Original author: Duo Nine
Compiled by Odaily Planet Daily (@OdailyChina)
Translator: Azuma (@azuma_eth)
Editor's note: The price of BTC broke the $70,000 mark again this morning, and everything seems to be looking up. However, YCC founder Duo Nine pointed out a hidden concern in the Bitcoin network, arguing that as the fee structure of the Bitcoin network transitions, the wrapped version of xBTC and ETFs and other derivative investment products are actually siphoning the value from the Bitcoin network, conducting a 'vampire attack' on it.
Duo Nine believes that this concern may not seem serious at the moment, but it is already showing a trend of gradual intensification. This could become a 'cancer cell' that accompanies the development of the Bitcoin network and must be taken seriously at this stage.
Although Duo Nine has an extreme bitcoin maxis-like stance on other ecological wrapped tokens, the issues pointed out still hold some thought-provoking significance.
The following is the original content by Duo Nine, compiled by Odaily Planet Daily.
Bitcoin is in trouble.
If changes are not made quickly, the situation may worsen.
I'm not talking about halving times or block rewards; the issues are far more serious than that.
As the Bitcoin network develops, transaction fees will gradually replace block rewards as the primary cost structure of the network.
This will be a gradual process that takes decades.
However, a new problem is emerging. This problem is difficult to predict, but some signs have already appeared.
This issue is related to people no longer truly using Bitcoin.
Every time BTC is wrapped into wBTC, cbBTC, tBTC, kBTC, or solvBTC, it means that the native BTC will be placed in some wallet above the network and will no longer be acted upon.
If it no longer moves, it means there are no more fees.
That value has been transferred to Ethereum or other networks. However, this is just the tip of the iceberg.
As DeFi develops, more and more BTC will be locked on the native network, and that value will flow out in the form of wrapped tokens.
BitGo has wBTC, Coinbase has cbBTC, Kraken has kBTC, Threshold has tBTC... Clearly, this situation will not easily stop.
Ten years from now, the number of wrapped tokens will only increase.
Since the beginning of this year, 11 Bitcoin spot ETFs have been approved, and they have collectively purchased $20 billion worth of BTC.
Where are these BTC? The answer is in the wallets of some custodial service providers, where they are also being locked away.
Investors are actively trading Bitcoin investment products on Nasdaq, but they are trading ETFs, not native BTC.
This is similar to the situation with wrapped tokens; the value of native BTC has been abstracted away and is flowing elsewhere.
Problems are starting to arise. If value continues to flow out, who will pay for the security of the Bitcoin network?
Ethereum? Nasdaq? They certainly won't.
Under normal assumptions, as the fee structure transitions, users should continue trading on the native network, accumulating fees for miners.
However, the reality is that Bitcoin is being 'locked away,' and its value is being transferred to other chains or abstracted into ETFs and other forms.
In cryptocurrency, we generally describe this situation as a 'vampire attack'!
The so-called 'vampire attack' refers to the siphoning of liquidity and value from one chain or protocol, along with its users, to another chain or protocol.
Right now, Bitcoin attackers are pocketing this value. Congratulations to BlackRock, congratulations to Coinbase, you are winning!
Custodial service providers like Coinbase currently hold over 2 million Bitcoins, with a large amount of BTC locked away and gradually forgotten.
Worse still, this situation could lead Bitcoin to fall into the hands of third parties.
Satoshi Nakamoto warned us about this problem in the white paper: 'As long as there is a third party between you and your BTC, value will be lost.'
Whether it's BlackRock, Coinbase, wBTC, or cbBTC, what they provide is merely an IOU.
They retain the real BTC and give you a worthless certificate in exchange (if they choose to break their word).
This poses a real danger for both yourself and the entire Bitcoin network. Third parties may break their promises, and they may also steal value from the native chain of BTC, thereby reducing the security of the Bitcoin network.
Fortunately, this issue is not yet 'urgent.' For the next twenty years, Bitcoin's block rewards will still be substantial.
Meanwhile, demand for Bitcoin will continue to increase, especially from third parties — they are always ready to profit from Bitcoin.
So, what should you do about this?
First, try to avoid having third parties hold your Bitcoin. Relying on third parties goes against the original intention of Bitcoin and your reason for purchasing Bitcoin.
The best custodian is always yourself. You should hold Bitcoin on the native network and not rely on various third parties.
Second, you should truly use the Bitcoin network. With the development of ordinals and other emerging use cases, many people are capturing and protecting their value on Bitcoin's native network. In this operational model, Bitcoin's value will never be abstracted away.
Continuing to use the Bitcoin network is the biggest investment in Bitcoin's future. By using the native network, you can help maintain Bitcoin's security, and the fees you pay will be used to incentivize miners to protect the network's security. As long as usage is sufficient, the transition of the fee structure can be seamless.
