Before we talk about the possibilities, let’s talk about some facts. Bitcoin has died 245 times so far.
Bitcoin, the world’s first cryptocurrency, has been in our lives for almost 10 years.. Although Bitcoin has managed to remain open for almost all of this 10-year period, it is still fashionable to comment on Bitcoin’s ‘collapse’.. Even people who know about Bitcoin and this industry can sometimes make such comments.. Such people continue to make predictions about the collapse of Bitcoin, even if the contrary is proven every day.
In this article, we will talk about the possibilities that will cause the destruction of Bitcoin.
Technically speaking, Bitcoin will survive as long as there are several computers on a network that continue to run Bitcoin software.. For Bitcoin to disappear, something really extreme has to happen.. If the cryptocurrency community doesn’t devour itself out of greed or indifference, it looks like Bitcoin will continue to be the biggest cryptocurrency for years to come.
Scenario 1: Apocalypse
Probability (next 5 years): Near zero
Effect: Sudden death
If you have electricity, internet and everything If the resources that provide all kinds of data communication are closed from all over the world, the nodes in the Bitcoin network cannot communicate with each other.. Therefore, the system becomes unusable.
Temporary shutdown of the internet around the world creates confusion among the Bitcoin community, but this is not a big deal because the system (theoretically) starts from the beginning based on the longest chain.
Bitcoin fans or who knows maybe even museums keep the Bitcoin software active, the extinction of Bitcoin would be prevented.
Scenario 2: Critical bug
Probability (next 5 years): Low
Probable impact: Sudden disconnect
In this scenario, one of the Bitcoin updates it may contain a bug. It’s a big enough bug to put the whole system at risk.
Even if the entire community agrees to fix the code (which there is no guarantee), there will definitely be a price crash in the process of installing the new version and rebooting the system.. In fact, it wouldn’t be surprising to see a fork next to it.
However, the Bitcoin community is already aware of this risk.. Even the smallest changes made in the code are examined and tested between peers and everything is done according to the rule.. Also, it takes an institution like NASA to make a perfect code.
Scenario 3: Forked disconnect
Probability (next 5 years): Low
Possible impact: Slow disconnect
If the community is unable to agree on future steps for technical reasons (or money), Bitcoin will
During the Bitcoin Cash split last summer, the original network’s node and hash power dropped, but the BCH fork was not that damaging.. In the event of a few forks like this, the network is fragmented and weakened.. Again, it has to be said that whether this happens or not is in the hands of the community.
Scenario 4: The states are on our neck
Probability (next 5 years): Low-medium
Probable impact: Sudden disconnect
Governments cannot directly destroy Bitcoin because it is a decentralized system. However, states can control and even restrict the use of Bitcoin within their jurisdiction.
For example, they can close bank accounts affiliated with crypto money companies.. They can prevent the opening of any type of business related to the cryptocurrency industry.. If only a few countries impose a ban on cryptocurrencies, it won’t have a huge impact because crypto companies in banned countries can easily switch to another country.
This is exactly what happened when China closed its cryptocurrency exchanges last year.. It’s almost certain that at least a few countries in the world will take a stand like China and jump on cryptocurrencies.. However, it is highly unlikely that most countries around the world will come to such a prohibition decision.. Imagine if the United Nations had reached such a compromise.
While Bitcoin is already legal in Japan. In other words, if the USA, EU, UK and China collectively implement a ban, there will still be a serious effect, of course.
However, the probability of these countries banning cryptocurrencies is not very high because… why would they ban it?
Scenario 5: Massive hacking
Probability (next 5 years): Medium-high
Probable impact: Temporary collapse
This scenario can happen in several different ways.
Our first form is called the 51% attack. A malicious party within the Bitcoin network can directly hack the protocol itself.. This attack is theoretically possible, yes, but it is unlikely to materialize.
Those who take part in the network and make a 51% attack will also destroy their own income sources.. In order to attack from outside the network, it is necessary to invest heavily in mining equipment and electricity, in which case the attacker will destroy his own income source.
Therefore, the probability of a direct hacking attack on the protocol is not very high.. But it is quite possible to attack an application built on the protocol.
(For example) Mt.. Gox was providing 70% of all Bitcoin transactions. There are many more cryptocurrency exchanges around the world today.. If one of them is hacked and a large amount of Bitcoin is stolen, the price of Bitcoin will likely drop, but Bitcoin will likely survive it.. After this attack, the price of NEM dropped between 15-20% and started to pick itself up a day later.
Scenario 6: “Better” cryptocurrency
Probability (next 5 years): Low to medium
Probable impact: Slow disconnect
“Better” Is it possible for a cryptocurrency to replace Bitcoin? By “better” we are talking about a coin that brings more profit in terms of mining, lowers transaction fees to users, and is on par with everything else.
First of all, we need to clarify something.. The topic of “coin to replace Bitcoin” is more about economics than usage and function.. This coin needs to be much “better” to overcome the network effects and absorb the capital that Bitcoin enjoys today.
The fact that nothing like this has happened yet also gives a message.. A coin that will surpass Bitcoin in the next 5 years needs some pretty solid capital, functionality and support.. The United Nations has no intention of creating a global cryptocurrency anytime soon.
There is something else that could happen with the economy.. If electricity prices increase drastically, mining becomes less profitable.. Only mining pools in regions where electricity is partially cheap continue to do business.
This is a tough cost-safety trade-off for Bitcoin.. Bitcoin should lower the cost of security, but it should also not compromise the security of the ledger.
Scenario 7: Market exhaustion
Probable (next 5 years): Low
Probable impact: Slow disconnect
If crypto-based startups fail to come up with products with real-world use, people will switch to cryptocurrencies. and they may gradually lose faith in tokens. Something similar actually happened in the cryptocurrency market in 2015 and 2016.
In this case, the growth of the market may slow down and the market cap becomes almost constant after a point.. The cryptocurrency market loses its appeal to an investor and continues to decline.
Source: Can Bitcoin Be Destroyed? 7 (Unlikely) Paths to Irrelevance by Sebastien Meunier
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