Justin Drake, one of the leading developers of Ethereum, has attracted attention in the cryptocurrency community with a long and remarkable explanation of Bitcoin's security model.
In a post on social media, Drake described Bitcoin's proof-of-work (PoW) system as unsustainable and dangerous.
Drake noted that Bitcoin transaction fees are at their lowest level in the last 13 years, and that daily transaction fees have dropped below 10 BTC. He said that although block rewards decrease after halving periods, the income from transaction fees still remains at 1%.
“Low fees = low security budget = low security,” said Drake, arguing that Bitcoins security model is broken and this poses a systemic risk to the entire crypto ecosystem.
Drake also criticized Bitcoin's 21 million supply limit, saying that this structure sabotages itself in the long run. He stated that if miners were to be supported only by transaction fees, revenues would decrease 100 times and even 1% of the existing mining infrastructure could take over Bitcoin with a 51% attack.
Unless transaction fees miraculously increase by 100 times, there are only two potential solutions for Bitcoin to survive, Drake said:
- Removal of the 21 million supply limit and introduction of an additional issuance mechanism called “tail issuance”.
- Switching to proof-of-stake (PoS) system.
However, he noted that both of these suggestions are difficult to gain cultural acceptance within the Bitcoin community. Moreover, he stated that the “tail issuance” model will only work proactively, and will not work once Bitcoin is attacked.
Drake also stated that projects such as Lightning Network, Ordinals, Stacks, and Liquid only provide short-term transaction fee increases, but long-term sustainability cannot be achieved. Drake also evaluated recent projects such as BitVM, and stated that such technologies may be vulnerable to 51% attacks, and therefore are far from being a solution.
Drake's final message was clear:
“Bitcoins PoW model is not sustainable. The math is against this system. If a fix is not made, at some point this system will break.”