wrong

bitcoins market cap is not a reserve of fiat...
calculating a fiat amount against the market cap is false and bad
comparing market cap to GDP is a false assumption and false narrative to follow

again the market cap is a meaningless number and not based on real fiat reserves or funds available. concentrate on the per coin cost of the real market. not some math multiplying stat(cap) that has no linkage to any real fiat changing hands

do not try to assume a market cap has any relevance to the block reward
dont try to associate market cap with a GDP when the actual economics is based on PER BTC PRICE of the rewards/mining income

the mining income/rewards are not based on a 21m total. so the amount of income a mining pool gets is not as massive as OP suggests

based on lets say a market spot this cycle of between $70k and $140k(2x of recent ATH)
the amount of coins mined this cycle would come out as $42b-$92b.. no where close to the 21m market cap
no where close to any GDP globally or of any meaningful large country

also for a pool to attack the network they need to have 50% of hashrate to mess around with re-organising blocks to double spend
so when the network is operating at over $40billion of hardware costs and electric. it can safely operate at those levels
yep it can level off far before reaching trillions of market cap, far before the per btc price of the rewards reaches billions

hashrate does not need to 2x or increase continually. infact if hashrate went too high against the mining rewards. miners would drop out as the sats per hashrate (due to competition) would result in not getting very many sats per block if there were too many miners on one pool/working on each block

the network does not need to get to $1-$100trillion worth of hardware/electric to operate in 100 years

---

heres the real economics to think about

if a block only has 3.125 reward ($437k per block at $140k) AND the blocks transactions are only $10-$10m transfered in a transaction then if someone wants to undo their transaction they wont be spending $20billion(50% of $42bill current level) on hardware to undo a $10m transaction
as they wont break even by getting $437k reward and $10m tx set to them.. it would require them to double spend and re-org thousands of blocks to break even. by which time other pools and methods can fight against a malicious mining pool that tries for that length of time..

many mining pools know being malicious might seem effective short term but would get undone/punished later and so they dont act maliciously even if they had the 50%+ hashpower to do so.
mining maliciously might be highly UNECONOMICAL short term but effective.. but ineffective longterm thus still also uneconomical long term
thus not really worth doing.

when the network reaches a point of security that no individual can afford to be malicious there is no need to continue to increase security.

so again there is no need to get hashrate costs to be trillions. when blocks only handle transfers of millions/billions per tx/block and only handle thousands-millions per reward

Without reading the whole thing, it appears that his arguments all boil down to this:


1. "extremely high fees". The cost of the fees depend on the economic value of the transactions. Block space is limited, so only the most economically valuable transactions will be included. The fees paid for those transactions will be reasonable because transactions requiring unreasonable fees will not use Bitcoin. In simple terms, if you think the transaction fees are too high for what you want to do, then Bitcoin is not for you. None of this means that Bitcoin will fail. It will just fail for you.

2. "maintain the present level of security". It is assumed that the present level of security is the minimum necessary level of security. That may or may not be true. I have yet to see someone determine the minimum necessary security.

Right off the bat I would say that his premise that Bitcoin is secure now is flawed. As we discussed extensively in another thread here, Bitcoin is absolutely vulnerable to a 51% attack and it wouldn't be difficult to a large nation-state player, or possibly even a smaller one. Bitcoin has a systemic security risk, always has, and always will.

He is right that thinning margins for miners could very well increase security risks for Bitcoin ("reducing security" not a correct way to say it).

He's wrong that increasing transaction fees will make any difference in the sustainability of Bitcoin since, at $50 per transaction, the price is already uncompetitive with almost any form of money transfer today. But Bitcoin isn't used as a money transfer mechanism today, it's simply an investment instrument.

In other words, if shares of Berkshire Hathaway cost $1000 to transact in, would people stop buying these $400k shares? Of course not. Almost all buyers of "Bitcoin" these days do so through broker of some kind that isolates end-users and spreads the transaction cost across thousands of end-user requests.