Ethereum researcher claims Bitcoin's supply cap risks network security

Ethereum (CRYPTO:ETH) researcher Justin Drake has sparked a debate over the future of "sound money" in the crypto space, suggesting that Bitcoin's (CRYPTO:BTC) fixed supply cap of 21 million coins may eventually compromise its long-term security, while Ethereum's decreasing issuance will make it "ultra sound" money

Drake argued in a February 5 X post that Ether will become “ultra sound” when its issuance decreases, especially following the network’s transition to a deflationary model after the 2022 Merge.

However, he pointed out that ETH issuance started to increase after the Dencun upgrade in April 2024, which reduced layer-2 network fees and decreased the overall burn.

Despite this, Drake compared the issuance of Bitcoin and Ether, stating that Bitcoin's supply has grown by 657,000 BTC since the Dencun upgrade, while Ethereum added 469,000 ETH during the same period.

He emphasised that Bitcoin's supply is growing at a rate of 0.83% annually, 66% faster than Ethereum’s.

Drake also expressed concerns over Bitcoin’s 21 million coin cap, which could pose security risks as miner revenue is mostly derived from block rewards, making the network vulnerable to attack.

He argued that the low cost of a 51% attack on Bitcoin could be catastrophic, calling the risk “utterly insane” given the increasing interest from nation-states.

However, Bitcoin proponents countered by arguing that advancements in energy efficiency and mining technologies, such as nuclear power and energy demand response, will help secure Bitcoin’s future.

Analyst James Check emphasised that critics fail to account for the full complexity of Bitcoin's sustainability, highlighting its ability to evolve with new energy sources and market conditions.

Drake acknowledged Ethereum’s own issues, including excessive staking and systemic risks from liquid staking platforms like Lido.

He suggested a "Croissant Issuance" model to help balance supply and demand.

At the time of reporting, the Bitcoin (BTC) price was $96,975.53 and the Ethereum (ETH) price was $2,633.57.