Whether you follow Bitcoin or not, you have probably heard about this phenomenal digital gold. Being around for about a decade, Bitcoin has seen its rises & falls, however, showed a constant overall growth over its existence.
Starting from zero, the coin is now worth more than 50 thousand US dollars (as of March 2021) and continues soaring towards new heights daily. However, despite being widely considered the most profitable asset of all time, the industry still talks about the fact that it is only a matter of time when Bitcoin is going to collapse. Many elite investors have shown their disbelieve and opposition to Bitcoin & cryptocurrency, with many big names like Warren Buffet saying that BTC is worthless.
Whether you are for or against cryptocurrency, what do you think are the actual chances of Bitcoin losing all of its value?
The attention Bitcoin has gathered around itself is so huge that even two Yale University economists have carried out a study about it, which examines the chances of Bitcoin’s price going back to zero within one day. Surprisingly or not, but based on the risk-neutral disaster probability, Bitcoin’s chances of completely losing its value reach only 1.3%. While it seems extremely insignificant at first, let us show you a quick comparison, The chances of going bust of one of the strongest fiat currencies - Euro, are 0.009%. Based on the information from this research, Bitcoin is almost 144.5 times more likely to collapse back to zero than a fiat currency like Euro. Although the chances of this happening are extremely low, it is still worth a thought, considering such a huge difference.
Besides the research, many believe that Bitcoin’s inevitable failure hides in the fact that the coin has no intrinsic value and is only backed by the market’s confidence in it, as well as mathematical algorithms.
Apparently, it is highly unlikely for Bitcoin to lose its value within a day, however, there are plenty of quite possible scenarios that could bring the price of this digital coin back to zero.
While new cryptocurrency conspiracy theories surface the Internet on a daily basis, Bitcoin has to either become impossible to trade, sell, or to be used as means of payment or exchange in order to for its price to plummet down to zero.
It is solely up to you what to believe, but the only realistic way of Bitcoin actually losing all of its value is for the coin to be banned by the entire world, potentially making it illegal to store and/or use. Again, it seems highly unlikely, but just for the record, there are a handful of countries that prohibit the use of cryptocurrency at the moment of writing this article.
Do not jump to conclusions right away, though. Banning Bitcoin would be only the first step towards eliminating its existence. In order for Bitcoin to stop functioning, the entire Bitcoin blockchain network has to be taken down, rending all of its nodes offline. What is more, certain measures would also be required to prevent the creation of new nodes. Only after all of these steps it would become theoretically impossible to transfer Bitcoin, thus preventing its use on all levels. However, there is a strong possibility that a workaround would be found to keep at least some of BTC floating around.
Let’s take a look at another possible case, however, less extreme. There is a possibility that Bitcoin could simply be superseded by another superior cryptocurrency or another type of payment system, which would simply take it out of the game. While such a scenario would drastically reduce Bitcoin’s value, it is still highly likely that it will retain at least a part of its value but as rather a collector’s item or a modern history artifact. While being less extreme, such a scenario would definitely take a couple of years or even decades to come to life.
What is your favorite cryptocurrency conspiracy theory?