Bitcoin faces long-term security reckoning, warns fund founder

Justin Bons, founder and chief investment officer of Cyber Capital, has argued that Bitcoin’s reliance on declining block subsidies will eventually undermine the incentives that secure its network. His assessment centres on the mechanics of Bitcoin’s proof-of-work system, where miners validate transactions and are rewarded through a mix of newly issued coins and transaction fees.

Bitcoin’s design hard-codes a reduction in new supply roughly every four years through the halving mechanism. While this scarcity has underpinned its appeal as a store of value, Bons contends that it also creates a long-term problem: as block rewards approach zero, miners will depend almost entirely on transaction fees to cover operating costs and maintain network security.

At present, the bulk of miner revenue still comes from block subsidies rather than fees. Data from blockchain analytics firms shows that transaction fees typically account for a small fraction of total miner income, even during periods of heightened network activity. Bons argues that expecting fees alone to replace subsidies at a scale sufficient to deter attacks is unrealistic under current usage patterns.

The concern is not new among protocol researchers, but Bons places a clearer time horizon on the risk. He estimates that between seven and eleven years from now, the reward structure will reach a point where honest mining becomes less profitable, increasing the likelihood of centralisation or coordinated attacks. Such a scenario could include miners abandoning the network, consolidating into a few dominant pools, or being economically incentivised to manipulate transaction ordering.

Bitcoin advocates counter that fee markets will naturally develop as adoption grows, with higher demand for block space driving up fees. They also point to historical resilience, noting that the network has operated for more than 15 years without a successful large-scale attack. Some developers argue that second-layer solutions, such as the Lightning Network, will push everyday transactions off-chain while preserving security on the base layer.

Bons disputes that off-chain scaling resolves the core issue. He argues that reducing on-chain activity may further suppress transaction fees, weakening the very revenue stream miners are expected to rely on in the future. In his view, Bitcoin’s refusal to adjust its monetary policy or security assumptions reflects an ideological rigidity rather than a technical necessity.

The debate touches on a broader fault line within the digital asset sector: whether Bitcoin should remain ossified as a form of digital gold, or evolve to address emerging risks. Other proof-of-work networks have already modified parameters such as issuance schedules or fee mechanisms to balance security and usability. Bitcoin’s governance model, which prioritises conservative change and broad consensus, makes such shifts difficult.

Market reaction to Bons’s comments has been muted, reflecting a familiar pattern. Similar warnings about mining incentives, energy costs and security budgets have surfaced periodically, often during bear markets or after halvings. Yet Bitcoin’s price has continued to be driven more by macroeconomic factors, institutional flows and regulatory developments than by long-term protocol economics.

Still, some analysts view the discussion as increasingly relevant as the asset class matures. With exchange-traded products expanding access to Bitcoin and sovereign and corporate balance sheets showing intermittent interest, the network’s security assumptions are no longer a niche technical concern. Any credible threat to transaction finality or censorship resistance would have implications far beyond crypto-native users.

Academic research has also examined the so-called “security budget” problem. Studies modelling future fee markets suggest that sustaining current levels of hash power through fees alone would require either significantly higher transaction costs or far greater on-chain activity than seen today. Both outcomes could challenge Bitcoin’s competitiveness relative to alternative networks.

Bons has positioned his critique not as a prediction of imminent collapse, but as a call for earlier acknowledgement of structural risk. He maintains that addressing the issue while block subsidies remain meaningful would offer more options than waiting until incentives are severely constrained.