The Cost of Bitcoin’s Security

Fears over the declining block reward are real.

Rusty Russell
May 28 · 1 min read

I hypothesize several hundred billion, in present value USD, would be an adequate security budget — Dan Held, https://blog.picks.co/bitcoins-security-is-fine-93391d9b61a8

Dan dismisses concerns about Bitcoin’s security once we transition to fees; he’s wrong. [Note: Dan claims I misread maliciously, and that is an annual budget, hence I have fixed up below.]

Taking his quote above, let’s assume we want it to cost $̶1̶0̶0̶ ̶B̶i̶l̶l̶i̶o̶n̶ $700 Million USD to undo 100 blocks, widely considered an “uncrossable threshold” in bitcoin; at that point, miners’ coins start disappearing and chaos ensues.

That implies we’re paying $̶1̶0̶0̶ ̶B̶i̶l̶l̶i̶o̶n̶ 700 Million USD in fees per 100 blocks, so each block costs $USD 1̶B̶ ̶i̶n̶ ̶f̶e̶e̶s̶!̶ $7M in fees.

With the absolute theoretical future best-case (Schnorr sig sharing into one giant coinjoin) we can squeeze about 10900 inputs and outputs into a block; giving us a fee of $̶1̶0̶0̶,̶0̶0̶0̶ $700 per transfer.

That’s why there’s genuine concern about Bitcoin’s security as the subsidy is removed, and at the same time a real concern over fee levels for those who want it to be used by non-millionaires; $10 fees gives us at best 1/70 of the security budget Dan says is adequate.

Rusty Russell

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Rusty is a Linux kernel dev who wandered into Blockstream, and is currently trying to produce a prototype and spec for bitcoin lightning. Hodls bitcoin (only).