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Bitcoin is mortal? 7 ways to lose relevance

Sebastien Mognier, a financial services consultant with 15 years of experience, can judge whether Bitcoin can be destroyed.

Despite the fact that the first Crypto Currency has been in working order for almost 10 years, conversations about its imminent demise do not lose their popularity. Even seemingly intelligent people are spreading the “syndrome of insanity on the basis of bitcoin,” if one can call it that. They continue to prepare for the collapse of the crypto currency, although every day bitcoin proves to them the opposite.

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From a technical point of view, bitcoin will exist as long as there is a group of computers using the appropriate software. Only one Scenario will lead to its complete destruction. In all other cases, bitcoin will remain the leading crypto currency in the coming years, unless, of course, the community decays due to its greed and disorder.

Scenario 1:  End of the World
Probability (in the next 5 years):  Close to zero
Result:  Instant death

If all sources of electricity, the Internet and other data transmission channels are disconnected on the planet, bitcoin nodes can not communicate with each other. The system will become useless.

Temporary disconnection of the Internet around the world, of course, will cause some confusion, but in theory, bitcoin will continue to exist after that as the longest of the chains. Even if enthusiastic geeks or museums will support the bottkoin nodes, the crypto currency will continue to exist.

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Scenario 2:  Critical error
Probability (in the next 5 years):  Low
Result:  Instant loss of significance

According to this scenario, the next update of bitcoin may contain a bug of the level of the infamous The DAO, which led to the Ethereum forking, which will compromise the integrity of the entire system.

Even if the community agrees (not a fact) to fix the code, install a new version and restart the system, the result will be the collapse of the price and the appearance of the fork.

The community is well aware of this risk: all code changes are thoroughly tested according to established norms. In the long run, nobody is immune to mistakes.

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Scenario 3:  Fork domination
Probability (in the next 5 years):  Low
Result:  Gradual loss of significance

If the community does not come to a common decision about the future of bitcoin from technical or pseudo-technical (material) considerations, several forks of the largest crypto currency may arise.

Bitcoin Cash, separated from the blockade of bitcoin last summer, did not have such destructive influence, but several forks of the same level can do it.

If this happens, bitcoin may lose its market share and gradually lose its significance. However, this scenario again contradicts the interests of the community.

Scenario 4:  Coordinated government action
Probability (over the next 5 years):  Medium to low
Result:  Instant loss of significance

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Governments can not destroy bitcoin itself because of its decentralized nature. However, they can control and limit its use in their jurisdictions.

For example, they can close bank accounts of crypto-currency companies and prohibit the registration of such companies. If only a few countries resort to such measures, the effect will be negligible, because the business will simply move to another jurisdiction.

This happened in China after the ban on exchange trading of crypto-currencies last year. And although there are almost certainly other states that will want to follow this path, a ban on the world level is unlikely.

Bitcoin is recognized by the Japanese authorities. At the same time, if the United States, the EU and the United Kingdom join China, the damage will be very significant.

However, world leaders will rather follow the path of regulation, tax collection and investor protection.

Scenario 5:  Major hacker attack
Probability (in the next 5 years):  Medium to high
Result:  Temporary collapse

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This script itself includes several scenarios.

Firstly, this is the so-called 51% attack, the organizer of which can try to seize control at the protocol level. In theory, this is possible, but unlikely.

The organizer of such an attack will destroy its own source of benefit. At the same time, he will be forced to spend huge resources on equipment and electricity, which are guaranteed not to pay off.

More likely, hacking an application based on the protocol.

When in 2014 there was a break-through of Mt Gox (as an example of such an attack), this exchange accounted for 70% of transactions in the network of bitcoins. Today, the number of exchanges has increased significantly. If one of them is hacked, the course will most likely collapse, but it will be restored later.

Last week  , the  Coincheck Exchange, which lost $ 400 million in the NEM crypto currency, was hacked .The NEM rate fell by 15-20% and recovered every other day.

Scenario 6:  “Best” Crypto-currency
Probability (in the next 5 years):  Medium to low
Result:  Slow loss of significance

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Can the “best” crypto currency replace bitcoin? “Best” is understood to be more advantageous for miners with lower commissions for users while maintaining other characteristics.

The question is primarily economic. This crypto currency should be much “better” to overcome the network effect and the strength of the brand, which today is characterized by bitcoin.

The fact that it has not happened so far speaks for itself. For economic and managerial (not technical) reasons, the “world” crypto currency, provided by the UN, is unlikely to appear in the next 5 years.

There is another economic factor: if the cost of electricity increases suddenly, mining may become unprofitable. Only large pools will remain in countries with relatively cheap electricity. In this case, bitcoin will have to find a new way to ensure the protection of its network while maintaining the integrity of the registry and reducing energy costs.

Scenario 7:  Market Fatigue
Probability (in the next 5 years):  Low
Result:  Slow loss of significance

If crypto-currency start-ups can not provide products that have value in the real world, people can begin to lose faith in crypto-currencies and tokens.

In this case, the growth of the market will slow down, and its volume will eventually stabilize. The market of crypto-currency will lose its attractiveness from the investment point of view, which will lead to further decline.

Probably, crypto-currency start-ups will still be able to develop something valuable. In any case, the Crypto currency market is in the early stages of development and will not soon be bored by investors. In addition, as history shows, the market can always perk up.

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The post Bitcoin is mortal? 7 ways to lose relevance appeared first on Digital Bodha.

This post first appeared on Cryptocurrency News | Bitcoin Mining Hardware | Dogecoin, please read the originial post: here

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Bitcoin is mortal? 7 ways to lose relevance


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