Today, it is difficult to imagine a digital money market without a major coin. It seems that it has already proved its worth and will always exist, but in reality — this is not entirely true.
The actual Bitcoin supply limit stands at 21 million. More than 80% of the total emission of the main cryptocurrency has already been mined, and the last coin will be received in about 2140. It would seem that for the quiet existence of the first digital coin there are at least 120 more years. However, it’s not that simple.
In the spring of this year, BitFlyer interviewed residents of different European countries, and more than half of the respondents were sure that, in the near future, Bitcoin would disappear. 55% of them predicted the existence of the main digital coin only until 2029. The reasons why the disappearance of Bitcoin is inevitable were not named. But there are dozens of assumptions about what exactly is capable of destroying the first cryptocurrency — from the absurd and unlikely ones to the truly possible ones.
Prohibitions by Regulators and Authorities
In late July, a working group of the Government of India proposed a complete ban on cryptocurrencies in the country. A fine for mining, storage, sale, transfer and issue of digital coins will be 250 million rupees (about $ 3.63 million at the exchange rate at that time) and there will a prison term of up to 10 years. Whether the bill will be approved by the authorities is still unknown. If this happens, the value of cryptocurrency may decline, but the collapse of the digital industry is unlikely to happen. After the recent ban on the purchase and sale of the first cryptocurrency in Iran, slight fluctuations in the price of bitcoin were recorded. A similar thing happened as a result of similar actions in Afghanistan, Morocco, Algeria, Bangladesh and Bolivia.
However, bans in more influential countries on the crypto market, such as America or China, can seriously shake the position of Bitcoin. The unanimous unification of all countries against BTC can do even more harm to the state of the first cryptocurrency. But given the considerable number of states loyal to the digital industry, today, it is difficult to imagine. In addition, bans often only strengthen the interest of users and force them to come up with more sophisticated ways to circumvent sanctions and laws.
Bitcoin is built on the Proof-of-Work algorithm (proof of completed work), which is necessary to confirm transactions and create new blocks. The user with the most computing power can find more blocks and get more rewards. But if more than half of the network’s power is in the one “hands”, then its operation will be in jeopardy.
The possibility of the first 51% cryptocurrency attack was noted in the White paper. Satoshi Nakamoto wrote that if most of the CPU nodes are controlled by honest miners, then the blockchain will grow faster and surpass any other blockchains. To change the data in the last block and change the operation of other nodes, the attacker needs to make a huge amount of effort. But in theory, a 51%attack is the most effective way to destroy bitcoin.
In January of this year, cryptocurrency project developer Jimmy Song explained on his Twitter why it is extremely difficult to conduct a 51% attack on the BTC network. The user needs not only to have enough ASICs to capture the hash rate but also to find a powerful power source for all equipment. In addition, with the passage of time and the growth of the hash itself, the cost of attack will steadily increase.
The Death of the Mining Industry
In the summer of this year, when the price of the first cryptocurrency approached the mark of $ 10,000, the activity of miners in the Bitcoin network reached a historic high of 65.19 (Th/s). And in 2018, after a sharp collapse in the rate of the main digital coin, the leading manufacturers of equipment for token mining announced colossal losses and termination of the activity.
For example, the developer and supplier of video cards and chips Nvidia said that the period of maximum demand for GPUs for mining has already ended. According to the company’s estimates, the profit from the sale should have been reduced to $ 100 million but, in fact, it fell to $ 18 million. Due to the cryptocurrency market falling, the production of video cards for mining did not bring the expected profit and also became unprofitable.
The fact that the collapse of the Bitcoin exchange rate can cause great harm to the mining industry has already been proven. Whether this will work in the opposite direction is a moot point.
Capture of Bitcoin by “Whales” of Digital Industry
The topic of manipulating the crypto market by large players has been discussed actively in the industry for a long time. There are a lot of versions about the ways of how they affect the Bitcoin exchange rate. One of the most popular tactics with which “whales” can control the market is called “rinsing and repeating”: a large player sells a large amount of digital money at a price lower than the market. This causes a panic, the price drops sharply, after which the initiator buys the assets at the most favorable rate and as a result remains in the black, then, the cycle may repeat. Will the “whales” have the strength and influence to destroy bitcoin? There is no exact answer to this question.
But there is an assumption that the largest “whale” is the creator of Bitcoin Satoshi Nakamoto. According to unconfirmed information, he owns not only 1 million coins, which is almost 6% of the current cryptocurrency issue, but also knows how to eliminate BTC. However, the story “I gave birth to you, I will kill you” in the person of Satoshi Nakomoto seems to many just a myth.
A more real threat is the imminent launch of Bakkt’s global regulated platform for digital assets. Some people are waiting for this event with hope, and other ones — with great concern. Last year, there were suggestions that this service would not lead to a revolution in the digital industry, but to the capture of the bitcoin by institutional investors.
On September 19, 2018, amid news of the upcoming launch of Bakkt, concerned representatives of the cryptocurrency community sent a letter to the SEC warning about the dangers of improper regulation of the corporate implementation of bitcoin for the technology itself. The authors stated that if Bakkt begins to store all the funds in a single account, and also use them for lending and investment, then, it is likely that the funds of the borrower and the funds of the lender will be mixed. This phenomenon was observed during the financial crisis in 2007-2008. In addition, the combination of bitcoins on one account can significantly increase the risks of hacker attacks, disrupt decentralization and lead to the collapse of the first cryptocurrency.
Among the absurd assumptions about what can destroy bitcoin, there are ideas about turning off the Internet around the world, global cyberwar and crowding out BTC with altcoins. What will happen to the world if the main cryptocurrency disappears is a topic that becomes more and more relevant every year. But, perhaps, an even more significant question is what will happen to the world if Bitcoin does not disappear.
6 years ago, Reddit user Luka Magnotta posted a letter from the future. This is a message from 2025, where the first cryptocurrency already costs more than $ 1 million. Most of the digital coins are concentrated in the hands of a small percentage of people who built entire cities to protect themselves and miners. States around the world no longer control the collection of taxes, economic growth has slowed, and terrorist groups prey on cryptocurrency millionaires. The world has turned into chaos, and the only way to save it is to destroy the first cryptocurrency.
There are six years left until 2025 — a period in which an incredible amount of events can happen. And although it does not seem now that bitcoin could go up to $ 1 million, such a scenario does not look incredible.