How will the Bitcoin network maintain its security as block subsidies disappear?

Around the year 2140, the Bitcoin network will reach an important milestone - all 21 million Bitcoins will have been mined. This means that Bitcoin miners will no longer receive newly minted Bitcoins as rewards, but will have to rely on transaction fees to sustain their operations. This change has raised concerns about the long-term security of the Bitcoin network.

The Evolution of the Bitcoin Incentive Mechanism

Currently, Bitcoin miners' income mainly comes from two aspects:

1. Block subsidy: The fixed amount of new Bitcoin obtained for mining a new block. This amount is halved every four years.

2. Transaction Fee: An additional fee paid by users to expedite transaction processing.

As time goes on, block subsidies will gradually decrease until they disappear, while transaction fees will become the only source of income for miners. This shift could have a profound impact on network security.

Risks Associated with the Decrease in Security Budget

The disappearance of block subsidies means that the "security budget" of the Bitcoin network will be significantly reduced. This may lead to the following risks:

1. Increased risk of 51% attack: The decline in network hash rate reduces the cost of malicious attacks.

2. Increased volatility in computing power: A decline in earnings may lead to a large number of miners exiting, causing severe fluctuations in network computing power.

3. Centralization Trend: Only the miners with the most significant economies of scale can survive in a low-yield environment, which may exacerbate network centralization.

Optimist's View

Despite the challenges, some experts are optimistic about the future of Bitcoin:

1. Bitcoin value rises: As the price of Bitcoin continues to increase, even a small percentage of transaction fees can provide miners with substantial income.

2. Increased demand for block space: New applications such as institutional settlement and layer two scaling solutions may significantly raise the demand for block space, driving up transaction fees.

3. Technological Innovation: Layer 2 solutions such as the Lightning Network can enhance the usability of Bitcoin and indirectly increase the transaction demand on the main chain.

Future User Experience

In a future that relies solely on transaction fees, the interaction of ordinary users with Bitcoin may present a multi-layered structure:

• Main chain transactions: may become expensive, mainly used for large transfers.

• Layer 2 Network: Such as Lightning Network, provides fast and low-cost solutions for everyday small payments.

• Cross-chain assets: such as wrapped Bitcoin, using Bitcoin on other Blockchains.

Conclusion

The long-term security challenges faced by the Bitcoin network are complex. Its future will depend on the interplay of technological innovation, economic incentives, and social consensus. Despite the potential risks, the Bitcoin ecosystem has over a century to adapt to this transition. In any case, the Bitcoin network after 2140 will be the ultimate test of its design philosophy and adaptability.