Saturday, May 30, 2020

Vitalik Buterin Says Bitcoin’s Fixed Supply is Deceptive

Vitalik Buterin, Ethereum’s co-founder and CEO recently gave his opinion on Bitcoin’s finite supply of 21 million and the impact it could have on the network’s security. According to the CEO, decreasing the amount of coins that can be mined as well as the rewards earned by miner could pose a security problem in future, reports a medial outlet on March 28.

Vitalik Butering Engages in a Q&A Section on Reddit

Per the report, Vitalik Buterin recently engaged in a Question and Answer section on Reddit and he was asked how he felt about Bitcoin’s maximum supply. He said the notion of a decreasing reward for miners is kind of deceptive. Also, stating that Bitcoin is safe because miners are verifying transactions goes contrary to Bitcoin’s finite supply.

According to the CEO, the network is currently safe because miners are obtaining rewards to do so, but then, halving this reward every four years could bring about miners disinterest in verifying such transactions. And as such, we may still get the fixed 21 million supply but an insecure network.

Heavy Reliance on Transaction Fees

The CEO also makes reference to the fact that when the 21 million coins are reached, then miners will have to rely heavily on transaction fees, thereby turning the Blockchain into a fee-only model. Rewards will also be decreased by a factor of 50.

Buterin also said:

If you take Bitcoin’s hashrate and divide it by a factor of 50, it becomes not much stronger than what ETC has, and ETC got 51% attacked. So I think, in general, people should view promises of supply caps, even if they’re backed by angry and ideologically-excited people, as less credible than people generally view them now

Asides from Ethereum’s CEO, several other members of the cryptocurrency industry have aired their opinion that there is a need to increase Bitcoin’s supply. BTCNN on March 27 informed that Peter Todd, a Bitcoin core developer has proposed that Bitcoin’s limited supply should be shedded. He also said setting up a Bitcoin tax could prevent transaction fees from increasing significantly.

There are others in the sphere, who do not agree that there is a need to increase Bitcoin’s supply. In their opinion, it should not even be heard of. Bitcoin Cobra, the co-owner of bitcoin.org and bitcointalk.org while responding to Matt Longo’s tweet and that of another crypto enthusiast on February 5 said there will always only be 21 million coins and anyone who doesn’t agree, should be chased out of the community.

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