One of the most recent examples of this can be seen in a post by iOS developer Gaurav Sharma, which argues that Bitcoin is actually a modified Ponzi scheme. He argues that far from being decentralized, the development of Bitcoin is actually controlled by a central committee of developers, which he claims only benefits the powerful.
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This overlooks the fact that anybody competent can submit a Bitcoin Improvement Proposal BIP for consideration, and the entire protocol can be forked with relative ease if undesirable changes are made. With Bitcoin, all nodes and miners are free to choose which client they run—the client with the most combined work automatically becomes the canonical chain. As a result, the Bitcoin unit on these chains will almost certainly still have value, due to the computational work and resources involved in maintaining the integrity of the network.
Another common argument made by Sharma—and numerous other skeptics, including Warren Buffet and Mark Cuban —is that Bitcoin is simply overvalued because it has little or no utility.
Bitcoin price crashed! Here is what comes next - CityAM : CityAM
A similar phenomenon is described by Metcalfe's law , which states that the value of a network is proportional to the square of the number of connected users. If Bitcoin were to truly crash to zero, it would mean either that it became impossible to trade Bitcoin or exchange it for goods and services, or that buy-side liquidity fell to zero for some reason. One of the only plausible scenarios that could cause this is Bitcoin being banned by all world governments, potentially rendering it illegal to own or use—as is already the case in a handful of countries. This would also require taking down the entire Bitcoin network, rendering all nodes offline—including the ones in space —and making it impossible to set up new ones.
Theoretically, this would make it impossible to transfer Bitcoin and would prevent underground trading, likely rendering Bitcoin worthless—but this would be nearly impossible to accomplish. The decentralization and global spread of network nodes is the entire value proposition of the Bitcoin blockchain. Another possibility is that Bitcoin could simply be superseded by a better cryptocurrency or a similar alternative payment system, rendering it obsolete and therefore worthless as a payment method or store of value.
But this scenario would likely take several years—perhaps even decades—to play out. Whatever the case, it appears likely that Bitcoin will always retain some value, either as a collector's item or as a historic artifact for future generations.
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A similar phenomenon was observed relatively recently when the Reserve Bank of India RBI demonetized Rs and 1, notes in November due to a massive increase in counterfeit notes. Although authentic Rs and 1, notes can no longer be used as legal tender in India, they still retain some value as works of art or as a curiosity. Editor's note: This article was first published in September , and was updated in March to reflect Bitcoin's rising price and the influx of institutional investors.
For the best experience, top crypto news at your fingertips and exclusive features download now. Investors who have been tracking Bitcoins in the past would recollect that a similar rally in was followed by a crash.
- bitcoin sample wallet address.
- Bitcoin crashes for second time in a week - CityAM : CityAM;
- Buying Bitcoin is the most crowded trade; reminiscent of the 2018 crash.
Interestingly, in the December BofA survey, Bitcoin topped the list of most crowded trades. Even now, many experts have been warning of a bubble building up in Bitcoins, especially considering the sudden spike in volatility and increasing institutional participation.
History and regulators suggest a big reversal will come at some point
While demand would increase and volatility ease should corporations hold Bitcoin for business purposes, the opposite is true when institutions gain exposure for speculative purposes. Empirical evidence from other asset classes suggests that higher participation by institutional investors could increase volatility because of their more opportunistic investment approach," Michael Bolliger, chief investment officer, global emerging markets, UBS Switzerland AG said in a report on 14 January.
Ultimately time will tell what holds true for Bitcoin investors but those in the bullish camp see further upside. Click here to read the Mint ePaper Mint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.
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