Bitcoin is facing significant challenges that could lead to a systemic breakdown within the next 7 to 11 years, according to an analysis by Justin Bons. The focus of his warning centers on a combination of declining miner rewards, governance limitations, and a shrinking security budget, which could leave the network vulnerable to attacks and congestion.
Bons highlights that each halving event reduces the block subsidy, which in turn decreases miner revenue unless there is a substantial increase in Bitcoin“s price or transaction fees. He argues that the required price growth to compensate for these reductions would surpass the total output of the global economy within decades. Furthermore, sustained high transaction fees typically diminish user activity, leading to lower miner revenue in real terms and weakening the economic deterrent against chain attacks.
The analysis stresses that security should be gauged by the revenue generated for miners rather than the raw hash rate. As miner revenue declines, the cost of potential attacks becomes more favorable for malicious actors, shifting the balance in their favor.
Key vulnerabilities identified by Bons include:
- Halvings consistently reduce security funded by inflation.
- Fee markets struggle to maintain high levels for extended periods.
- Miner revenue decreases even as the hash rate increases.
- The costs of attacks diminish relative to potential rewards.
- The network”s overall value increases faster than its security budget.
Attack scenarios highlighted in the analysis include double-spend attempts directed at exchanges. An attacker with majority control of mining power could send coins to exchanges, trade them, withdraw the proceeds, and then reorganize the blockchain to reclaim the original coins. By simultaneously targeting multiple platforms, attackers could potentially extract hundreds of millions of dollars.
Bons estimates that within the stipulated timeframe, the cost to sustain a one-day attack might drop below $3 million, a figure that pales in comparison to the possible gains. Such conditions could attract state-level actors as potential attackers.
Currently, Bitcoin“s on-chain capacity is limited to about seven transactions per second. If all holders attempted to conduct a transaction simultaneously, the backlog could extend to nearly two months. This scenario would worsen with global adoption, potentially leading to delays that could stretch into decades. During periods of congestion, many transactions may stall or drop, creating a situation akin to a bank run.
The analysis suggests that a drop in price could lead to miners shutting down their operations, further slowing block production until the difficulty adjusts. This creates a self-reinforcing cycle where falling prices, declining security, and network slowdowns exacerbate one another.
In terms of governance, Bons argues that the control over development lies with Bitcoin Core, which acts as a gatekeeper for protocol changes. Past disputes over block size have resulted in limited capacity, while alternative proposals have diminished influence. This history raises concerns about the likelihood of swift solutions to the current dilemmas.
Some developers have acknowledged these issues, with discussions about increasing inflation to secure funding. However, such a move would violate Bitcoin“s promise of fixed supply, potentially dividing the community and leading to weaker versions of the network.
Bons warns that without structural changes, Bitcoin“s security funding is likely to decline, while the economic incentives for attacks will grow. Governance barriers continue to restrict meaningful reforms, raising the risk that any response will occur only after significant damage has been inflicted. The next decade will be crucial in determining whether Bitcoin can adapt to these pressures or face dire consequences from its current design.
