Vitalik Buterin makes Bitcoin prediction for the year 2042, says a big problem awaits BTC
Ethereum (ETH) creator Vitalik Buterin has an idea of what the state of Bitcoin (BTC) will look like in twenty years.
In a new interview with economist Noah Smith, Buterin says that in the medium term he believes cryptoassets will become about as volatile as gold or the stock market, moving away from the great bubble and crash phases of the past.
The crypto visionary also says that while crypto could satisfy a few key narratives over the next two decades, mainstream adoption will be the biggest factor in determining the fate of digital assets.
“If, by 2040, cryptocurrency has robustly entered a few niches: it replaces gold’s store-of-value component, it becomes a kind of ‘Linux of finance’, an always available alternative financial layer that ends up being the backend of really important things, but doesn’t completely take over from the mainstream, then the chance of it either disappearing or taking over the world completely by 2042 becomes much smaller, and individual events are going to have much less impact on that possibility.”
Looking ahead, Buterin says he has concerns about the future security of Bitcoin. With block rewards gradually decreasing to zero over time, the Ethereum founder says the mining ecosystem could lose its incentive to keep the network secure.
“A consensus system that unnecessarily costs huge amounts of electricity is not only bad for the environment, it also requires the issuance of hundreds of thousands of BTC or ETH every year. Eventually, of course, the issuance will be reduced to almost zero, and then it will cease to be a problem, but then Bitcoin will begin to deal with another problem: how to ensure that it remains secure.
Buterin says there may come a time when Bitcoin may be forced to switch to at least a hybrid proof-of-stake consensus mechanism to overcome the security flaws in the mining ecosystem.
“When it comes to Bitcoin, I’m concerned for two reasons. First, in the long term, Bitcoin security comes solely from fees, and Bitcoin just isn’t succeeding in getting the level of fee revenue required to secure what could be a system multi-trillion dollar Bitcoin fees are around $300,000 per day and haven’t really grown that much in the last five years…
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 politically impossible. What will a future look like when there is $5 trillion of Bitcoin but it only takes $5 billion to attack the chain? Of course, if Bitcoin is indeed attacked, I expect the political will to switch to at least hybrid proof of stake will emerge quickly, but I expect it to be a painful transition.”
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Featured image: Shutterstock/Natalia Siiatovskaia/Art Furnace
