Bitcoin is secured by its mining network continually producing new blocks of Proof of Work to add to the blockchain. There is only two sources of revenue Bitcoin provides to the miners - inflation emission of fresh coins and transaction fees paid by users.

The security budget is like the engine on a coal-powered steam train. It must be continually fed with new inflation and/or transaction fees, or the chain's security will plummet as miners turn off in response to lowered rewards. As miners turn off, Bitcoin becomes easier to attack by adversaries like governments and banks. If fear of this vulnerability also lowers the market price, that reduces the value of the inflation and transaction fees in purchasing power terms (even if not in Bitcoin terms), lowering the security budget even further! This potentially could form a lethal vicious cycle so it's not an issue to take lightly!

For this reason, it is essential that the Bitcoin network has a strong plan for perpetually funding miners to continue providing security. Contention over this issue was ~ in The Blocksize War.

From a BCH perspective, the BTC community do not have a viable plan for addressing their security budget issues. A limited blocksize & throughput means security budget must ultimately be funded by very high on-chain fees (for example, maybe $1 000 / transaction). This is not viable in a world of alternative cryptocurrencies and fiat payment systems offering similar-enough payment networks at a price point of $0.01 / transaction. Users will not be willing to pay such an enormous difference just to transact on the BTC network. The BTC rebuttal is that price increases will be enough to sustain the security budget in the short term, while small end-user fees will be provided by Layer 2s like Lightning Network and then aggregated into sufficiently large settlement payments on the Layer 1 blockchain. However so far the evidence that Layer 2s can attract sufficient end-users to make this model viable is very limited.

From a BTC perspective, the BCH community do not have a viable plan for addressing their security budget issues. The lack of price increases & low transaction adoption has ~. The BCH rebuttal is ~.

Both perspectives have some truth, ~.

~ and remains a large problem with BTC.

Cost to attack vs hashrate

It is critical to understand that Bitcoin network hashrate is not the important metric in assessing the chain security. What matters is the cost to attack, which is related to but separate from hashrate. This is because the cost per hash changes over time (due to improving Bitcoin mining ASIC manufacturing, more efficient mining operations, fluctuating energy prices etc.).

For example, if the total Bitcoin network hash rate was 1 BILLION hashes / second, this would nevertheless be very insecure if the best available technology could produce 1 billion hashes / second from a single $100 mining machine. In this simplified hypothetical, the cost to attack (by acquiring a 51% stake in the network) is low at only $101 even though the hash rate is high.

In contrast, the Bitcoin network could be very secure at only 1 MILLION hashes / second if the best available technology could produce only 1 hash / second from a single $100 mining machine. In this case, the cost to attack is $101 000 001 despite the total hashrate being exponentially lower than the first example. The difference is contained in the reduced output of a mining machine at the same price, which more than offsets the reduction in total hashrate.

These two examples are not realistic, they are just meant to demonstrate how cost to attack is independent of hashrate.

Bitcoin (especially BTC) users celebrating new hash rate highs as guarantees of incredible security often miss this nuance. A higher hashrate MIGHT mean the Bitcoin network is more secure than ever, but it doesn't necessarily mean that.

Funding the security budget

BTC propaganda

As with a huge list of other things, many BTC adopters are confused about funding the security budget.

They complacently believe that security budget is not an existential issue that needs their attention, because of one or a combination of reasons - all of which are insufficient with any more than a single step of reasoning.

1. "We have plenty of time". The Bitcoin inflation schedule is not expected to conclude until the year 2140. This means there is over 110 years during which the inflation emission of new coins will continue to provide some contribution to the security budget. The key word is "some". Every halving, the contribution (in Bitcoin terms) halves, so it exponentially decreases. As of 2026, it contributes only 3.125 BTC / block, and by 2032 will be under 1 BTC / block. Without significant increases in ()
2. "The price is going up". After the point of diminishing inflation is raised, the rebuttal will always be that a diminishing inflation of BTC can be offset by increasing purchasing price per coin. It is true that the inflation halving can be meaningfully offset by price increases. For instance, the security funded by 50 BTC / block at a price point of $100 can be replaced by the security of only 25 BTC / block at an increased price of $200. However, the assumption that the BTC price will double every 4 years is very flimsy. Although Bitcoin was able to make massive price appreciation in its early years, and while it may continue to increase, the average increase year-on-year is declining. Soon enough, the ability to attract fresh capital (especially in an increasing competitive cryptocurrency market) will fall below the demands to consistently double price - especially if the BTC community remains complacent about their lack of security budget problems.

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See also: What about Monero (XMR)?

See also: Why Bitcoin Cash instead of another cryptocurrency?

See also: What if governments ban/regulate crypto?