Vitalik Buterin predicts the end of Gold, Bitcoin and an unprecedented financial revolution by 2040

With the merger (the merge) fast approaching in September, the debate over proof of work versus proof of stake has never been stronger. Vitalik Buterin shared some thoughts on the future of crypto-currency, as well as the potential limitations of bitcoin’s current consensus model.

Vitalik: crypto could become “the Linux of finance.”

Vitalik’s comments on the state of the crypto industry always get attention, especially because people are interested to see what the Ethereum founder thinks of on the evolution of certain assets in the future. His recent comments about how crypto-currencies could become the “Linux of finance” have attracted attention.

Vitalik Buterin explained that over the next 20 years, from today to 2042, there are a whole series of problems that we as a society will be forced to face.

The future success or failure of crypto-currencies depends largely on how these individual issues are addressed, and how they affect the bigger picture.

If, by 2040, crypto-currencies have firmly established themselves in a few niches: they replace the store-of-value component of gold, they become a kind of “Linux of finance“an alternative financial layer that is always available that ends up being the background to really important things, but doesn’t quite take over the mainstream, then the likelihood of them disappearing or taking over the world completely in 2042 will be much lower.”

The problem of capping the supply of bitcoins

One of the main concerns that the Ethereum community often expresses about the long-term security of bitcoin is that there are limits to what can be achieved with proof-of-work.

Read:  Solana is experiencing its worst drop in almost two years, SOL plunges below $10.

In the long run, Vitalik believes that lowering block rewards will not be enough to sustain Bitcoin in the long run, since the majority of revenue will come from fees and there are not enough fees generated to scale such a large security budget.

For Bitcoin to be secure, the blockchain must be able to withstand a 51% attack. The higher the total hash rate of Bitcoin, the harder it is to carry out a 51% attack on the network.

Currently, miners are incentivized to mine by block rewards, which include newly mined bitcoins and the transaction fees generated in that block. Currently, 6.25 new BTC are mined per block.

Every two years, the number of bitcoins mined per block is halved, which means that in a few decades, the inflation rate will be extremely low, but miners will be competing for far fewer bitcoins.

This means that miners need to generate a lot of revenue from fees in order to remain profitable.

Also, for the Bitcoin network to remain secure, the hash rate must increase with the price: if the price far exceeds the hash rate, this is a problem, because the hash rate is effectively Bitcoin’s security budget.

Is Vitalik right about the PoW? Can this problem be solved?

Even at current levels, it would be extremely difficult for a single party to obtain a sufficient share of the hash rate to perform a 51% attack, given the high costs associated with setting up Bitcoin mining farms.

Vitalik’s argument that Bitcoin is inherently insecure and would be more secure with Proof of Stake, or at least a hybrid between Proof of Work and Proof of Stake, has yet to be proven.

Although innovations like the Lightning Network have made the mempool often quite empty and the fees generated have not increased much in recent years, the hash rate continues to increase.

Read:  What are crypto whales? Can they manipulate the crypto-currency markets?

Despite China’s 2021 ban on bitcoin mining, political uncertainty, denigration of proof of work by Aetherians and a major collapse of all markets, bitcoin’s hash rate continues to beat ATHs, meaning the network is more secure than ever.

Moreover, as Bitcoin becomes established and mining becomes a more fundamental part of energy companies’ business models, the future marginal cost of adding the hash rate for many industries is close to zero.

For countries like El Salvador, which already produce far more energy than they consume, the marginal cost of using geothermal energy to mine more bitcoins is close to zero.

When comparing the cost of mining bitcoins in different countries around the world, it is clear that the hash rate can continue to increase significantly as miners seek to arbitrage energy prices in different jurisdictions.

The price can drop much lower before it becomes uneconomical to mine, and there is also the difficulty adjustment to ensure the network remains secure.

However, the issue of declining revenue for miners could be an issue over the next few decades – even if the price appreciates exponentially, the lack of revenue generated from fees could cause the hash rate to slow down somewhat.

Other Proof of Work blockchains, such as Monero, have anticipated this from the beginning: in the case of XMR, there is a fixed rate of new XMRs that can be mined per block ad infinitum, which means that Monero miners have much more stability in predicting future mining needs, and will likely be able to continue to mine profitably for much longer.

Vitalik has a vested interest in Proof of Stake over Proof of Work, given that Ethereum has always changed direction since its inception. Now, in September, Ethereum will move entirely to Proof of Stake.

The Best Online Bookmakers July 14 2024

BetMGM Casino

BetMGM Casino