What if Bitcoin went to zero?
economist.com
economist.com
The first three groups may shy away if the price crashes, but the fourth group will (mostly) not. Because what the fourth group is doing (mostly) does not care what the price is.
They can buy their goods whether it costs 0.00001 or 100 BTC, because those goods are indexed against fiat prices. As Bitcoin goes down, prices on the markets that sell these goods automatically rise to counter.
Perhaps the price gyrations would be more aggravating for the sellers of these things. They rely on converting cryptocurrency back to fiat to finance their business, (although perhaps some are able to buy their wholesale product with crypto directly). Volatility exposes them to a risk of losing value if Bitcoin falls between the point in time a buyer places an order, and the time the seller is able to withdraw and convert the payment to fiat.
Ultimately these buyers and sellers support some price floor for Bitcoin and other cryptocurrencies as they exchange real goods and services.
There's a lot of hype around cryptocurrencies, but ultimately this is the true killer use case. And there are millions of people who value that >$0.
The one problem with this is trust.
Even shady enterprises need tools to do business they can trust, and if all funds they have suddenly devalue by orders of magnitude they will loose trust.
Another way a shady enterprise can loose trust is if everybody stops using bitcoin and everybody knows whatever is left is a shady business. It is like going around with a big bag of $100 banknotes marked "STOLEN".
There is only so much utility from bitcoin for shady enterprises if they are restricted to only exchange funds between themselves but being unable to convert to real money. They would also have to mine bitcoin on their own.
You dont have to leave it to imagination. For me bitcoin was the easiest way to pay content writers from remote places like venezuela or middle east.
This was when bitcoin was around $500 or less and I bought some bitcoins to pay this contract workers. There was nothing shady or illegal. it just was the simplest way to pay anyone across the world.
If BTC goes to zero, I will buy the remaining 14 million floating coins for $0.00000001/BTC.
Of course, there are others like me, and this will bootstrap value >$0
What we need to brace ourselves for is it going to infinity. There are not that many coins left, and when people realize this, they will run for the exchanges.
The exchanges, of course, are all actually insolvent, as over the years fraud, loss, theft and just plain being a dumbass has made their liabilities impossible to satisfy. There is not enough coins.
Not your keys, not your coin. Stash em away asap!
On a practical matter, a sudden drop in the value of bitcoin could make it literally impossible to by, as the resulting drop in hash power could mean that no new block is ever mined, so the bitcoin transaction giving you ownership is never proccessed.
In the long run, as long as even a single person has an interesting in mining, a new block will be mined (on average) every ten minutes.
We recently saw a 50% drop in hashrate. Bitcoin kept on producing blocks. https://www.theblockcrypto.com/post/109315/bitcoin-hashrate-...
Further, as miners turn their machines off, even before a difficulty adjustment, it becomes profitable (in btc terms) for those of us with ancient machines to resume mining. Our unprofitable machines suddenly become profitable.
> On a practical matter, a sudden drop in the value of bitcoin could make it literally impossible to buy.
Nope. Most buying happens on exchanges. The flood of liquidity wouldn't suddenly evaporate. And blocks would still be produced as explained above.
Btw. We've had ~90% drops in ₿ price before. https://twitter.com/ChartsBtc/status/1418395476190064645?s=1...
It seemed it was a surprisingly poor and unfocused analysis. The Economist is normally better than this
Oh dear. I'm going to act as if I never read this uninformed low quality article. I expect much better than this from them.
I do hope that people will gradually realize that other more modern cryptocurrencies meet any specific goal (including the original goal of bitcoin) better, and eventually the majority of the value will congregate elsewhere, but I doubt it'll ever go to zero.
When talking about the USD, it isn't a question of if the USD went to zero, but when people stop using it entirely in international trade, and it actually becomes worthless. It is currently on artificial life support, but there isn't any sustainable way to continue that.
The cost of yet another war of U.S. aggression would send the dollar into a final value implosion. Yet if you peek at Gettr.com, war propaganda against China is everywhere. It's not just the Republicans, a few years ago "Madame President" held a public speech in a park, and declared war on both Russia and Iran for no particular reason. Iran is backed by China, perhaps because Iran hasn't started any wars. YouTube has "helpfully" one way or other deleted the video of that talk.
The history of Rome is repeating, unless the Federal Reserve is shut down and replaced with a non-criminal central bank, without private profit interest.
[1] Visualizing the Purchasing Power of the Dollar Over the Last Century https://howmuch.net/articles/rise-and-fall-dollar
[1] Hillary Clinton Is A Threat To All Of Humanity https://www.corbettreport.com/hillary-clinton-is-a-threat-to...
coincidentally that's actually a big problem with bitcoin... it's a deflationary currency so all the wealth is accumulating in the hands of the early adopters who are just sitting on it. this hinders its adoption since people are incentivized to not spend it.