Ethereum co-founder Vitalik Buterin told Noah Smith that he has two major concerns about Bitcoin. Buterin pointed to Bitcoin’s fee model and PoW consensus mechanism, saying they could leave Bitcoin vulnerable to attacks in the long run.
Ethereum founder has fears over Bitcoin (BTC) future
Vitalik Buterin is worried about the future of Bitcoin. The Ethereum creator had an interview with economics writer Noah Smith on Sept. In this interview, he said he was worried about Bitcoin for two reasons. Buterin thinks that Bitcoin may face problems in the long-term due to its fee model. Bitcoin currently distributes money to miners as payment to secure the network. But the protocol has a fixed supply limit of 21 million. Therefore, the network will rely solely on transaction fees for security.
Buterin tells Smith that this is a problem because Bitcoin “could not generate the level of fee income needed to secure a multi-million dollar system.” The amount of fees Bitcoin generates for other protocols has long been a hot topic of discussion in the crypto community. According to Crypto Fees data, Bitcoin averaged $225,000 in fees last week. Thus, it followed DeFi mainstays like Aave and Uniswap. The largest fee generator was Buterin’s Ethereum, which received around $2.7 million in the same timeframe.
Buterin’s other fear for Bitcoin is PoW. “Proof-of-Work provides much less security than Proof-of-Stake for every dollar spent on transaction fees,” says the Ethereum founder. So, he says, having a $5 trillion network that costs just $5 would be problematic. Buterin also points out that it will not be “politically feasible” for Bitcoin to move away from Proof-of-Work.
Buterin’s comments will likely spark outrage in some corners of the crypto community. Bitcoin’s most ardent supporters have long argued that PoW is a fundamental part of network design. Others made similar statements to Buterin regarding the best crypto fee model. However, this issue is often overlooked by its supporters, as Bitcoin is planned to launch cryptocurrencies by 2140.
Buterin advocates PoS ahead of Merge
The debate over whether blockchains can reach consensus via PoW or PoS has raged for several years. Meanwhile, Ethereum is gearing up for its transition to PoS. Merge is scheduled to take place around September 15. After that, Ethereum will be secured by validators who set ETH tokens instead of miners.
Some of Ethereum’s loudest detractors argue that PoS limits decentralization. It also claims to allow larger stakeholders to control the network. But Buterin tells Smith that such arguments are ‘clearly false’. He notes that critics have misunderstood that “Proof-of-Work and Proof-of-Stake” are governance mechanisms. “However, these are actually consensus mechanisms,” the Ethereum founder says. In other words, shareholders can verify transactions, but cannot influence the future design of the network.
As you follow on Kriptokoin.com, PoS criticism intensified last month after the Treasury Department approved Tornado Cash. It has also led to arguments that governments may one day try to censor Ethereum. Coinbase CEO Brian Armstrong commented on the matter, saying that his firm would stop staking instead of censorship. Buterin also weighed in, saying he would see complying with regulatory sanctions as an attack on the network.
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