Bitcoin's Future Challenges: Sustainability After 2140

With the development of Bitcoin, an important question has increasingly emerged - how will the network sustain itself once all 21 million Bitcoins have been mined? It is expected that around the year 2140, the Bitcoin network will no longer produce new coins, and miners will only be able to rely on transaction fees for revenue. This shift has raised concerns about the long-term security of Bitcoin.

Evolution of Bitcoin Incentive Model

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

1. Block Reward: A fixed number of new Bitcoins is generated with each new block. This amount is halved every four years, known as "Bitcoin halving."

2. Transaction Fee: An additional fee paid by users to incentivize miners to include transactions in blocks.

As time goes by, the block rewards will gradually decrease until they completely disappear in 2140. At that time, miners will only be able to rely on transaction fees to sustain their operations.

Economic Feasibility in the Era of Post-Subsidy

There are different views on the feasibility of Bitcoin's future:

Pessimists believe that historical data indicates that the growth of transaction fees is insufficient to compensate for the decrease in block rewards, which may lead to a decline in the network security budget.

Optimists believe that the rise in Bitcoin's value and the increase in demand for block space will drive transaction fees up to a level sufficient to support the network's operation. They think that Bitcoin could develop into a trillion-dollar asset, and even a small percentage of transaction fees could provide miners with substantial income.

Potential Risks of Reduced Security Budget

A decrease in the security budget may pose the following risks:

1. 51% Attack: The decrease in network hash power makes it easier to control more than half of the hash power, increasing the risk of double spending and transaction censorship.

2. Hashrate fluctuations: A large-scale exit of miners due to declining profits may cause network vulnerability in the short term.

Response Plans and Innovations

The Bitcoin community is exploring various solutions:

1. Layer 2 solutions: such as the Lightning Network, improve efficiency and reduce costs by processing transactions off the main chain.

2. Bitcoin Rune: Allows the creation of tokens on the Bitcoin network, potentially bringing new application scenarios and fee income.

These innovations aim to increase the utility and value of Bitcoin, thereby raising transaction fees to support network security.

The Future of User Experience

As the network evolves, the way users interact with Bitcoin may change:

• Main chain transactions can become expensive, mainly used for large transfers.
• Daily small transactions may be transferred to Layer 2 solutions for low costs and instant confirmation.

Long-term Considerations for Investors

For investors, the disappearance of block rewards highlights the trade-off between the scarcity and security of Bitcoin. While a fixed supply is attractive, network security will increasingly depend on the future fee market, which adds to the uncertainty.

Conclusion

The Bitcoin network after the year 2140 will face significant challenges. Its long-term sustainability will depend on the complex interactions of technological innovation, economic factors, and social consensus. Although these issues are still far off, they are crucial for the future of Bitcoin and warrant close attention and in-depth discussion.