Bitcoin Not Going to Last Says Vitalik Buterin

Aleading light in the crypto world, Vitalik Buterin, the man behind Ethereum (ETH), believes Bitcoin (BTC) cannot compete in the long term. According to an economic journalist and former Bloomberg columnist, Noah Smith, Buterin believes Bitcoin may reach a point where it cannot generate enough fees to maintain security.

Ethereum will switch from proof-of-work mining to proof-of-stake mining in the next week or so. On the other hand, the crypto granddaddy Bitcoin continues to use a proof-of-work system. It's because of this that Buterin is pessimistic. Besides using a fraction of proof-of-work energy, Buterin argues that proofof-stake will prove more sustainable in the long run. Let's unpack his two biggest concerns.

Insufficient fees make Bitcoin insecure.

Blockchain technology offers increased security, especially for big cryptos like Bitcoin. However, Buterin says we shouldn't assume the Bitcoin network is always secure. A close connection exists between efficiency and security, according to him. "Every dollar you spend on paying for security, how much can you get for that dollar?" he asked. To prevent bad actors from manipulating blockchains, blockchain uses different models. These include proof-ofwork and proof-of-stake. Proof-of-work rewards miners who validate blocks by giving them new coins as they are created. However, Bitcoin will only be able to produce a limited number of coins. Miners will eventually not receive new coins, only transaction fees.

It is Buterin's concern that this will not be enough. The security of Bitcoin depends entirely on fees, and Bitcoin is not generating the fee revenue needed to secure a multitrillion-dollar system. "Around $300k of Bitcoin fees are being charged daily and haven't increased in five years," he added.

Proof-of-work could compromise Bitcoin's security

Buterin wonders, "What would the future look

like if there were $5 trillion in Bitcoin, but it only took $5 billion to attack it?". With enough money, Buterin believes bad actors could subvert Bitcoin's network without getting too technical. Traditional currencies are very different from cryptocurrencies. With the blockchain, they don't need a third party to maintain them, such as a bank or government. It could, however, leave them vulnerable to a variety of attacks.

According to Buterin, the amount an attacker must pay to attack is what determines how secure you are. There are medium ongoing costs for proof-of-work miners and medium entry costs, according to Buterin. On the other hand, a proof-of-stake validator has low ongoing costs and high entry costs.

Ethereum is moving to a proof-ofstake system, and he doesn't think Bitcoin will follow suit. A Bitcoin attack would, however, quickly change people's minds.

Investors' implications

There's no doubt that Buterin is a crypto legend worth listening to. Known as Ethereum's driving force, the 28-year-old has spent years immersed in everything blockchainrelated. There's little doubt that he is right about the long-term security risks associated with Bitcoin's proofof-work validation model. There's little doubt that he is right about the long-term security risks associated with Bitcoin's proof-of-work validation model.

Also worth noting is that Ethereum transitions away from the proofof-work model he criticizes this month. Consequently, Buterin

is in a good position to explain its flaws. Buterin must win over Ethereum's community by proving proof-of-stake has its critics. The biggest cryptos have run on proofof-work models up until now, so it isn't as well tested. A more centralized approach also has its disadvantages.

There's still a lot to play for despite Buterin's concerns about its security. Some long-term investors, such as Jack Dorsey, believe Bitcoin will be the currency of the internet in the future. As a type of digital gold, Ark Invest believes it could gain market share in the international remittance industry, as well as act as a currency in emerging markets.

In summary

By doing your research, check out how the Bitcoin community might handle this issue before it becomes a problem. Take a look at what other crypto experts have to say about proof-of-work versus proof-of-stake. Keep an eye on how Ethereum's move to proof-of-stake evolves and what problems it faces.

Take your time if Buterin's words are making you wonder about your longterm view, and you're considering selling your Bitcoin. It's not a security risk that could undermine the system next week.

The last Bitcoin will be minted around 2140, but fewer and fewer new ones will be created over time. Don't rush any investment decisions. With Buterin's warning in mind, take into account the risks and opportunities associated with your crypto portfolio.

—Crypto Weekly