- Bitcoin is under a “vampire attack” by third parties.
- Wrapped BTC and ETFs present a long-term threat.
- Miners‘ confidence continues to grow.
Bitcoin advocates often tout its incentive system as a masterclass in game theory, designed to ensure longevity and seamless operation well into the future.
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However, the rise of centralized third parties, including ETF providers and DeFi firms, introduces new uncertainties. As these entities aim to profit from Bitcoin, the long-term outlook becomes less predictable, raising concerns about the network’s future.
Bitcoin Under Attack
As centralized third parties seek to profit from Bitcoin, its long-term outlook appears increasingly uncertain. Duo Nine, founder of Your Crypto Community, warned that the growing prevalence of ETFs and wrapped Bitcoin tokens could reduce network activity, ultimately hampering miner incentives.
Miners earn income by matching the target hash to secure block rewards and collecting fees from successful transactions. However, with the block reward halving every four years, the network will increasingly rely on transaction fees directly tied to network activity.
If fewer transactions occur due to more BTC being locked away, miners may struggle to cover their costs, forcing them to exit the network.
Duo Nine warned that this “ vampire attack ” is already underway, with liquidity and value being siphoned off the Bitcoin network through wrapped tokens and ETFs locking away vast amounts of BTC.
While this scenario hasn’t yet materialized and may not for another two decades, Duo Nine emphasized the need for the community to resist these external pressures. He urged Bitcoin users to avoid relying on third-party services and use the network .
Miners Pile In
Despite concerns that centralized third parties will stifle network activity in the long term, Bitcoin miners remain optimistic. On October 21, the Bitcoin hash rate reached an all-time high of 885 EH/s, marking a 67% increase from the beginning of 2024, when it stood at 530 EH/s.
Daily mining revenue is now at $36.2 million, significantly below the April 20 peak of $107.8 million. This suggests that miners are currently content with reduced earnings, likely due to confidence that future BTC price increases will sufficiently offset present risks.
On the Flipside
- ETFs have acquired 4.5% of the BTC supply in nine months, or 1.1 million coins.
- Kraken is the latest centralized third party to introduce a wrapped Bitcoin token (kBTC).
Why This Matters
While Bitcoin was designed to free money from centralized control, the success of institutional adoption may paradoxically undermine the network that gives it value.
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