The Halving Exposes Bitcoin to 51% Attacks – Here’s What We Can Do

Raphael Auer is Principal Economist in the Innovation and Digital Economy unit at the^, Bank for International Settlements (BIS). His research focuses on issues related to cryptocurrencies, stablecoins and central bank digital currency. The views expressed here are his and do not necessarily reflect those of the BIS. 

The imminent halving of the “block subsidy” exposes a fundamental threat to Bitcoin. Whenever a new block is added to the blockchain, a quantum of new bitcoins is created and paid to the miner adding the block. As miners compete for this subsidy, they drive up the system’s difficulty, making it harder for so-called 51% attacks to succeed. But the subsidy is set to diminish over time, halving very soon to 6.25 bitcoins per block, so that the total supply of coins will eventually reach 21 million. And as the subsidy shrinks, Bitcoin could fall victim to 51% attacks, just as smaller cryptocurrencies already have.