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The event that brought ETH from Proof Of Work to Proof Of Stake will be remembered for the next 10 years. Bitcoin maximalists have criticized this step as harmful for ETH, due to greater centralization with possible censorship of transactions.
In addition to decentralization and scalability, maximizing the security of a blockchain is essential to make it resistant to attacks. One of the most popular theories that try to put Bitcoin in a bad light is that of the "security budget
The security budget of a blockchain could be defined as the "disincentive to attack the network" and is independent of its consensus algorithm (eg PoW or PoS). It is measured in relative terms. That means:
revenue miner / market capitalization
miner revenue = block reward + transaction fees
Market capitalization is ultimately the metric to be protected (as opposed to transactions, for example), because the incentive to attack the network grows with the network itself (i.e. as the market cap increases). Regarding the hashrate it should be considered that the cost per hash decreases over time. The Bitcoin blockchain security budget decreased from around 10% in 2015 to 2% in 2021 as a result of the two halvings. It is irrelevant to the security of the Bitcoin network if the price of BTC appreciates (or depreciates) in USD terms, because its market cap growth is inevitably ensured by relatively decreasing miner income (this makes costs of an increasingly cheaper attack). Also, in the case of BTC, the transaction fees as part of the miners 'income are quite negligible, because they represent only one% of the miners' income. It should be borne in mind that the higher the "commissions / revenues of miners" ratio, the less predictable will be the income of the miners and therefore the less predictable the amortization time of the mining plant will be. Relying heavily on commissions as a component of miners' revenues also incentivizes chain reorganizations, damaging its stability.
It should be considered that with each halving (every 4 years) BTC's security budget is reduced.
Satoshi (2008): "Once a predetermined number of coins have gone into circulation, the incentive will pass entirely to transaction fees becoming completely inflation-free
This is why, according to this theory, as halvings pass, some miners risk turning off their machines because the budget paid by the network does not incentivize them to protect it. The time between blocks will likely increase accordingly (protocol rules require it to be around 10 minutes). The less decisive is the incentive to mine, the more the block times will be variable and consequently longer. The difficulty changes only every 2016 blocks (about 2 weeks).
Ethereum Classic serves as an example for a blockchain that is too cheap to attack (even if it has suffered several 51% attacks) and consequently suffers from frequent chain reorganizations that damage its usability. In practice, this type of chain instability prompts exchanges to impose two weeks of waiting time for final transaction confirmation to further process the coins. Obviously it would be disastrous for BTC (due to its usability). It is worth bearing in mind that when people praise Bitcoin's immutable economic policy as its greatest strength, if this theory proves true, it could become its greatest weakness.
What will happen in 2140 when the last fraction of Bitcoin is mined?
