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Worst Case Scenario: 4 Reasons Why Bitcoin Could Go To Zero

An objective take by Tom Mitchelhill on why Bitcoin won’t live to see 2030.

Bitcoin isn’t an asset. It’s a religion.
Now, that’s a positive and a negative.
It means that the Bitcoin zealots are willing to pour enormous amounts of capital into the crypto flagship and keep it there indefinitely.
It also leaves them completely blind to all of the evidence that criticises their ideology.
If you’re going to invest in anything, whether it be a stable blue-chip stock or a highly volatile cryptocurrency, you need to update your thesis as new information presents itself.
Here’s the 4 major things you should know about the potential future decline of Bitcoin. Most of these issues are further clarified by Nassim Nicholas Taleb in his 5-page Black Paper which is one the most potent criticisms of Bitcoin to date.
1. Bitcoin is a revenue-free bubble
Bitcoin offers holders no expectation of future earnings. Because of the absence of any expected dividend, reverse dilutions or buybacks that would provide earnings for holders in the future, it’s pretty likely that the value of Bitcoin will become zero once miners are extinct.
Compare this to investing in a successful, early-stage company which grows over time and eventually pays shareholders a dividend once it becomes large enough to do so. This company has real world-utility in the interim and provides a direct service to customers, where Bitcoin is yet to offer any major real-world utility, other than increased speculation.
It goes without saying, but the decentralized ledger technology at the core of Bitcoin is something of immense and revolutionary value. However, this fact doesn’t offer any competitive advantage over the numerous other cryptocurrencies with an established market for real-world exchange and far greater future earnings potential for holders.
There are numerous other tokens in the cryptosphere right now that could easily outstrip and replace Bitcoin in the coming years.
2. Ethereum will destroy Bitcoin
Ethereum is an asset with enormous real-world potential because it is fundamentally adaptable. The Ethereum blockchain is a programmable platform for smart contracts, dApps and protocols that solve real-world problems and perform useful functions — which is a lot more than can be said for Bitcoin…
Ethereum and its native token Ether (ETH) has an active use-function; namely replacing the wild array of antiquated accounting and banking services that cost passive users of the traditional finance (TradFi) system nearly $3 trillion every single year.
Ethereum currently accrues approximately 0.05% of all the potentially capturable financial earnings available in the Tradfi ecosystem. If we assume that it’s capable of capturing just 0.5% of total fiat earnings, then its price would be roughly $40,000 per token.
Contrary to Bitcoin, this would be done via real-world applications of its utility, not just waiting to be realised as an alleged store of value or as a valid medium of exchange.
Bitcoin’s loudest advocates — Michael Saylor or Robert Breedlove — will scream about the immutable value of Bitcoin until they’re red in the face. One of the biggest arguments they put forward is that Bitcoin is a store of value.
Is it really?
“Gold and other precious metals are largely maintenance-free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time. Cryptocurrencies require a sustained amount of interest in them” — Nassim Taleb.
Gold has ample industrial utility, with half of gold supplies going to jewellery, one tenth to industry and a quarter being used as central bank reserves. It has a variety of robust and anti-fragile methods through which it acts as a store of value, maintaining this status despite being untethered from modern currency in 1971.
3. Bitcoin’s real value is artificially inflated
The failure of Bitcoin to become a recognised currency has been masked by the inflation in the price of Bitcoin. This has created enough profits for a large number of people to jump on the hype-train of Bitcoin well ahead of any real-world utility being provided.
Any increase in the price of Bitcoin has very little do with its genuine utility. The growth in Bitcoin’s price are only false inflations based in future speculation that provide enthusiasts with enough monetary “proof” to make a lot of loud noises about its future.
Ironically, the enormous inflation in the price of Bitcoin was driven by the era of “free money” it pretends to be an antidote to. This era of “stimulus forever” is quickly coming to an end as an increasingly hawkish Fed clamps down on everything expenditure.
4. Bitcoin has already failed as a currency
A currency by definition is: an efficientstable exchange of value that tracks a weighted basket of goods and services with minimum error.
It takes approximately 10 minutes for a transaction to be validated on the Bitcoin ledger. How can Bitcoin expect to compete with Mastercard or VISA if we have to stand awkwardly in a coffee shop for 10 extra minutes just because we’re crypto enthusiasts? If Bitcoin or any other cryptocurrency for that matter expects to be seen as a valid payment system, it needs to be both fast and secure.
Secondly, real-world prices of goods and services exist in direct relation to the income that regular people receive. Items can be deemed expensive or cheap relative to that income. A Lamborghini is considered expensive because it’s worth 5 to 6 times the median salary in the United States. The value of the dollar that people buy Lamborghini’s with stays relatively consistent. In order for a currency to function, its price must be relatively stable.
Thus, in order for people to be able to regularly buy goods with a price denominated in Bitcoin, they must also have an income that is fixed in Bitcoin. For an employer to pay a salary in Bitcoin that employer must be receiving revenue that is also fixed in Bitcoin. Furthermore, in order to create and manufacture goods that are sold for revenue in Bitcoin they must have their overheads fixed in Bitcoin. The scalability issue death spirals.
Bitcoin: a digital antiquity of the future.
This article is a very simple list of events that could prove to be catalysts for Bitcoin’s future demise. It provides a framework for investors and crypto fanatics to see the simple ways in which Bitcoin could become nothing more than a smouldering ruin — a failed experiment, imprisoned in a glass case somewhere in the great museum of cybernated time.
To reiterate: This article wasn’t written to “take down” Bitcoin because I have some deep hatred for it, it was for with the sole purpose of having an adult conversation about the future of Bitcoin and cryptocurrency.
I’m a current holder of multiple cryptocurrencies & a full-time cryptocurrency reporter for one of Australia’s largest web3 publications, and so, I have a lot of skin in the game when it comes to blockchain tech and crypto.
I just want everyone to be more aware of the ways that Bitcoin can fall of a cliff without anyone ever realizing what happened.
This article was written by my good friend and partner Tom Mitchelhill, who I highly recommend everyone to follow! He posts some amazing content.
Thank you, everyone, have a wonderful day!
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