Vitalik Buterin and his attack on Bitcoin
The fact that the relationship between Bitcoin maximalists and Vitalik Buterin has always been tense is not a secret to anyone. And that more or less veiled barbs are just OK. This time, however, it is Buterin who leads the attack in a long and interesting interview with Noah Smith. An interview in which, in addition to merger issues and the general state of the market, there was a place for Bitcoin. With some answers that may not appeal to those who love BTC and have always considered ETH a kind of “illegitimate child”.
The question asked by Noah Smith sounded like: “Estimates of Bitcoin’s energy consumption show a fairly close correlation with its price. This does not apply to, say, stocks, houses or gold — none of these assets require an increase in the amount of energy to maintain higher prices. This appears to represent a force that will push the price of Bitcoin down in the long run. Isn’t it?”
A relatively unbalanced view, at least according to those who write it. At the moment, the correlation is sluggish, but still represents a problem that is worth discussing openly, as is customary in the Bitcoin community. Vitalik Buterin answered this question as follows:
“I generally consider the interaction of Bitcoin supply and demand, and the way supply is formed, as two separate issues. The periodic difficulty adjustment ensures that the number of Bitcoins issued is set according to the roadmap: 6.25 every 10 minutes today, 3.125 from 2024, and so on. This roadmap remains unchanged, regardless of capacity and price. And therefore, from an economic point of view, it does not matter whether the protocol offers these coins to miners, developers or rabbit breeders. And that’s why I disagree with the opinion that for some reason believes that mining supports the price of Bitcoin.
This exactly refers to what is believed to happen when Bitcoin mining halves (halving), which happens periodically every 4 years, and which for many is an important factor in the growth of the BTC”.
Then he added:
“The consensus system, which unnecessarily requires significant energy costs, is not only harmful to the environment, but also requires the annual emission of hundreds of thousands of BTC or Ethereum. Eventually, the issue of Bitcoin will approach zero, and then this problem will cease to be relevant. But then Bitcoin will face another problem: how to ensure security. And it is these security-related motives that have become the main driving force behind Ethereum’s decision to switch to PoS.”
Bitcoin and Ethereum contradictions
This question exists, and has been considered for some time in certain Bitcoin circles. It is not necessary to agree with Vitalik Buterin, but it should be recognized that the day will come, in fact, very far away, when miners who guarantee the security of the Bitcoin protocol will have to be “content” with fees, and will no longer have the benefits issued with each block.
At this point, the transition fee should be such as to support and justify the use of energy to maintain the network. There is a possibility that in the distant future the cost of energy will be such that it will not be a real bottleneck. And that it is the presence of processors that will be the limiting factor in the ability to score 51%.
Obviously, if Bitcoin is attacked in the future, it should be expected that the political will will be created to at least switch to a hybrid PoS system, but it will still be a painful transition.