During an interview with Noah Smith (a writer and media personality), Buterin stated that he was worried about the future of bitcoin for two reasons. Both of them being
Among the potential problems that bitcoin might face in the future, Buterin mentioned its fee model as the first.
Bitcoin has a supply cap of 21 million coins. In simpler terms, only 21 million bitcoins will ever exist. Miners get rewarded with small amounts of bitcoin in exchange for securing the network. A model that runs fine with its current mechanism, as long as the last bitcoin has not been mined yet.
However, bitcoin's supply will reach its limit in the long term, and miners' services will no longer be required. Mining the cryptocurrency will no longer be possible, and the network will have to rely on transaction fees to secure the network.
This will happen sometime around 2140, according to experts. Buterin mentioned that this will be a serious problem because "bitcoin has not succeeded in generating the level of fee revenue required to sustain what could be a multi-trillion dollar system."
For context, the amount of fees bitcoin generates compared to other protocols has been under scrutiny for a while now in the crypto community.
According to data, bitcoin has accrued over $225,943 in fees over the past week, beating Defi giants like Polygon, SushiSwap, and Solana. Interestingly, the Defi protocol with the most considerable accrued fees over the last seven days is Ethereum, with $2,760,410 in fees.
Buterin's comments on this issue can be controversial if one considers certain aspects.
For example, he argues that it doesn't make much sense to have a 5-trillion-dollar network that costs only 5 billion dollars to attack. In addition to these comments, Buterin also mentioned that bitcoin abandoning its proof of work protocol would be 'politically infeasible.'
Well, some of the most ardent fans of the bitcoin network and protocol have argued that Bitcoin's proof of work mechanism is a fundamental part of its design.
However, both of Buterin's comments may be overlooked since the last bitcoin is estimated to be mined around 2140. More than a century from now.
The Ethereum network is set to merge with the beacon chain on September 15th, 2022, heralding its switch from proof of work to proof of stake.
With this new consensus mechanism, new blocks will be added to the blockchain by validators rather than miners. Ethereum holders must "stake" their coins and receive validation rewards. However, some of the biggest critics of the Ethereum network disagree with its move from POW to POS.
According to these critics, the proof of stake mechanism 'limits decentralization'. Vitalik Buterin, however, in his interview with Smith, pointed out that these assessments were 'plain wrong.'
According to him, POW and POS are often mistaken for governance mechanisms when they are consensus mechanisms. In simpler terms, the validators on a proof of stake network can validate a network but have no power to influence its future design.
Buterin's concerns over the future of bitcoin are not immediate threats and may take decades to become a real problem. However, the Ethereum network's move to a proof of stake algorithm will happen soon. But it neither threatens the network's decentralization nor gives its validators control over its future design or infrastructure.