Is Bitcoin’s security at risk? Experts weigh in

Bitcoin (BTC) is regaining its bullish momentum after a brief period of consolidation between $26,600 and $27,400. The largest cryptocurrency in the market looks set to break higher levels if it closes the month above $27,000.

Bitcoin’s potential to hit new annual highs and start a bull run is currently being debated in the market. However, the safety of the largest crypto by market capitalization is a less discussed topic.

Justin Bons, the founder of Cyber ​​Capital, Europe’s oldest cryptocurrency fund and a full-time crypto researcher, has expressed concern about certain factors that could significantly reduce Bitcoin’s network security.

Is Bitcoin’s Security Model Unsustainable?

According to a recent Twitter mail by Justin Bons, he suggests that the sustainability of BTC’s security model and the current hashrate may not increase with price.

Justin Bons further argues that price drops and halvings (when the block reward for miners is halved) result in exponentially lower security for the network. As shown in the chart below, Bons suggests that BTC’s security is lower than it was two years ago.

According to Bons, the chart shows Bitcoin miner earnings, specifically the block reward that miners receive for processing transactions and adding them to the blockchain. Bons clarifies that this differs from hash rate, a metric that measures the computing power used to mine Bitcoin blocks.

Bons further argues that the hash rate is not necessarily an accurate indicator of Bitcoin’s security, as the hash rate can increase while miner earnings decrease. This is because as mining hardware improves and becomes more efficient, it costs less to produce the same number of hashes.

This means that even if the hash rate increases, it does not necessarily mean that the network is more secure. Bons highlights the importance of considering multiple metrics when evaluating the security of Bitcoin’s network rather than relying solely on the hash rate.

For Bons, the cost goes into producing the hashes that ultimately secure BTC’s network, arguing that what matters most is the cost of “attacking” Bitcoin, which is not determined solely by the hash rate.

What are the alternatives to Bitcoin?

Bons further argues that as block rewards for miners decline over time, the network will increasingly rely on Bitcoin transaction fees (TX) to incentivize miners to secure the network.

If the TX fees are not high enough, the author believes that the security of Bitcoin will decrease to the point where it becomes profitable for attackers to launch an attack, making the network insecure.

Bons suggests that if the security of Bitcoin’s network continues to decrease due to low transaction fees, there may be two options to solve the problem.

The first option, according to Bons, would be to increase Bitcoin’s supply inflation by creating more Bitcoin beyond the 21 million originally intended. This will increase the circulation of Bitcoin and may help motivate miners to continue securing the network, even if the transaction fees are low.

The other option would be to let the network come under double spend attacks. This would be a serious security breach, allowing attackers to steal funds from other users on the network by using the same Bitcoin twice. This would be the last resource and could result in a loss of confidence in Bitcoin’s security and value.

Overall, Bons suggests that BTC’s security model may not be sustainable in the long run, and that changes may need to be made to ensure the network’s security and longevity.

Featured image from Unsplahs, chart from TradingView.com