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> Anyone making new predictions of Bitcoin's demise must explain precisely how and why its distributed network would fail. A systemic banking panic. Everyone

> Anyone making new predictions of Bitcoin's demise must explain precisely how and why its distributed network would fail. A systemic banking panic. Everyone becomes worried about being able to extract money/value from the crypto ecosystem as a whole due to the failure of some exceptionally large entity (Coinbase or Binance or Tether failing). They all run for the exits at the same time trying to cash whatever crypto they can into currency. With no sort of backstop, no FDIC, no government intervention, no failsafes, etc there's nothing to stop it from all unwinding to effectively zero in a panic. And panics aren't concerned about market efficiencies or intrinsic value or network effects or anything other than the ability to flee into some other unaffected liquid asset. The contagion would spread throughout the network with people trying to take any exit they could find until that exit was shut down. Given that the crypto ecosystem in general doesn't believe in government regulations to prevent panics it is nearly certain that one will happen, which will bring crypto to a very sudden halt. The probability over time reaches 100%, but it will likely take some kind of precipitous drop from a sufficient height that no individual Billionaire will be willing to step in and buy it all up cheap (previously crypto has likely been "small enough" that a billion here and there was able to stop the crash in e.g. 2018). It is impossible to predict when it will happen since it requires knowing how much systemic cash is available for withdrawals and how much can be raised, and the timing of financial entities failing, and the appetite for risk of anyone with deep enough pockets to try to bail it out. And Bitcoin has never really been tested by a recession that would cause it any kind of problems. The V-shaped pandemic recession was cushioned by a lot of injected liquidity in the markets and people switched to greed almost right away after the first bit of panic waned. It has never been stress tested by something like 2001 or 2008 in the broader economy.

bb88 3y ago
Systemic banking panic. Or systemic crypto panic. But there could be lots of causes for it. Mining made illegal by locales, states, or countries -- because of energy pricing. BTC transfers made illegal through law or made undesirable in some way (say KYC but with like actual teeth) And then there's the long shot chance that a nation-state (China perhaps) figures how to program their quantum computers to break BTC algorithms, snatching away value, before investors even realize what even happened. For the record, I don't think it would happen. But also I didn't think that AI would be a thing in my lifetime.
- lamontcg 3y ago
  Most of those concerns though are covered by "failure of an entity" -- which could be inherent through bad business practices, or it could be regulatory. A quantum computer breakthrough that destroys BTC does really fundamentally cause BTC to fail as an algorithm, which is a bit higher level. I don't think that is likely, and we don't really have AGI, although LLMs are great for certain kinds of queries and polishing language or doing boilerplate coding.
- anonymouskimmer 3y ago
  You don't need a "nation-state", any old sovereign state will do fine. I've read that various cryptocurrencies (including Bitcoin) are/have worked on quantum-proof verification algorithms. Not sure what it entails, but people are working on it.
anonymouskimmer 3y ago
> Everyone becomes worried about being able to extract money/value from the crypto ecosystem as a whole due Some of those "everyone" are people who live in countries with both currency controls (so they can basically only buy their national currency, or cryptocurrencies), and a horribly inflating national currency. Even a non-exchangeable-for-fiat Bitcoin is better in their eyes than the only other alternative they have. No one wants to spend 100 trillion Zimbabwean dollars on a loaf of bread. In the more stable world you'd need the failure/shutdown of exchanges approximately simultaneous with the strengthening of those national currencies. It might happen, but it'll be a while. I'm anti-crypto, I just don't see it happening in the near term.
- lamontcg 3y ago
  > Some of those "everyone" are people who live in countries with both currency controls A minority of people flooding to the exits can easily remove all the liquid cash from the system and cause it to collapse. There's probably no more than around ten billion in cash at any one time supporting a nominally trillion dollar financial system. A 1% stampede for the exit can produce a crash by draining that liquidity to zero. And when the dust settles it will all have been a transfer of wealth from the poor to the rich.
  - anonymouskimmer 3y ago
    If you actually are using it as a currency, you don't need it to have any liquidity (with respect to exchanging it for another currency). You just need the person you're dealing with to prefer it to the alternative.
nostrademons 3y ago
That would just re-price Bitcoin. The price could crash, a lot, but that won't necessarily reduce adoption. I know I've got a lot of $0.01 limit orders that'll have me hoovering up Bitcoin if it ever reaches that price.

bb88 3y ago

Systemic banking panic. Or systemic crypto panic. But there could be lots of causes for it. Mining made illegal by locales, states, or countries -- because of energy pricing. BTC transfers made illegal through law or made undesirable in some way (say KYC but with like actual teeth) And then there's the long shot chance that a nation-state (China perhaps) figures how to program their quantum computers to break BTC algorithms, snatching away value, before investors even realize what even happened. For the record, I don't think it would happen. But also I didn't think that AI would be a thing in my lifetime.

lamontcg 3y ago
Most of those concerns though are covered by "failure of an entity" -- which could be inherent through bad business practices, or it could be regulatory. A quantum computer breakthrough that destroys BTC does really fundamentally cause BTC to fail as an algorithm, which is a bit higher level. I don't think that is likely, and we don't really have AGI, although LLMs are great for certain kinds of queries and polishing language or doing boilerplate coding.
anonymouskimmer 3y ago
You don't need a "nation-state", any old sovereign state will do fine. I've read that various cryptocurrencies (including Bitcoin) are/have worked on quantum-proof verification algorithms. Not sure what it entails, but people are working on it.

anonymouskimmer 3y ago

> Everyone becomes worried about being able to extract money/value from the crypto ecosystem as a whole due Some of those "everyone" are people who live in countries with both currency controls (so they can basically only buy their national currency, or cryptocurrencies), and a horribly inflating national currency. Even a non-exchangeable-for-fiat Bitcoin is better in their eyes than the only other alternative they have. No one wants to spend 100 trillion Zimbabwean dollars on a loaf of bread. In the more stable world you'd need the failure/shutdown of exchanges approximately simultaneous with the strengthening of those national currencies. It might happen, but it'll be a while. I'm anti-crypto, I just don't see it happening in the near term.

lamontcg 3y ago
> Some of those "everyone" are people who live in countries with both currency controls A minority of people flooding to the exits can easily remove all the liquid cash from the system and cause it to collapse. There's probably no more than around ten billion in cash at any one time supporting a nominally trillion dollar financial system. A 1% stampede for the exit can produce a crash by draining that liquidity to zero. And when the dust settles it will all have been a transfer of wealth from the poor to the rich.
- anonymouskimmer 3y ago
  If you actually are using it as a currency, you don't need it to have any liquidity (with respect to exchanging it for another currency). You just need the person you're dealing with to prefer it to the alternative.

nostrademons 3y ago

That would just re-price Bitcoin. The price could crash, a lot, but that won't necessarily reduce adoption. I know I've got a lot of $0.01 limit orders that'll have me hoovering up Bitcoin if it ever reaches that price.