Buterin outlined two reasons why he is concerned about the security of Bitcoin in the future to Bloomberg columnist Noah Smith in the interview conducted over email, published on September 2.
Buterin is concerned that the fees alone will not be enough incentive for miners to safeguard the network, which he thinks has the potential to become a system capable of handling multiple trillions of dollars.
It is important to keep in mind that the only time miners who validate transactions or blocks will be eligible to collect transaction fees as rewards is when all of the Bitcoin has been mined. Buterin argues that it is very improbable that the Bitcoin network will be able to earn the amount of fee income necessary to keep the system running.
“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. Bitcoin fees are about $300,000 per day and haven’t really grown that much over the last five years,” Buterin wrote.
Buterin’s second concern
Second, Buterin claims that the Proof-of-Work (PoW) consensus process has a vulnerability that might compromise users’ data security. Buterin claims that proof-of-work offers far less protection for each dollar spent on transaction fees than Proof-of-Stake (PoS).
It is estimated by the person who founded Ethereum that in a hypothetical future when there is around $5 trillion worth of Bitcoin, all that is needed to launch a successful assault on the system is $5 billion worth of Bitcoin.
According to Buterin, the situation is made even more precarious by the fact that maximalists and miners are unwilling even to contemplate switching to PoS.
“Second, proof of work provides much less security per dollar spent on transaction fees than proof of stake, and Bitcoin migrating away from proof of work seems to be politically infeasible. What would a future look like when there’s $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain? 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,” Buterin writes.
It is worth mentioning that the Ethereum network is inching closer and closer to transitioning. The update, referred to as the Merge is anticipated to take place between September 10 and September 20 and is expected to decrease the amount of energy that is used by the network and supply