Bitcoin (BTC) might be facing a serious risk of a “bank run,” according to Justin Bons, founder and CIO of Cyber Capital. A bank run happens when people withdraw their money from a bank because they fear it might fail.
Bons points out some critical weaknesses in Bitcoin’s ability to handle transactions, its self-custody approach, and its network security. He believes these issues could lead to a crisis that destabilizes the network and harms investors.
He explains that Bitcoin can only process about seven transactions per second (TPS). Using data from Glassnode and Bitcoin’s code, he argues that if a panic situation arises, the 33 million users on the network would face significant delays when trying to withdraw their funds.
“Under optimal conditions, the transaction queue could stretch to 1.82 months,” Bons notes. “But in reality, transactions could get stuck and be dropped, making it tough for smaller users to exit without paying high fees.”
He warns that this limitation could lead to a “death spiral.” In this scenario, a price drop could force miners offline, further slowing the network. The resulting delays could worsen the panic, creating a cycle of falling hash rates, longer block times, and decreasing prices.
Bons also highlights that Bitcoin’s transaction capacity is inadequate for real-world use. He contrasts Bitcoin’s 7 TPS with Visa’s 5,000 TPS and other cryptocurrencies that can exceed 10,000 TPS without sacrificing decentralization. “There are literally ZERO use cases supported by 7 TPS,” he states. “The only way forward for BTC adoption is through centralized custodians and banks, which goes against its idea as ‘freedom money.’”
Moreover, he questions Bitcoin’s long-term sustainability, pointing to its shrinking security budget as a serious concern. He believes this issue could worsen the risks he mentioned earlier. Bons also discusses how Bitcoin has strayed from its original vision of being “peer-to-peer (P2P) electronic cash.” He regrets that the network has become more of a speculative asset than a practical medium of exchange.
His comments have sparked a lively debate on social media. Patrick Flanagan, a tech expert, dismissed Bons’ claims, stating, “This is pure fantasy. If this were going to happen, it would have happened years ago.”
Bons countered that the risk increases with more users. He noted that even a small number of people leaving could trigger a bank run. The larger the network grows, the bigger the problem becomes.
Some users suggested trading wrapped Bitcoin (WBTC) on Ethereum as an alternative, which avoids Bitcoin’s basic limitations. Bons acknowledged this but pointed out that while WBTC users could exit quickly, those on-chain would be stuck, making the sell-off worse. The conversation also touched on Bitcoin’s self-custody model.
“Self-custody advocates should pay attention to this. One little bit of fear, uncertainty, and doubt (FUD), and everyone gets their money stuck,” said Joel Venezuela from DashPay.
Bons agreed, recognizing the tough spot he’s in as both a cypherpunk and a self-custody supporter. Another user compared the situation to gold, asking how long it would take to liquidate global gold holdings. Bons responded that while gold has limits, its theoretical transaction capacity far exceeds Bitcoin’s, making it less prone to such bottlenecks.
Critics of Bons argue that Bitcoin has faced similar concerns in the past without collapsing. However, his warning adds to the growing call for a reassessment of Bitcoin’s scalability and usability.
Despite his grim outlook for Bitcoin, Bons remains hopeful about the broader cryptocurrency space. “There is still much hope for cryptocurrency as a whole,” he concluded, suggesting that Bitcoin’s original principles now thrive in other blockchain projects.
As Bitcoin continues to be the leading cryptocurrency, discussions about its scalability and resilience persist. Bons’ warning serves as a clear reminder of the challenges Bitcoin faces in seeking wider acceptance. Meanwhile, Galaxy CEO Mike Novogratz has shared similar concerns about a Bitcoin reserve in the U.S., stating, “I think it would be very smart for the United States to take the Bitcoin they have and maybe add some to it… I don’t necessarily think that the dollar needs anything to back it up.”