Bitcoin Could Face Collapse in 7 to 11 Years, Warns Cyber Capital Founder

Justin Bons, founder and chief investment officer of Cyber Capital, has issued a forecast predicting Bitcoin (BTC) may face collapse in the next 7 to 11 years. His concerns stem from decreasing security budgets, the escalating risk of 51% attacks, and what he describes as impossible choices for the Bitcoin network. Bons cautions that these fundamental vulnerabilities could undermine trust and potentially lead to chain splits.

Key Takeaways

Justin Bons warns that Bitcoin may collapse within 7 to 11 years due to declining security budgets and rising attack risks.
The long-term threat lies in Bitcoin's economic security model, particularly after the halving events that reduce miner rewards.
Falling miner revenue makes the network more vulnerable to 51% attacks, potentially making such attacks economically viable.
There are risks of congestion and “bank-run” scenarios, which could trap users during crises.
The dilemma facing Bitcoin includes the possibility of exceeding its coin supply limit or accepting a weakened security model, both of which may lead to significant consequences.

Bitcoin's Security Model Analysis

Rethinking Bitcoin's Economic Security Model

Experts have long raised alarms about various risks associated with Bitcoin, especially those tied to quantum computing, which could potentially compromise current cryptographic standards. However, in a thorough analysis, Bons has identified a unique set of concerns. He asserts that the long-term threat to Bitcoin lies in its economic security framework.

“BTC will collapse within 7 to 11 years from now! First, the mining industry will face challenges as the security budget decreases. That’s when attacks begin, including censorship and double-spending,” he stated.

A significant aspect of Bons' argument is Bitcoin's diminishing security budget. Each halving cuts miner rewards by 50%, which results in less incentive to secure the network. The last halving took place in April 2024, with more occurring approximately every four years. Bons believes that in order to keep its current security level, Bitcoin would need either to experience continuous exponential growth in price or to maintain permanently high transaction fees—both of which he deems unrealistic.

Bitcoin’s Declining Security Budget

Falling Miner Revenue and Increased Attack Risks

Bons argues that miner revenue is a crucial indicator of network security, more so than hashrate alone. He emphasized that as technology advances and hardware becomes more efficient, hashrate might increase while the cost of producing hashes decreases, thereby misleading observers about the network’s actual resistance to attacks.

He contends that declining miner revenue lowers the network's attack cost. Once the expense of executing a 51% attack drops below the potential rewards of double-spending or disrupting the network, these attacks become financially sensible.

“Crypto-economic game theory relies on a system of punishment and reward, where miner revenue symbolizes the cost of an attack. The reward side for potential attackers includes double-spending, with 51% attacks targeting exchanges being very realistic due to substantial possible gains,” his post explains.

At present, transaction fees make up only a small fraction of miner earnings. As block subsidies trend toward zero in the coming decades, Bitcoin will have to depend almost exclusively on transaction fees to secure the network. Yet, Bitcoin’s limited block size restricts transaction throughput and total fee revenue.

Bons asserts that sustained high fees are improbable because users often exit the network during spikes in fees, preventing fees from reliably replacing block subsidies over time.

Risks of Congestion and a Potential Death Spiral

In addition to the worries surrounding Bitcoin's security budget, Bons highlighted the risks of possible “bank-run” scenarios. He noted, “Even under the most conservative estimates, if every current BTC user conducted just one transaction, the resulting queue would be 1.82 months long!”

He elaborates that in times of panic, the network might struggle to process withdrawals quickly enough, effectively trapping users due to congestion and rising fees—leading to a situation akin to a bank run.

Furthermore, Bons pointed out Bitcoin's two-week difficulty adjustment mechanism as an added risk. In a significant price drop, unprofitable miners could cease operations, slowing down block production until the subsequent adjustment.

“As panic causes the price to plummet, more miners could shut down, further delaying block production and escalating panic, leading to even more price declines and miners exiting the network—a cycle that can continue indefinitely. This phenomenon is known as a vicious cycle in game theory, often referred to as a negative feedback loop or death spiral,” he explained.

He cautioned that such congestion risks could make mass self-custody unsafe during stressful periods, warning that users might struggle to exit the network during times of high demand.

Bons ultimately pointed out a critical dilemma facing Bitcoin. One option would be to exceed the 21 million coin limit to maintain miner incentives and network security; however, he noted this would compromise Bitcoin’s core value and likely result in a chain split. Alternatively, he suggests tolerating a progressively weakening security model, increasing vulnerability to attacks and censorship.

“The most probable outcome is that in 7–11 years, both scenarios I described, along with others, will likely occur simultaneously,” Bons concluded. He also linked this issue with the legacy of the block size wars, arguing that the governance limitations within Bitcoin Core make meaningful protocol changes politically unlikely until a crisis necessitates action. By then, he warns, it may already be too late.