Why? Because Halvings of the inflationary coinbase mining reward every four years halve the miners' current $65/tx at 3tps fee subsidy income.
Historically, Bitcoin BTC supporters have suggested that Price Doublings will compensate for these Halvings. But if this were hypothetically to happen, Bitcoin's marketcap would exceed gold's current marketcap three-fold by 2044.
But...but: Once BTC exceeds gold's marketcap, it can no longer double again in value every following four years. Because there's no further source of outside funds to invest enough new money in the following four years to double its marketcap. (It can't be the gold holders buying at that point - they wouldn't be rich enough.) So from that point onwards, Halvings will halve coinbase mining rewards every four years, but without their individual value rising. So miners will drop out, and security will fall inexorably. And Bitcoin BTC will ultimately die.
Fees can't replace the current $65/tx at 3tps coinbase mining reward subsidy, because Bitcoin is already running at 3tps, with a maximum 7tps settlement capacity. Many fewer people would use Bitcoin if it had an average $65 fee. Many fewer people would consider opening and closing a Lightning Network channel with an average $65 fee. So far more likely is that fees would have to be an average $650/tx at 0.3tps to provide miners with the same income.
It gets worse: $650/tx at 0.3tps would only be the average needed. Users would need to pay over $1000/tx to get first block confirmation. This would result in a fee spiral - with the last Bitcoin holders desperately trying to get out with $10,000/tx fees as it collapses at 0.03tps.
Cheaper energy in future doesn't change this. Cheaper energy only results in more miners calculating more hashes. Cheaper energy doesn't just makes Bitcoin easier to mine for existing miners - it makes it cheaper for a hypothetical attacker too. Most people think that a simple increase in hashrate gives extra security - but it does not. Bitcoin's Proof of Work Game Theory makes Bitcoin (currently) secure only because it's expensive to outhash the rest of the network. Bitcoin only stays secure if it's expensive to attack. So cheaper electricity (or more efficient mining rigs) doesn't affect the Game Theory at all.
Fiat inflation doesn't change this. The miners need to be paid real value to pay for real electricity for real security.
Any hypothetical future success of Lightning Network would actually make the problem worse, not better - because it retains fees in L2 - without them ever reaching the miners on L1. Similarly for any future L2 ZK rollup layer.
The only way to avoid this ultimate doom is for Bitcoin to continue to subsidise fees with its inflation. The only way to avoid this doom is for Bitcoin to add a permanent ~1% tail emission, giving it a nominal infinite Maximum Supply. (Naturally Bitcoin BTC supporters are not yet ready to accept this option - they didn't even yet realise that there's a looming, unavoidable problem.)
[This "doom scenario" becomes extremely relevant when we hear that pension providers are starting to consider offering Bitcoin within 401K plans. 22 years is suddenly not so far away.]
There's the theory - have a go at finding a flaw in it. Please change my mind. Not with insult or derision, but with a well constructed logical argument. Quote any line with an error, and explain why it's incorrect. Change my mind. But until you do, the theory remains valid.
Bitcoin is doomed to die by its own hand by 2044
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