2 - 4 minute read
A topic that has received increased attention lately is the concern around Bitcoin’s future “security budget.” This mainly stems from the worry that miner revenue will not be enough to offer adequate security in the future, post block subsidy. In this opinion editorial, I’ll be discussing why I believe those concerns are misplaced and that there are two key factors that will protect Bitcoin into the future, even without a mining subsidy.
Transaction Fee Scaling:
One of the main arguments against the long-term viability of Bitcoin is the concern that the end of the mining subsidy will lead to decreased security on the network. However, I believe that these concerns are largely unfounded, and that there are other factors that will continue to incentivize miners to participate in the network. One of those factors is the natural increase in transaction fees that will occur as the adoption of Bitcoin grows.
As more people use the Bitcoin network and the demand for transactions increases, the competition for block space will also increase. This competition will lead to higher transaction fees, as users are willing to pay more to get their transactions included in the next block. In fact, in the event of an attack on the network, such as an attempt to mine empty blocks in order to prevent users from transacting, the resulting competition for block space could lead to significantly higher transaction fees.
This is especially true given that Bitcoin’s design includes an immune system that is capable of defending against attacks. A report from Riot Blockchain and Blockware Solutions outlined how an empty block attack or other attempts to stop users from transacting could be met with natural defensive mechanisms, resulting in much higher transaction fees. These higher fees would provide an additional incentive for miners to continue participating in the network and help to ensure its security.
Mining as an Auxiliary Tool:
In addition to transaction fee scaling, the second factor that will protect Bitcoin into the future is the transition of mining from a primary security measure to an auxiliary tool. While mining will always be a key component of the Bitcoin network, it’s important to remember that it’s not the only security measure in place. The proof-of-work consensus algorithm is just one layer of security, and there are other measures in place to ensure the integrity of the network, such as the use of multi-sig transactions and the Lightning Network.
As these and other technologies continue to mature and gain adoption, the importance of mining as a security measure will likely decrease. While miners will still be responsible for proposing and validating blocks of transactions, their role in securing the network will become less central. This transition will allow for greater decentralization and reduce the reliance on mining as the primary security measure for the network.
While the end of the mining subsidy may bring some changes to the way the Bitcoin network operates, I believe that the factors of transaction fee scaling and the transition of mining to an auxiliary tool will continue to protect the network into the future. While it’s natural to have concerns about the future of any technology, I’m confident that Bitcoin will continue to be a secure and valuable asset for years to come.