Bit(BTC) cannot handle a massive exodus - Bons
Bons emphasized in a detailed SNS thread the critical flaws in Bit(BTC)'s transaction capacity, self-custody model, and network security. In his opinion, this can lead to instability in the network and significant harm to investors. Bons' analysis focuses on Bit(BTC)'s limited transaction processing capacity, which he calculated to be around 7 transactions per second (TPS). Using data from Glassnode and the Bit(BTC) code, he argued that in the event of a large-scale panic triggering a simultaneous exodus, Bit(BTC)'s 33 million on-chain users would experience a bottleneck.Bons warned that these limitations could lead to a "death spiral." A price crash could halt miners and further slow down the network. The resulting delays could exacerbate the panic, leading to a vicious cycle of hash rate decline, extended block times, and price drops. In his criticism of BTC, Bons argued that Bit(BTC)'s transaction capacity is insufficient for real-world use. He compared Bit(BTC)'s 7 TPS to Visa's 5,000 TPS or cryptocurrency competitors that can exceed 10,000 TPS without sacrificing decentralization."At this rate, the queue would lengthen by 1.82 months even in optimal conditions. But in reality, transactions would get stuck and ultimately canceled, leaving small parties unable to find an exit without paying exorbitant fees." – Justin Bons, founder of Cyber Capital explanation.
Bons also questioned Bit(BTC)'s long-term sustainability, citing the declining security budget. In his view, this is a critical issue that could exacerbate the risks he outlined. The thread also mentioned that Bit(BTC) has deviated from its original vision of being a "peer-to-peer (P2P) electronic cash." He lamented that the network's constraints and governance have transformed it from a practical medium of exchange into a speculative asset."There are no use cases that can be supported at 7 TPS. Mass self-custody of BTC is a dangerous narrative. The only scalable path for BTC adoption is through centralized custodians and banks, which contradicts the spirit of 'the money of the free'." – Justin Bons, founder of Cyber Capital
Unexpected Bit(BTC) bank run debate on SNS
Bons' statements sparked a heated debate on X (formerly Twitter). Self-proclaimed tech expert Patrick Flanagan dismissed his claims.Bons rebutted, arguing that the risk increases as the user base grows. He added that even a small fraction of users leaving could trigger a run, and the problem becomes more severe as the network expands. Other users highlighted potential alternatives, such as trading wrapped Bit(BTC) (WBTC) on Ethereum, which bypasses the base layer limitations of Bit(BTC). Bons acknowledged this, but pointed out that while wrapped BTC users can quickly find an exit, on-chain users would be trapped, exacerbating the selling pressure. The discussion also expanded to the self-custody model of Bit(BTC)."This is pure fantasy. If such an event was imminent, it would have happened years ago." – Patrick Flanagan, tech expert statement.
Bons responded, acknowledging the difficult position he finds himself in as a cypherpunk and self-custody advocate. Another user raised the comparison to gold, questioning how long it would take to liquidate the global gold holdings. Bons rebutted, arguing that while gold also has practical limits, its theoretical transaction capacity is much larger than Bit(BTC)'s, making it less vulnerable to such bottlenecks. Critics of Bons' analysis argued that Bit(BTC) has weathered similar concerns in the past without collapsing. However, his warnings have added to the voices calling for a re-evaluation of Bit(BTC)'s scalability and usability. Despite his gloomy outlook on Bit(BTC), Bons remains optimistic about the broader crypto space. "There is still a lot of hope for the entire crypto ecosystem." – Justin Bons, founder of Cyber Capital. He concluded that the original spirit of Bit(BTC) is now thriving in other blockchain projects. Meanwhile, while Bit(BTC) remains the dominant cryptocurrency, the debate over its scalability and resilience continues. Bons' warnings serve as a reminder of the challenges Bit(BTC) faces as it seeks broader adoption in the evolving financial landscape. Elsewhere, Galaxy CEO Mike Novogratz has expressed similar concerns about the Bit(BTC) reserve in the United States."Something self-custody advocates should consider. A single FUD can lock up everyone's money." – Joel Venezuela of DashPay comment.
"I think it is very wise to utilize the Bit that the United States holds, and perhaps to hold even more. I don't think the dollar needs to be backed." - Novogratz stated.
