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Justin Bons, the founder and CIO of CyberCapital, has laid out a blunt and worrying view of where Bitcoin could possibly be heading in the following decade. In an in depth note shared on X, Bons noted that Bitcoin is heading towards complete collapse inside the following seven to 11 years, which is brought on by the way in which The network pays for its security and the continued decline in block rewards.
Reduced Miner Payouts Leading to Complete Bitcoin Collapse?
Bitcoin is thought for its halving cycle, which reduces the block rewards given to miners by about 50% every 210,000 blocks, which is about 4 years. Bons' criticism focuses on this event as a reason that Bitcoin's network security will finally fail and cause a whole collapse of the leading cryptocurrency.
As Each bisection cuts the block Bons believes that Bitcoin continues to reward itself and that Bitcoin is heading to some extent where it could possibly now not reliably fund the miners who protect the network, setting in motion a series of risks that turn into harder to disregard with each cycle.
Many Bitcoin proponents will argue that the Bitcoin network remains to be very secure because of the increasing hashrate. However, in response to Justin Bons, the hash rate may increase whilst actual security declines, as advances in mining hardware reduce the associated fee of hash creation. The most vital thing is how much money is actually made by minersas this number represents the profitability and value that an attacker would have to fulfill or exceed.
Charts tracking block rewards and miner revenue show Bitcoin's security in economic terms already lower than it was a couple of years ago. In his opinion, to keep up security at current levels, either transaction fees would need to be so high that users would simply stop using the network, or the value of Bitcoin would double every 4 years at a pace that might quickly outpace the dimensions of the worldwide economy.
Bitcoin miner revenue. Source: @Justin_Bons on X
Prediction: Bitcoin will collapse in two to 3 halvings
The seven to eleven yr time-frame outlined by Bons for Bitcoin's collapse is directly linked to the Bitcoin halving timeline. According to the industry expert, inside two to 3 more halvings, the associated fee of attacking the Bitcoin network over an extended time period could fall to a level that makes such attacks financially attractive.
If miner payouts are low enough, Bons believes the potential advantages from attacking multiple exchanges or protocols could outweigh the prices of carrying out the attack. The most realistic scenario for that is double-spend attacks on exchanges.
Bitcoin is currently trading at $95,270. Chart: TradingView
An attacker controlling 51% of all mining power could deposit Bitcoin, exchange it for one more asset, withdraw those funds, after which reset the blockchain to get well the unique coins.
He also highlights data showing that Bitcoin's security budget relative to its overall market value has been trending downward for years. This signifies that Bitcoin doesn’t robotically turn into safer because it grows in size.
Bitcoin security budget as % of market cap. Source: @Justin_Bons
This signifies that Bitcoin is facing a possible breaking point. From here, the network either increases its hard supply cap of 21 million to revive incentives to miners, a move that might likely split the chain, or your complete Bitcoin ecosystem accepts the danger of double-spend attacks.
Featured image from Unsplash, chart from TradingView
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