Comment
Author: Admin | 2025-04-28
Bitcoin (BTC) may be at risk of a catastrophic “bank run,” according to Justin Bons, founder and CIO of Cyber Capital. A bank run is when customers withdraw their deposits from a financial institution over fears of insolvency. Bitcoin Cannot Handle Mass Exits, Bons SaysIn a detailed social media thread, Bons highlighted critical flaws in Bitcoin’s transaction capacity, self-custody model, and network security. In his opinion, these could lead to a crisis that would destabilize the network and devastate investors. Bons’ analysis centers on Bitcoin’s limited transaction processing capability, which he calculated at approximately seven transactions per second (TPS). Using data from Glassnode and Bitcoin’s code, he argued that Bitcoin’s 33 million on-chain users would face a bottleneck if a mass panic triggered simultaneous exits. “At this rate, the queue would be 1.82 months long under optimal conditions. However, in reality, transactions would get stuck and eventually be dropped, making it impossible for smaller parties to exit unless they pay exorbitant fees,” Bons explained.Bons warned that this limitation could lead to a “death spiral,” where a price crash forces miners to shut down, slowing the network further. The resulting delays could deepen the panic, creating a vicious cycle of declining hash rates, prolonged block times, and falling prices. Further in his critique of BTC, Bons claimed Bitcoin’s transaction capacity is insufficient for real-world use. He compared Bitcoin’s 7 TPS to other systems, such as Visa’s 5,000 TPS, or even competitors in the crypto space that exceed 10,000 TPS without sacrificing decentralization. “There are literally ZERO use cases that can be supported by 7 TPS. Mass self-custody over BTC is a dangerous narrative. The only scalable path forward for BTC adoption is through centralized custodians and banks, contradicting its ethos as ‘freedom money’,” he stated. Bons also questioned Bitcoin’s long-term sustainability, citing its shrinking security budget. This, in his opinion, is a critical issue that could exacerbate the risks he outlined. The thread also touches on Bitcoin’s deviation from its original vision as “peer-to-peer (P2P) electronic cash.” He lamented that the network’s constraints and governance have turned it into a speculative asset rather than a practical medium of exchange. Bons’ remarks ignited a heated debate on X (formerly Twitter). Patrick Flanagan, a self-described tech expert, dismissed the claims.“This is pure fantasy. If this was going to occur, it would have occurred years ago,” Flanagan argued. Bons rebutted, asserting that the risk
Add Comment