Justin Drake, a researcher at the Ethereum Foundation, claims that the Bitcoin network’s security model is broken because transaction fees have not reached a significant proportion of the network’s total revenue, including the block subsidy.
Bitcoin security model compromised, proof-of-work unsustainable, says Ethereum researcher
The Bitcoin network’s security budget is once again in the spotlight. Justin Drake, a researcher at the Ethereum Foundation, claims that Bitcoin, as it stands, is a ticking time bomb because its current security budget is unsustainable without the current block subsidy for miners.
Drake argues that transaction fees, which are set to increase in the future when the block subsidy is eliminated, have not been able to support the network’s operations. Since 2016, fees have accounted for only 1% of all revenue generated by miners per block.
If fees were the sole source of income for miners today, revenue and hashing infrastructure would also decrease 100-fold, exposing the network to the risk of 51% attacks. Drake emphasizes that if Bitcoin rises to $1 million and the same level of fees are collected as today, this would only represent 10% of what miners receive today, leaving the network equally vulnerable to attacks. “Bitcoin would be a $20 trillion asset backed by 1/10 of today’s hashing infrastructure,” he explained.
Drake notes that fees would have to increase 100-fold to maintain today’s viability in the future. “So far, every attempt to generate transactional utility on Bitcoin has failed to achieve a sustainable fee volume,” he noted, and considers this unlikely in the short term.
For Bitcoin to survive in the future, Drake explains that the 21 million BTC limit would have to be lifted, adding tail issuance to the network, or simply switching from proof-of-work to proof-of-stake consensus.
“Bitcoin is supposed to be antifragile. Yet, the elephant in the room isn’t being addressed,” he concluded.
Bitcoin Core developer James O’Beirne has also raised concerns about the same issue. He explained that miners and the Bitcoin community will need to implement tail issuance in the future to alter the Bitcoin issuance schedule to compensate for their dwindling revenues, thus undermining Bitcoin’s property rights.
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