Original author: Duo Nine
Compiled | Odaily Planet Daily (@OdailyChina)
Translator | Azuma (@azuma_eth)
Editor's note: BTC's price broke through the $70,000 mark again this morning, and it seems that everything is developing in a positive direction. However, Duo Nine, the founder of YCC, pointed out a hidden concern about the BTC network, believing that the encapsulated xBTC and ETF derivative investment products of the major ecosystems are actually extracting the value of the BTC network, which is a "vampire attack" on the BTC network.
Duo Nine believes that this hidden concern does not appear to be serious for the time being, but it has a trend of gradual aggravation, which may become a "cancer cell" that accompanies the joint development of the BTC network and must be paid attention to at the current stage.
Although Duo Nine has a certain extreme tendency of bitcoin maxis in his attitude towards other ecosystem-encapsulated tokens, the problems he pointed out still have certain contemplative significance.
The following is the original content of Duo Nine, compiled by Odaily Planet Daily.
BTC is in trouble.
If changes are not made soon, things could get ugly.
I'm not talking about halving time or block rewards, the problem is much more serious than that.
As the BTC network gradually develops, transaction fees will gradually replace block rewards as the main cost structure of the network.
This will be a gradual process that will take decades.
However, a new problem is emerging. This problem is quite difficult to predict, but some signs have already appeared.
This problem is related to people no longer truly using BTC.
Whenever BTC is encapsulated into wBTC, cbBTC, tBTC, kBTC or solvBTC, it means that the native BTC will be placed in a wallet on the network above and no longer perform any operations.
If it no longer moves, it means no more fees.
The value has been transferred to Ethereum or other networks. But this is just the tip of the iceberg.
With the development of DeFi, more and more BTC will be parked on the native network, and this value will flow out in the form of encapsulated tokens.
BitGo has wBTC, Coinbase has cbBTC, Kraken has kBTC, Threshold has tBTC... Obviously, this situation will not stop easily.
Ten years from now, encapsulated tokens will only become more numerous.
So far this year, 11 BTC spot ETFs have been approved, and they have collectively purchased $20 billion worth of BTC.
Where are these BTCs? The answer is in the wallets of some custodial service providers, and they are also parked.
Investors are actively trading BTC investment products on Nasdaq, but what they are trading is ETFs, not native BTC.
This is similar to the case of encapsulated tokens, where the value of native BTC has been abstracted and flowed to other places.
The problem is starting to emerge. If value continues to flow out, who will pay for the security of the BTC network?
Ethereum? Nasdaq? They certainly won't.
Under the normal preset, as the fee structure shifts, users should continue to transact on the native network, accumulating fees for miners.
However, the reality is that BTC is being "locked in a cabinet", with its value being transferred to other chains or abstracted into ETFs and other forms.
In the crypto world, we usually describe this situation as a "vampire attack"!
The so-called "vampire attack" means that the liquidity and value of a chain or protocol have been siphoned off, along with its users, to another chain or protocol.
Now, the attackers of BTC are pocketing these values. Congratulations to BlackRock, congratulations to Coinbase, you are winning!
Custodial service providers like Coinbase currently hold over 2 million BTCs, a large amount of BTC has been locked up and gradually forgotten.
Worse, this could lead to BTC falling into the hands of third parties.
Satoshi Nakamoto warned us about this problem in the whitepaper: "As long as there is a third party between you and your BTC, value will be lost."
Whether it's BlackRock, Coinbase, or wBTC, cbBTC, they are only providing an IOU.
They hold the real BTC, and give you a worthless certificate in exchange (if they choose to renege).
This is a real danger to you and the entire BTC network, because third parties may break their promises, and third parties may also steal value from the native BTC chain, reducing the security of the BTC network.
Fortunately, this problem is not "imminent". For the next twenty years, the BTC network's block rewards will still be considerable.
At the same time, the demand for BTC will continue to increase, especially the demand from third parties - they are always ready to use BTC for their own benefit.
What should you do about this?
First, try to avoid third-party custody of your BTC, as relying on third parties goes against the original intent of BTC and the purpose for which you bought BTC.
The best custodian is always yourself. You should hold BTC on the native network, not rely on various third parties.
Secondly, you should truly use the BTC network. With the development of Ordinals and other emerging use cases, many people are capturing and protecting their value on the native BTC network, and in this mode of operation, the value of BTC will never be abstracted.
Continuing to use the BTC network is the greatest investment in BTC's future. By using the native network, you can help maintain the security of BTC, and the fees you pay will be used to incentivize miners to protect the network security. As long as the usage scale is sufficient, the transition of the fee structure can be achieved seamlessly.
