.
But given the current dismal situation of fee income, Drake is deeply concerned about it. He believes that such a low fee income is difficult to support the huge computing power demand of the Bitcoin network. Once the income of miners cannot cover their mining costs, including hardware equipment investment, power consumption and maintenance costs, etc., miners are likely to choose to leave, resulting in a significant decline in the computing power of the Bitcoin network. Computing power is the core guarantee of Bitcoin’s PoW security model. A decline in computing power will pose a huge security risk to the Bitcoin network and may even trigger a 51% attack. In a 51% attack, if a malicious attacker can control more than 50% of the entire network’s computing power, they can tamper with transaction records, disrupting the transaction order and trust foundation of the Bitcoin network.
Historical data shows that the computing power of the Bitcoin network has also experienced fluctuations. For instance, in certain regions where power policies are adjusted or there is a shortage of mining machines, computing power may experience a temporary decline. However, in the past, the rise in Bitcoin’s price and the entry of new miners often enabled computing power to recover quickly and reach new highs. However, nowadays, as the halving of block rewards continues to advance, the fee income has failed to effectively make up for the gap caused by the reduction in rewards, making the problem increasingly intractable.
Drake further elaborated that, in contrast, after Ethereum shifted to the Proof of Stake (PoS) mechanism, its security model demonstrated greater stability and resistance to attacks. Under the PoS mechanism of Ethereum, validators participate in network verification by staking a certain amount of ETH and obtain block generation rewards. This mechanism does not require a large amount of energy to compete for computing power like PoW does. Moreover, if an attacker wants to launch a 51% attack, they need to control more than half of the staked ETH, which is much higher in terms of economic cost and operational difficulty than launching an attack on Bitcoin. It is estimated that to launch a 51% attack on Ethereum at present, attackers need to invest nearly 44.8 billion US dollars to obtain sufficient staking rights, while launching an attack on Bitcoin theoretically only requires about 10 billion US dollars in computing power investment.
In addition, Ethereum has also established a unique “social layer” defense mechanism. When abnormal situations or potential attacks occur, community members can take coordinated actions, such as performing a hard fork, to isolate the attacked chain, making it difficult for attackers’ malicious actions to succeed. This approach of combining technical defense with community consensus provides additional security guarantees for the Ethereum network.
The Bitcoin community has had mixed reactions to Drake’s views. Some Bitcoin supporters believe that the Bitcoin network has withstood countless tests over the past 13 years and still operates safely. Its PoW mechanism has been verified over time and demonstrates strong resilience. The low fee income is only a temporary phenomenon. With the expansion of Bitcoin’s application scenarios and the increase in market demand, the fee income is expected to rise.
Moreover, the computing power of the Bitcoin network is widely distributed, and it is not easy to carry out a 51% attack. Many miners, considering their own interests, will also actively maintain network security. However, some industry insiders have pointed out that Drake’s viewpoint does indeed reveal the potential challenges faced by the Bitcoin security model. The Bitcoin community needs to seriously consider countermeasures. How to ensure network security and the enthusiasm of miners in the context of continuously decreasing block rewards will be an important issue for the future development of Bitcoin.
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