7 scenarios for the Bitcoin destruction

7 scenarios for the Bitcoin destruction

By Crypto4light | crypto4light | 1 May 2023

Despite the fact that bitcoin works flawlessly throughout its life, there is a fashionable tendency to predict its demise.

Moreover, at first glance, quite smart and adequate people suffer from the “bitcoin disorder syndrome”. Every time they make mistakes in their predictions, they tirelessly repeat that bitcoin will soon come to an end.Suppose that these people are really intelligent, then the only explanation for their statements can only be emotions and unwillingness to understand how this system works.

Okay, let’s simulate situations in which bitcoin may not be.

From a technical point of view, bitcoin will exist as long as at least 2 computers are online and running software to keep the blockchain running.

That’s why:
Scenario #1: Armageddon

Probability: not known for sure, but unlikely in the near future

If all the electrical systems, including the backup ones, are switched off simultaneously and suddenly around the world, then the bitcoin nodes will not be able to communicate with each other, in fact, the nodes of the telephone, postal, radio, telegraph, and everything that is powered by electricity. Accordingly, the confirmation of transactions and block calculations will stop.

Moreover, a temporary shutdown of the Internet throughout the planet at the same time, in theory, should not lead to the withdrawal of the system. In theory, the operation of the system should continue from the last longest block in the chain.

Scenario #2: Critical error

Probability: Low

If a bug is discovered in a bitcoin software update (like the infamous DAO project built on the ethereum blockchain) that compromises the integrity of the system, and if the community agrees (which is not guaranteed) to fix the code, install a new version and restart the system, this, will certainly lead to a sharp price decline and a fork. But this risk is taken into account by the community, so any code modification is checked

Scenario #3: hard forks

Probability: low in the next 3–5 years

Bitcoin has already survived a dozen hard forks. Basically, new forks were created for the sake of profit. But forks can also occur for technical reasons, for the sake of code improvement, faster transactions, for ease of use.

For example, the fork of Bitcoin Cash, although it was quite aggressive, did not harm Bitcoin. Theoretically, several forks in a row can occur, which fragment the network, while the complexity will remain at the current level (in short, it will become more difficult to mine, transactions will also take longer to confirm, respectively). If this happens, then Bitcoin will lose its leadership, but, again, the existing interest of the community in it will not allow this to happen.

Scenario #4: Government intervention

Probability: medium

It is impossible to destroy bitcoin due to its decentralization and lack of control over any state. However, national governments may restrict its use in their territories. Close the accounts of crypto companies, prohibit mining and related business to cryptocurrencies. But this is only possible if most countries prohibit the use of cryptocurrencies and bitcoin. If it is only a few states, then crypto companies and miners will simply move to where it will be allowed. But if the US, EU, UK and China jointly ban crypto, this of course can affect the market, but it will survive. However, it is more likely that they will regulate the cryptocurrency market to collect tax revenue, as the US is already doing.

Scenario #5: major hack

Probability: medium, closer to low

There are several options for implementing this scenario.

First: “Attack 51%”. Fewer people are involved in generation, less network capacity, more likely the network will die. But it threatens new currencies more than old ones.

The second is more likely — hacking applications designed to serve the protocol. For example wallets, vaults, exchanges. But if Mt.Gox, which was hacked in 2014, handled over 70% of bitcoin transactions. Now there are a huge number of exchanges, exchangers and wallets. And the hack of one subject will not greatly affect others.

By the way, more than $500 million in cryptocurrency was recently stolen from the Coincheck exchange. But the exchange rate only staggered by 15–20% and returned back in 1 day.

Scenario number 6: they will come up with a cryptocurrency better than bitcoin

Probability: Medium

Better means less energy-intensive mining, faster and cheaper transactions, higher trust, reliability and stability. But even if such a currency appears, it will still be first pegged to bitcoin at a price. And she will have to go through a difficult path to win the trust of people around the world.

Actually, the very fact that this has not happened in 10 years speaks for itself. Again, if governments suddenly increase the cost of electricity and mining becomes too expensive, only large pools with large capacities and access to energy will be able to mine, and ordinary people will only be left with mining to trade bitcoin.

Scenario #7: Market Fatigue

Probability: low

If crypto startups fail to bring any tangible value to the real world, people will slowly start to lose faith in them and the rest of the tokens. This has already happened in 2015–2016. In this case, capitalization will decrease, market growth will slow down, volatility will also decrease, and the cost of bitcoin will stabilize at some point. The crypto market will lose its attractiveness from an investment point of view, which will lead to a further fall and, as a result, only enthusiasts will remain on it.

But, even in this case, bitcoin will continue to exist. It will still be in people’s wallets, on exchanges, and used for some transactions. In general, even if the price falls, the value will not go anywhere.

In addition, we must remember that the last bitcoin will be mined approximately in 100 years, which means that a lot can still change.

In any case, the market always bounces back after a fall, and you can make money on a fall.

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