[Cryptography] Question about Bitcoin's security model

[Renato Schiavinato Lopez]

On Wed, Jul 15, 2026 at 9:37 PM jameslancasterliverpool via
cryptography <cryptography at metzdowd.com> wrote:
>
> Hello,
>
> I have been studying the Bitcoin protocol and would like to ask a question.
>
> In your opinion, what is currently the biggest long-term security challenge for Bitcoin: quantum computing, mining centralization, or something else?
>
> I would appreciate your thoughts.
>
> Thank you.
>
> James Lancaster


For me, the exploitation of non-monetary uses on the Bitcoin
blockchain is the most urgent challenge, and the one with the highest
consequence in the long term.

The community's desperation to solve this is clear. The controversial
BIP-110 proposal has a UASF flag day approaching in mid-August. While
critics point out that without massive economic backing from major
exchanges, a Knots-enforced UASF would simply result in a minor,
stalled chain split, we shouldn't underestimate the asymmetric risk
for miners. Even if the economic weight of Knots is currently low, a
rational miner faces a choice: mine a block containing raw arbitrary
data (risking rejection by a highly vocal, validating minority) or
mine a clean, strictly financial block that is guaranteed to be valid
on 100% of the nodes. Even pools already signaling BIP-110 introduce a
risk premium that might force hashers to think twice, despite the ease
of auto-switching pools.

Furthermore, many technical minds dismiss BIP-110 as a futile game of
cat-and-mouse, arguing that data can easily be hidden via
steganography in public keys or signatures. However, this misses two
crucial points:

First, security is about layers. Even a "speed bump" that doesn't
offer 100% protection is highly valuable. Forcing exploiters to
abandon simple, out-of-the-box minting tools and adopt complex
steganographic embedding software raises the barrier to entry,
reducing the sheer volume and velocity of spam transactions.

Second, and most importantly, forcing data into steganography actively
solves the legal liability (CSAM) issue for node runners. Currently,
inscriptions store raw, unencrypted, easily extractable media bytes in
the witness data. A hostile regulator can easily index these and hold
node operators legally liable for storing illicit material.

But if BIP-110 forces this data into steganographic signatures, the
material effectively "does not exist" on the node's disk. Without the
extraction key, those bits are mathematically indistinguishable from
random cryptographic entropy. You cannot outlaw storing valid Schnorr
signatures without outlawing cryptography itself. Thus, even if
BIP-110 fails to stop blockchain bloat, it succeeds entirely in
protecting the legal status of the network's validating
infrastructure.

Only time will tell if the UASF will activate, but the debate it has
sparked is already a victory. It directly addresses another critical
risk: client monoculture and node software centralization around
Bitcoin Core. More operators are looking for alternatives—Bitcoin
Knots has been gaining considerable traction, and other
implementations are rising too. From a decentralization perspective,
this is a major win.


Regarding quantum computing, while it poses a systemic threat, it is a
slow-burn challenge shared by almost all modern communication and
financial infrastructure. It is a threat, but solutions are being
explored and will be implemented in time.


Regarding mining centralization, we must separate the physical
infrastructure from the consensus-building process. The distinction
between "hashing" and "mining" is vital here. Today, the vast majority
of ASIC operators are merely "hashers"—they blindly compute hashes
over block templates constructed and pushed down by a handful of
centralized pool operators. This gives pools dangerous
transaction-filtering and censorship capabilities.

The structural fix for this is the industry-wide adoption of Stratum
v2, specifically its Job Negotiation Protocol. This allows individual
hashers to build their own block templates locally and negotiate them
with the pool, effectively shifting transaction selection power back
to the edges of the network.

However, we shouldn't mistake virtual hashpower renting for true
decentralization. Renting hashpower is a financial derivative; it does
not decentralize the physical hardware or the energy grid footprint.
If a state-level actor decides to seize or coerce physical mining
facilities in a specific jurisdiction, renting that hashpower remotely
does nothing to prevent physical censorship at the source. Censorship
resistance ultimately anchors in geographically dispersed, sovereign
ownership of the physical silicon and power generation.


Best regards,

Renato Lopez