Can Bitcoin survive on fees alone after block subsidy dies?

[d5000]

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

The attack target value is not related directly to market cap. It is related to the potential the attacker can double spend.

I believe that number to be more related to the average value in purchasing parity that is transferred in each block.

Let's look at such an attack and how it would be peformed:

- The attacker buys the Bitcoins he wants to steal (and probably mixes them a bit)
- He spends the transactions in a single block, to different merchants and exchanges.
- He begins to mine in secret.
- He waits until the confirmation period at all merchants and exchanges is over and all orders are confirmed. Probably most of the time he'll try to swap the coins for altcoins.
- He takes over the chain and "rewinds" all his transactions.

The merchants and exchanges would all have some kind of maximum value he can deposit. This maximum value, however, depends on purchasing power and not BTC probably. Let's say he tries to spend 100,000 BTC (6 billion USD) on 1000 different platforms, 1 BTC on each platform. This would not be a problem with 60,000 $ per BTC. But it would be probably a problem with 600,000 $ per BTC, because only a few platforms would allow such big deposits. He would then have to try to scam a lot more platforms, which makes the attack more complex.

So I believe there is some relation between market cap and double spend potential but the relation is not linear. It would even be somewhat detectable: blocks with an unnatural spike in transacted BTC could rise the alarms in merchants and exchanges, and make them rise the confirmation requirement. That's why I think the attacker would try to stay inside the normal limits, and thus be bound to the average transaction volume.

Another source of income for the attacker are short sales but this is way more difficult to predict, it is probably more related to market cap, but also related to the number of BTC (and their value in USD/purchasing power) available for lending and the security measures of the trading platforms. Most trading platforms would probably stop trading as a security measure when they detect a long reorg, and thus the attacker may have severe difficulties in re-buying the coins without having to go through some sort of scrunity for the sources of funds.

[MrEazyLife]

It’s an interesting question, but I think people sometimes overlook that Bitcoin doesn’t need transaction fees in 2140 to match today’s levels it needs them to match the network’s economic value at that time. If Bitcoin keeps growing, users settling large amounts on-chain may be willing to pay much higher fees than we see today.

Exactly the point I was trying to make, I don’t see this as a big deal. The problem should be, bitcoin should keep growing so as to match the economic value of that time. Users won’t see it as a big deal to pay the fee that will be attached. So long as it’s worth it

[tromp]

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

So I believe there is some relation between market cap and double spend potential but the relation is not linear. It would even be somewhat detectable: blocks with an unnatural spike in transacted BTC could rise the alarms in merchants and exchanges, and make them rise the confirmation requirement. That's why I think the attacker would try to stay inside the normal limits, and thus be bound to the average transaction volume.

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

[1] https://bitinfocharts.com/comparison/sentinusd-btc-doge.html#3m

[satscraper]

Nonetheless, this is actually a worry that I think all of us here wouldn’t be alive to see the last bitcoin mined and just like quantum computing scares let’s leave the worries till then.

You know what's sad about this? If you deduct 2026 from 2140, that's 114 years from now, no human on this forum active today might be alive by then. Sad stuff.  

They might want to bequeath their BTC, so they trouble themselves with such a question. But in my view, bequeathing Bitcoin presents several risks related to its value in 2140. If it is no longer mined, then its value will be in the toilet. Conversely, if mining continues extensively, resulting in the highest price, their heirs would owe extreme taxes. So it is better to live off BTC right now than bother yourself with such questions about what happens to it in 2140.

[Wind_FURY]

One interesting statistic is that Bitcoin is already more sustainable from fees alone than any other cryptocurrency that relies on tail emission; the revenue from fees outweighs revenues from tail emission implemented elsewhere.

How did you calculate that?

Bitcoin daily fees averaged under $200K recently, while DOGE produces well over $1000K per day in subsidies.

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

That makes Bitcoin almost 3 orders of magnitude less sustainable.

An interpretation of this statistic is that the market highly values fixed supply hard money, much rather than uncapped money.

Another interpretation is that the market values the original (and its network effects) much more than clones. If Bitcoin had a tail emission you would have reached the opposite conclusion.

Perhaps BlackHatCoiner is right. The market CURRENTLY values fixed supply rather than a cryptocurrency that has uncapped supply. BUT because Bitcoin is SOFTWARE FIRST and FOREMOST, the community should be OPEN to all possibilities that would help the network in its survival.

Probably decades from now when we're all dead, the next generation of Bitcoin HODLers would be more forgiving to those "blasphemous" proposals.

[d5000]

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

My post wasn't so much against Doge, but as a contribution to bring forward a bit the discussion about Bitcoin's future security budget. I consider the current security budget of Bitcoin much higher than necessary, even after the halving.

If we calculate the ratio between transaction volume and miner income, then we can get an estimation for the "double spend potential compared to the miner revenue".

To get a rough idea about the evolution, I've calculated this ratio for January with Gemini in each year since 2016. The numbers haven't been so different since back then, even if January 2025 seems to have had the highest ratio (and thus would be considered the "less secure January" so far).

In most years the value hovered between 200 and 250, with the lowest values for January 2018 (90), 2019 (107) and 2024 (165), and the highest for 2025 (340), 2026 (291) and 2021 (266).

Perhaps I'll start a thread about this doing the calculations for more months and contrasting multiple sources (I don't trust AIs that much with that kind of data, although the numbers at least don't look off)

A comparison with altcoins is however difficult. If you have low security budgets, even if you have a low transaction volume too, the exchanges may subestimate the attack potential. For example, if on a random altcoin which is acepted by at least one swap exchange you could attack the chain for enough time $1000, and the swap allows you to swap up to $10,000, then even if the transaction volume was near to zero it would be very risky to accept this coin.

Surprisingly, at least according to Gemini the same exercise didn't yield much lower values for Doge, but also numbers between 200 and 300, with even a spike to 794 for January 2021 (that was close to the coin's ATH).

[Wind_FURY]

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

My post wasn't so much against Doge, but as a contribution to bring forward a bit the discussion about Bitcoin's future security budget. I consider the current security budget of Bitcoin much higher than necessary, even after the halving.

But is it actually for us plebs to consider, or the miners who actually does all of the work? We can't truly have any strong opinions on the matter, no?

  ¯\_(ツ)_/¯

--SNIP--

A simple question,

Would you say that Bitcoin mining is centralizing or going more and more centralized? Is it easy for smaller miners to enter the Bitcoin mining industry, or harder? Are net profits growing or shrinking?

[d5000]

But is it actually for us plebs to consider, or the miners who actually does all of the work? We can't truly have any strong opinions on the matter, no?

Strange question. Ideally nobody has to decide anything because everything plays out as Satoshi thought, i.e. with the fee market ensuring enough security budget.

And the power to decide in Bitcoin is always of the so called "economic nodes". For example, if we want to introduce a mandatory transaction fee, or a tail emission. Developers are bound to what the hodlers / Bitcoiners decide to accept as a "Bitcoin", and if they don't agree, they can fork away (also from a miner activated fork).

That a mandatory minimum transaction fee is not discussed very frequently is strange. Of course there would be challenges, as it is price dependent, but it still may be a better option than a tail emission. Some altcoins do have a mandatory fee. I may miss something though, it's possible that this was discussed somewhen and turned out to be a bad idea.

The difference to today's situation where you can try a low fee and it depends by the miner, is that if it was protocol enforced, the "wait and see" strategy - people trying low-fee txes until they work, e.g. at the weekend - would not work anymore. (In addition, this may be even an interesting anti-spam idea. Hi Pepe, are you there? )

Would you say that Bitcoin mining is centralizing or going more and more centralized? Is it easy for smaller miners to enter the Bitcoin mining industry, or harder? Are net profits growing or shrinking?

I'm not an expert on that. I believe there was a centralizing tendency in 2020-25, but I don't know if it still continues. Net profits should be very price dependent and thus currently quite low but that again depends on the hashrate and difficulty evolution. There are tons of indicators that have to be taken into account. And some of them, for example if on-off renewables mining becomes more profitable, may actually favour smaller flexible miners.

Conclusion: better ask an AI about that, it may calculate the correct net profits for you, better than I could.

[Trust_Paid]

We talk about bitcoin 21m cap everyday but I think we talk less about what happen after year 2140. The block subsidy is scheduled to reach zero around the year 2140. After this, there will be no more new coins and miners will survive only on transaction fees. This was part of Satoshi original design but I'm curious whether this is sustainable in practice. Will that be enough to secure the network?

Once the last Satoshi is mined, bitcoin security will depend entirely on users competing for block space and paying fees high enough to support a strong global hashrate. Will demand for on chain settlement generate enough fees to keep mining profitable and 51% attacks economically unfeasible? Did Satoshi plan for for this or he assume bitcoin would be so valuable in the future? Or maybe he made mistake?

History shows bitcoin has adapted through every halving so far but I'm genuinely curious as we approach the end of the subsidy era. I know 2140 is still  very far but the incentive we build today determine if Bitcoin is still secure for next generations.

Even if we are still very far from 2140, the transition between the issuance of new coins through block rewards to only using transaction fees will be gradual and not abrupt. Each halving means that the subsidy gets reduced by half and hence pushes the network to depend solely on fees.

In my opinion, Satoshi was aware of the challenge and was expecting Bitcoin's adoption, transaction volume, and its value to increase. If Bitcoin becomes the popular global settlement network, people sending big values across the world may opt to pay higher transaction fees because of the security that comes with it. Miners will therefore still have the capacity to make profits without relying on issuance of new coins.

There is however no guarantee for this scenario. The on-chain demand may not be enough while the fees may also be too low. This will make the process of mining unprofitable and hence result to low hashrate and hence cheaper attacks. The advancement in technology, competition among miners, and institutional adoption of Bitcoin will be helpful in overcoming these challenges.

I consider it a healthy move for the community to begin discussing this matter rather than assuming everything will fall in

[fightfear]

Wow, finally a decent and civilised discussion on this topic with some excellent points being made! I copy below in bulk the posts/fragments of posts that I though need addressing and I'll post my thoughts on these lower down (it's much easier this way)

Sidechains can provide additional revenue for miners, but decentralized ones were rejected, so we have only some centralized federations, like RSK or Liquid,

While drivechains are indeed controversial, there are other quite decentralized models based on multisignature wallets. An example is Threshold Network's tBTC (not to be confused with testnet Bitcoin of course, they should really have chosen another name) which lives on existing blockchains like Ethereum but the federation is dynamic, everybody can participate. It is however not merge-mined with Bitcoin, it currently works with a PoS token.

From my understanding it would be possible to build a sidechain with a similar decentralized federation but with merge-mining, and then it would be possible to increase miner income with the subsidy. Why hasn't this been tried? I don't know but I assume it's simply more profitable to build a premined PoS token-based system, and the L2 boom has waned a bit also.

Why hasn't this been tried?

Yet another reason, why decentralized sidechains are not there: because people are afraid, that Merged Mining is bad, and it doesn't work for some reason. If done correctly, then it can work. But instead, we have a NameCoin, which made some mistakes, and anyone can just point at it, and say: "See? It doesn't work". Many altcoins were destroyed, because of poorly implemented Merged Mining, and now, a lot of people think, that it is a bad idea, because the same mining power can be redirected at something else, with no additional cost, and can be used to do some harmful things.

Why hasn't this been tried?

Because many people don't understand sidechains, and they think the system works differently, than it works in practice. For example: some people argue, that all full nodes will have to trace all sidechains. Or that all miners will have to mine all sidechains. Or some people worry, that all miners will try to steal all coins from all sidechains, and kill The Goose that Laid the Golden Eggs, instead of taking just fees, and letting them grow

I agree with a lot of what you wrote but I was referring here to sidechain models that are already possible with the current Bitcoin Script capabilities.

Basically, I'd simply fork Threshold's tBTC model to an altcoin chain with EVM (it seems to be based largely on EVM-compatible smart contracts which operate on several PoS chains) but with consensus powered by a merged mined PoW algorithm. I think this is a relatviely low hanging fruit, and that's why I'll asking myself why that hasn't been done - and the answer for me was until now: because it's not profitable for the dev group, or less than a tBTC chain with PoS and premine. But maybe this is short-sighted. Perhaps the community could reach out to miners to support such a sidechain, if it could benefit them in the future.

Practically speaking, you're right. It will be very hard path. BUT let me ask again, AND merely speaking from a context of discussing ideas - Is removing the supply cap something that the people in the community are starting to open up their discussions into, OR is it still an idea that's "blasphemy"?

I do consider it 'blasphemy' and the opposite of what Bitcoin is supposed to be.  But I do not mind a discussion or a debate, although there is probably no argument in the World that could change my mind.  I am very aware however that for pretty much all of the Bitcoin community the answer is a hard, straight, undebatable NO.

The main idea is that, if the limits of Bitcoin as a Currency are modified in time it makes Bitcoin volatile, uncertain, untrustworthy.  Hell.  It would make ME go away!  And see.  I do not have the same opinion about the Monero tail emissions so it is not a subjective thing about scarcity.  It is simply that it changes the 'quality' of Bitcoin if it makes sense.  Changing the rules in the middle of the game and with unknown consequences.  Consequences could be fatal if panic, distrust and all the rest of the hell breaks loose.  Remember SegWit and how much stress there was in the air at the time?  That was nothing compared to what this would do!

That's the "default" way of thinking among Bitcoiners, and I respect that. But I'm truly curious if more and more people believe that removing the supply cap would be a good idea as well since Peter Todd mentioned that it's more sustainable  for the network to have some sort of inflation of supply to support miners.

I do not believe the number of people who believe removing the supply cap would be a good idea is increasing.  If we ever get close to a necessity of that happening, we would probably get as close to it as we can when the price of Bitcoin does not offer significant increases every Halving any more and Miners are starting to feel their operations as a burdern and an expense rather than an investment with returns.

And I do not know if it will even happen at all considering the higher the price Bitcoin has, the more monetary return they will get from Fees while the Block Reward decreases.  It is thought thorough enough even for the 2140 situation because while the price of Bitcoin and usage increases and the Block Reward decreases, Fees we consider small today will be worth a lot more by then.  Enough for their Mining operation to STILL be worth it.

Now say you are right and Mining will soon not be sustainable any more.  If we ever get there, I presume it may happen about five to ten Halvings from now at the very earliest when Miners may start to seriously feel a decrease on their Block Reward returns.  Because if one thing is for sure, it is that Bitcoin can not sustain incredible price gains every Halving and at some point it will probably only double on average every Cycle.  And still.  As usage increases, it will offer enough incentive through Fees in my opinion.  But I will continue your scenario.


Anyway.  I have yet to see Miners complaining about their profitability or even about the sustainability of Mining in the conditions of constantly dropping Block Rewards and a fixed supply.  If there is a time where people are going to be ready for discussions around the supply cap, I imagine that would be the time.  Or maybe I missed such complaints, although I doubt it?

let's summarise:

There are two major issues with Bitcoin which will need addressing at some point:

• Security Budget Issue

(low fees + diminishing returns make mining less profitable. BSI* already too low)

• Centralisation

(as miners pivot to AI, the remaining miners get paid more but network gets increasingly more centralised)

*BSI - Bitcoin Security Intensity = Annualized miner revenue (block subsidies + transaction fees) / Bitcoin Market Cap. BSI has fallen to 1.2%, down from 3.9% in 2014, due to halvings reducing block subsidies and stagnant transaction fees

The issue won't 'start' in 2140. It's already here. Let me explain.
For miners to maintain their current revenue levels while subsidies halve (and let's not forget that these revenues aren't even that attractive anymore as 8 major miners pivoted to AI already, so I agree with Mia Chloe here), the price of Bitcoin would need to at least double with each halving, as Wind_FURY mentioned. I'll let you work out how much each BTC would have to be worth in 2140 if that was to happen...

...OK, OK, I'll do it for you. Each BTC would be worth approximately $53.7 trillion representing 11.3 million times the current global GDP of $109 trillion.
that's PER COIN!
How likely do you think this is to happen?

let's work out when this would become a problem then because we sure as hell won't have to wait 114 years for something to break as cookdata suggests. In as little as 30 years Bitcoin's mcap would need to reach global GDP levels if the price was to doble every halving and at least I for one, very much plan to be alive by then! (I'm looking at you Zaguru12 ). Plus it's not some kind of magic threshold after which no one will want to buy Bitcoin anymore. Sooner or later investors will realise that this will become a problem and they may divert their liquidity where there's no such known issues looming. It would be unwise to plan on waiting 30 years to only start worrying about it then or wait till others consider this future to be an issue first, before we react.

So we have miners that started pivoting to AI (where returns are much higher) due to pretty much non-existent fees and where price appreciation won't solve the problem because it's mathematically impossible. We have a security budget of about $10 billion or so annually (some estimates reach $40bn depending on assumptions) for an asset worth over a trillion USD, representing ~1% of its value (USA security budget is at around 3.5% level of its GDP which serves as a pretty good benchmark) and which does not scale with Bitcoin's price, as tromp pointed out. Some OG's say that the very value of Bitcoin lies in its security and I can see why.
In other words, we expect to have a mcap in the septillions (one septillion being a billion trillions) with a $10-40 billion security budget? yeah, that's going to end well...

If Bitcoin's mcap is expected to reach $10T within 10 years or so, are we happy to have a security budget of 0.1% of that? I don't know about you but I defo want to be around in 10 years. The disparity keeps growing with mcap, so eventually it will become irresistible for an agent (probably a nation state, as Satofan44 aptly mentioned) to attack it. An attack does not have to be economically motivated. It can be ideologically motivated Comeacross. This way they could deliver a significant blow to the west who's economies get increasingly more intertwined with Bitcoin, even if they don't make money on it. How? China for example could 'request' their mining companies to help them with this and suddenly it's no longer technically impossible.

It's all speculation at this of course but if we want the world (which unfortunately includes financial institutions, nation states etc) to adopt Bitcoin then Bitcoin will have to be secure enough for the world (and these entities) to have at least the same level of confidence in its security, as they do now, so we don't need an attack to happen. We just need people to realise that it could happen because Bitcoin isn't secure enough (hope that answers your question somewhat odolvlobo).
philipma1957 calculated that in as little as 22 years (or less) Bitcoin will be ripe for an attack and that's not that far off either.


So what do we do? Increase supply? Fork it? Steal Satoshi's coins? [insert facepalm here]
Will fees take care of the issue perhaps? How exactly do you envisage fees to magically increase to adequate levels @ Ambatman, suzanne5223, LFC_Bitcoin, BlackHatCoiner and Myleschetty? or is it just wishful thinking? I'm not sure financial institutions and nation states will want to participate once such discussions become mainstream, based on wishful thinking or Satoshi's 'divine design' (excuse the sarcasm). The reality is that Bitcoin became a store of value and it's quite clear that it will not be used as a payment network. As a store of value, the activity is more likely to decrease, not increase, taking the fees down even further.

This is not a problem that we can't solve and Bitcoin CAN survive, we just need to remain open minded about it and consider alternative solutions. Ideally, we want to leave the code alone and for the love of God we definitely don't want to increase supply (the one thing that humanity got right in finance and we want to ruin it?! I mean c'mon... PrivacyG you should know better   ). Sure Bitcoin would survive an increase of supply and even an attack, but who would buy it then? OG's from Bitcointalk? That's not going to double the mcap every halving is it?


d5000 very smartly suggested sidechains/merge-mining which is probably the direction we should be looking at whether we're willing to accept 'shitcoins' becoming part of the equation or not. What conditions should such token have to meet? Decentralised, no ICO, no VC round or private sales, no premine, no allocation for foundation/developer/treasury/advisor or insider unlock schedule etc, etc ,etc. This rules out existing merge-mining projects such as RSK and it leaves two other.
- Namecoin which has a value proposition built around its decentralised domain name system use case (sadly not successful since it was launched back in 2011). And as athanred noticed merge mining doesn't work for some reason.

- DMT-NAT which is a more recent project with over 40k+ holders (none with more than 1% of supply) which is perhaps more interesting because it's Bitcoin-native rather than a separate entity (issuance tied to bitsfield) and its core function is to solve Bitcoins Security Budget issue as a companion-token rather than via merge-mining (it gets deposited at coinbase level to miners that win a block whether they're aware of it or not).

Can either of these succeed? I have no idea. I do have to admit though that I have a bit of a soft spot for NAT, because as far as I can see, it solves all our issues by boosting miners' revenue (rivalling fees at $500M market cap and matching subsidies at $350B), drives hash rate expansion, and optimizes the metrics: BSI >1% and Energy Security Ration (ESR) >50%. it 'just' needs to breakthrough and grow its mcap to levels at which the second subsidy will make a difference to miners (easier said than done, I know).
I for one am planning to support this project, so it can fulfil its mission to save Bitcoin, rather than wait for 'devs to do something' once s**t hits the fan (an attitude expressed by a surprising number of Bitcoiners). They cover their eyes and ears and keep saying that everything will be fine. Oh how I wish life was that simple... reminds me of that meme with a guy in the middle of a fire (that's not a dig at you Synchronice... OK maybe a little   )

Have I missed anything regarding NAT? tell me where I'm wrong before I lose any money.


Should we continue looking for a better solution then? Absolutely, and I'll be watching these types of discussions closely.


If anyone wants to question any of the above I refer you to a the comprehensive article I've written on this subject which can be read on medium for free/without subscription:
Boring article on Bitcoin's Security Budget that you definitely don't want to read

[treesintheforestooh]

Seems to me in many respects there's missing the forest for the trees.

One way that has helped me understand where we stand and where we may or may not be going is the Bitcoin Security Index (BSI).

While user d5000 has a perspective where an attack is bounded by time (i.e. the Cost of Attack is directly related to someone motivated by monetary profit) the BSI - in my eyes - is more representative of the topic and issue in whole.

Namely: an attack will NOT be monetarily motivated, but ideological and political in nature.

As such, a return on investment is not measured in a return on money/monetary profit, but in fear, destabilization, and uncertainty.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

BSI = miner revenue/marketcap

In 2014 it was at about 3.9%. For reference, the United States spends about 3.4% of GDP on security in the form of the military and other defense (low estimate; probably higher with "black" projects, etc...).

Right now, 2026 BSI is sitting at about 0.80%. (note: this is slightly out of date, the current BSI is actually lower, as this calculates BTC at a higher fiat value than where it current rests, though is still moderately accurate)

Daily Miner Revenue: $35.89M (block rewards + fees).

Annualized Revenue: $35.89M × 365 = $13.1B.

Market Cap: 20,026,037 BTC × $81,291 ≈ $1.63T.

BSI = ($13.1B / $1.63T) × 100 = 0.80%

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

That's all to say that the current amount of money protecting the Bitcoin network is a small fraction of what itself protects and incorporates.

At current levels, I don't understand how anyone can feel comfortable - as the current Cost of Attack is low enough for any number of nations to cover, particularly if they are not interested in monetary profit. That's also not including to possibility of two or more nations - along with mercenaries or "l33t hackz0rz" groups - joining.

As another user mentioned in another thread related to this topic:

As Bitcoin becomes more intertwined with US economy, it's not beyond the realms of possibility for an actor(s) to attack the network with a goal to derail the west. Maybe not today or tomorrow but at some point. For example, imagine China saw an opportunity here to hurt the west and 'requested' Chinese miners to cooperate, whether they make money on it or not. This may sound far fetched but political landscape changes fast.

That's just a hypothetical, of course, highlighting China - it could just as easily be the U.S. attacking the network if China (as it currently is) dominates much of the hash-rental space and overall interest in Bitcoin (by sheer population alone, as well as military force).

It's paramount we protect Bitcoin and insure it's decentralization. Currently, miners are pivoting to AI and shutting down at (very, imo) worrying rates.

Fees can not cover the cost to keep Bitcoin miners and the network decentralized. It's just not in the math. Even at $100,000 fees *per block* that only adds about $5B of annualized revenue spread among all miners. If Bitcoin is to remain a Store of Value, which it sure appears is the trajectory, fees won't be anywhere remotely close to $100,000 - and definitely won't be a network usable by the average Joe.

Layer 2 solutions don't add to transaction fees and revenue - indeed, it's the opposite.

Going back to the BSI a little bit, let's say by 2032 each bitcoin/BTC is worth $10,000,000. That would equate to a MC of 21M x $10,000,000 = $210T.

Miner revenue (annualized) would be $410,625,000,000.

The BSI in that case would be 0.19553. Lower than it is now.

In other words, even at $10M value for each Bitcoin in 2032, the network would be 4x less protected than it is now (BSI = .8 now to BSI = .2 then). If BTC is lower than $10M by 2032, then the BSI is also lower and the network would be easier to attack/more profitable to attack in political terms.  

The Cost of Attack for Bitcoin would be a worthwhile endeavor for an organization to undertake - especially if they merely wanted to create an air of fear and uncertainty with a terrorist attack. It wouldn't take much in the face of us now seeing the world's first Trillionaire, not to mention, of course, the aforementioned nation-states, institutions, agencies, and associated mercenary groups.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------  

Ideally, a solution would be one that doesn't require forks, demurrage/taxation, merge-mining, explicit consensus change, faith-based security, and/or nutty argumentation.

Ideally, a solution would be a 100% Bitcoin-native mechanism that expands the security budget from within - not leaving it up to faith (or fees) - non-arbitrarily.

There is one such solution as it stands now. To be clear, I don't necessarily think it's THE only solution, but it is one solution - one among many that we will need, I think.

In my eyes, Bitcoin is far, far, far, far too valuable to leave up to hope and faith. That's the current course. Just hoping everything will turn out well. History shows that such a lack of preparation is recipe for disaster.

We have the hardest data layer ever - in all of human existence. There's nothing like it in all of history when accounting for the speed of communication and worldwide breadth. The thermodynamic properties of Bitcoin are unparalleled. It's hard to understate how important it is we actively and proactively protect this unique, awesome network.  

[Satofan44]

If anyone wants to question any of the above I refer you to a the comprehensive article I've written on this subject which can be read on medium for free/without subscription:
Boring article on Bitcoin's Security Budget that you definitely don't want to read

There is one such solution as it stands now. To be clear, I don't necessarily think it's THE only solution, but it is one solution - one among many that we will need, I think.

Fuck off with promoting DMT-NAT from new alt accounts, it is never going to be a thing. Nobody has interest in yet another wannabe savior of the network, enough of the savior complex. No amount of whining and complaining on the internet about this will get anyone interested in your nonsense. Imagining a problem with made up assumptions, and then delivering a "solution" is a classic snake-oil tactic. Let's see how it works. The number of transactions that Satofan makes per year is directly tied to the security of Bitcoin's network. Given that the number is low this year, this shows us that we are at risk. To solve this, here is a shitcoin-scam solution called Satofan-NAThereum.  
Fact 1: None of you here know anything about geopolitics, you are like toddlers playing a video game imagining that you are the hero of the story and that you know what is going to happen.
Fact 2: We have established only a nation state attack is possible.
Fact 3: We have established that motivations are therefore not going to be economic.
Fact 4: If motivations are not economic, then the attack if doable can be done today -- there is no need to wait for anything, the budget does not matter for a nation state of this level. Whether the cost is $10 billion or $50 billion is irrelevant.
Fact 5: Miner revenue has nothing to do with security budget. The security comes from the total deployed hash rate and capital invested to make that happen, it is not one year's worth of mining income.
Fact 6: "Market cap divided by miner revenue" is a completely invented ratio. There is no valid theorem in either economics or cryptography which proves that a monetary network requires security spending proportional to its market capitalization, other assets or currencies do not obey this either. Yet another completely made up thing.
Fact 7: A 51% attack has nothing to do with "destroying Bitcoin". It can create temporary chain reorganizations, double-spending and other issues but it does not let an attacker steal coins, now forge signatures or make arbitrary rewrites or change the protocol rules.
Fact 8: If the premise is that a nation state would be willing to burn tens of billion of dollars for purely political reasons, then the concern has nothing to do with the BSI ratio. You have made a case that is completely illogical, whether the miner revenue is 0.8% or 4% is completely irrelevant because under your own assumptions the attacker is not optimizing for profit.
Fact 9: Bitcoin is not a dead animal, it is not a passive target. If there is any indication that a nation-state attack is in progress or is about to happen it would trigger emergency responses from every significant network participants. Confirmation policies would change, deposits can be paused and if absolutely required we can change the protocol. To succeed with an attack you have to defeat both the protocols and the humans that are operating and using it.
Fact 10: The whole idea about these attacks assume hash rate is static. The practical reality is completely different, an attack that threatens the network creates powerful incentives for idle hardware to come online, new capital to enter mining and existing miners to expand. Security is not static, it is dynamic and incentive based. You can barely do any kind of abstract thinking, so stop imagining that you are capable to simulate complex incentive changes in an entirely specific situation involving a variety of variables.

Final fact: The conclusions presented do not follow from the premises. If BSI falls over time, it does not imply that Bitcoin becomes easier to attack. To conclude that would require to demonstrate that attack capability is growing faster than the network hashrate, that the decentralization will deteriorate sufficiently and that defenders can not adapt in any meaningful way. None of these points are established.

TL;DR: Shut the fuck up and stop hallucinating.

[treesintheforestooh]

 

... savior of the network, enough of the savior complex.

 

Not sure if you're directing that at me, but I specifically said it's one potential solution among many.

A market-funded secondary reward for proof-of-work, same energy and hash as bitcoin, one that does not require a hard fork, isn't merge-mining or taxation, and does not alter the 21 million limit is 100% worth evaluating technically.

Something that doesn't involve VCs and was initially a free and fair distribution and Bitcoin-native is intriguing. All those boxes are ticked when it comes to the aforementioned asset. It wasn't originally released as anything close to what it has become - it's been through miners actively engaging with it AKA "the free market" where it's gotten a reputation as a second-subsidy. Over 60% of world hashpower (almost all based in China) has integrated/engaged with it. It would be deeply unwise to ignore.  

At the end of the day, it's more money in the pockets of miner's to keep the lights on - and the network more decentralized - which is a good thing for the wider, more honest and noble among us.
  
With that said, and to be abundantly clear, I'm all for other deterrence methods and tactics. I'm far more interested in seeing Bitcoin - which I primarily value as a (future <sigh>) separator of money and state, as well a hardened data layer for historical use - survive and thrive with or without any one particular solution to security.  

I'm not interested in attacking you personally and believe you have some valid points. Let me repeat that: I believe you have some valid points.

With that said, the perspective and anger you're communicating comes across (at times) as strong cognitive dissonance with (some) illogical, contradictory bias, confusion, and insecurity.

Let me clarify:  

You must remember that there is no measure that solves problems for good, that is not how computer security works. It just makes them harder, more expensive, more difficult, or disables some particular cases.

Agreed. A multi-pronged approach to the security budget, including a market-based option built on abundant non-arbitrary Bitcoin data, can make attacking Bitcoin harder, more expensive, and more difficult. As well, it creates new value where there previously was none, encouraging would-be attackers to take part in the new market instead.

You make a fair point [about small 51% attacks] ... Back to your note, I agree that this attack [small 51% attacks] is more dangerous because it has a much higher likelihood (relatively speaking) of occurring. While an individual case would not kill Bitcoin by a long shot, it may not even cause severe damage but it would deal a good blow -- repeated cases of these blows would cause a lot of trouble.

Agreed again. Deterring attackers - primarily nation-states and mercenary groups (presumably paid by nation-states) and rented hashpower - by making it more expensive/costly to attack is a good thing. The lower the cost of attack is, the greater chance savvy, prepared, and advanced attackers will have in successfully deploying a "death by a thousand cuts" sort of tactic. Increasing the cost of attack is the wise course of action. Ignoring a decreasing cost of attack is folly.

It is either embrace the change with massive losses inflicted to the miners or let Bitcoin die. Why would anyone with a working brain choose the second option?

The context of your discussion there in that dialogue isn't quite the same as here, to be fair, but I think it's moderately fitting nonetheless.

People falsely understood that Bitcoin's cost to attack and mining power have to always increase, they do not. Even if we flatline or decrease for 5 or 10 years it would not have any impact at all. The issue is that most people are terrible at nuanced thinking, so you can only think in terms of "secure and not secure". A reduction of mining power even by 50% of what it is today would be still extremely secure.

The space is going to be different, don't waste time speculating the future when you can't even accurately forecast what is going to happen the next year.

This is non-nuanced thinking - exactly what you're deriding people for. It's also imbued in some of the Facts you listed, as well. I'm not going for character assassination here, just wanting to point that out - that you and I and everyone else here are human (presumably, heh) and have human characteristics and varying degrees of emtional response.  

Indeed, it's fallacious. One not knowing *all* variables moving into the future does not equate to an impossibility in surmising possibilities, events, or motivations. Furthermore, it does not negate preparing for them in a judicious and intelligent way.

(How would this work, losing 50% of hash? Would all the associated ASICs and other mining machines disappear, too? If not, then ipso facto, there's a resting 51% attack potential then and there.)

More to the point: pretending 450EH/s makes for a secure Bitcoin is highly questionable in the face of countless old ASICs sitting around, cheaper/cheapening hardware costs in general, and cheaper & cheapening electricity costs. We've already seen some large reorgs recently (the Foundry, AntPool, and Via related one about a month or two ago?) where such a reduction in hash would necessarily reduce the cost of attack in a material and substantial way, reduce overall confidence of the network, reduce users' confidence, reduce adoption, increase negative press/narrative, and reduce the reliability of final settlement. Not mentioning severely knee-capping incentives to remain honest.  

We will implement measures that will make the attack so costly that it will be near impossible.

Yes, I love it. Agreed.

I have said it a few pages ago, even a 50% drop in the security budget would be extremely secure.

...

Nobody knows anything for sure, and anyone who is claiming otherwise in a matter of confident is a scammer or an idiot.

Nothing ...^{to add here...}

...

... other than I don't think you're an idiot or scammer, though I do think there's some serious cognitive dissonance, confusion, bias, and insecurity on this topic generally speaking.

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I would like to address some of the listed facts.

It does certainly matter if the cost of attack is $10B or $50B. That's a difference of 5x the money/energy/cost. Furthermore, it can be increased to a greater degree to further disincentivize an attack. No one here is saying nation-states have unlimited funds/energy other than you. Risk vs. Reward is still a concept used by humans both in and out of positions of power. The assertion here (tied to Fact 8; something of a repeat) is an appeal to extremes and borderline reductio ad absurdum.

Saying "miner revenue has nothing to do with the security budget" is incorrect. Expected miner revenue supports the formation of capital, along with hardware acquisition, as well as ongoing participation; if revenue falls too far, miners exit and the attack cost falls with them - and the network becomes more centralized.

BSI *is* a completely invented ratio - you're right. Just like the GDP, CPI, fiat itself,  Price-to-Sales, and more. It's a gauge, a heuristic, and number to reference to identify trends intelligently. The current trend related to Bitcoin and the security budget is that a ~$1T MC network is only protected by a few $B - and it's going down. That's important to know in my opinion.

As well, there's nothing else like Bitcoin on the planet or in all of history. The comparison to other currencies and assets and their security is largely misinformed/dishonest.

Fact 10 and Final Fact can play both ways. Both ways it can play. Nevertheless, I *do* agree in many respects with your sentiment around both of them, to be clear.

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A Bitcoin-native, market-funded secondary reward that preserves the 21 million cap and requires no hard fork, merge-mining, or issuance change - one that comes from the same energy and hash as bitcoin itself - is worth discussing in a post/thread such as this. Without a doubt whatsoever.

We all want Bitcoin to succeed. And it almost assuredly will, though that's not to say there aren't nuances and degrees to which it can and will succeed. We want to maximize its credible neutrality, decentralization, and immutability.

 

[BlackHatCoiner]

Will fees take care of the issue perhaps? How exactly do you envisage fees to magically increase to adequate levels @ Ambatman, suzanne5223, LFC_Bitcoin, BlackHatCoiner and Myleschetty? or is it just wishful thinking?

To be honest with you, I don't think fees will significantly increase. If Bitcoin is used as currency more than hard money store-of-value, then there is hope in L2 like Ark, which can lead to network congestion overtime, but even if these Layer 2 solutions succeed in sustainability, costs and user-friendliness, I doubt people will care to pay in Bitcoin.

I think the world will primarily use Bitcoin as a store-of-value, unless something extraordinary happens to our freedoms. Therefore, I think the hashrate might reach a point when it will decrease.

[treesintheforestooh]

I think the world will primarily use Bitcoin as a store-of-value, unless something extraordinary happens to our freedoms. Therefore, I think the hashrate might reach a point when it will decrease.

I am inclined to agree. From the looks of it, the Powers That Be - namely the larger Wall Street regime and network (state) - need a way out of their sheer psychotic nature, incompetency, and avarice. Bitcoin can do that pretty well, and even better if it's more centralized and under their control. That regime/network has more power and influence than any other in the history of humanity, I contend both qualitatively and quantitatively, particularly with the newfound ability to communicate at lightspeed around the world and better understanding of human psychology. Such a reality is a big factor in my position on this topic. 

[suzanne5223]

So what do we do? Increase supply? Fork it? Steal Satoshi's coins?

There's nothing we can do since the program put together to create Bitcoin is good, and there's no need for any fork. Besides, fork coin will always be a shitcoin.

Will fees take care of the issue perhaps?

Issue like? Because I don't see any issue apart from miners concern on mining expense

How exactly do you envisage fees to magically increase to adequate levels

BTC transaction fee increases are determined by the condition of the mempool (which is here unconfirmed transactions waiting in a queue).
When there's a huge number of unconfirmed transactions in the mempool, Bitcoiners intend to compete by using higher fees, while some use RBF when demand for block space is high, since miners always prioritize transactions with the highest sat/vB.

[Myleschetty]

So what do we do? Increase supply? Fork it? Steal Satoshi's coins?
Will fees take care of the issue perhaps? How exactly do you envisage fees to magically increase to adequate levels

Satoshi coin is unrelated to all of this since the mempool, miners' choices about which transactions have high fees, and the use of high transaction fees by Bitcoin users determine whether or not fees will rise.

I'm not sure financial institutions and nation states will want to participate once such discussions become mainstream, based on wishful thinking or Satoshi's 'divine design' (excuse the sarcasm).

They have no choice but to participate; if they don't, it will be to their detriment, and Bitcoin doesn't need them to survive or grow.

The reality is that Bitcoin became a store of value and it's quite clear that it will not be used as a payment network.

In addition to being a store of value, Bitcoin can be used as a payment network. If you prefer not to use the main network, you can use the LN network for fst nd low fees.

As a store of value, the activity is more likely to decrease, not increase, taking the fees down even further.

Even in the event of high transaction fees, the use of Bitcoin as a store of value will continue.