Bitcoin Forum

In order to evaluate the risks of bitcoin, I would like to know what possible events could cause bitcoin to go to $0. I want to know things that would be truly devastating to bitcoin, or possibly all cryptos. I am not saying anything like this is likely, but for me it is important to understand the potential risks associated with it. I also want to know what events might cause a price decline that bitcoin would never be able to recover from.

For instance, I have heard that if SHA256 (or maybe some other type of security) is cracked, then bitcoin will essentially become worthless. Also, another example of a doomsday scenario for bitcoin would be the emergence of a competing crypto that is superior in every way, causing btc price decline slowly to very little, as market share moves to the other currency. On the other hand, something like a U.S. ban on bitcoin, as unlikely as it is, would not cause the price to go to 0, it would just find a much lower equilibrium price very quickly, and then probably slowly rise from there.

As I own bitcoin, I am concerned that one day, I could wake up and bitcoin will have gone to 0 while I was sleeping due to some unforeseen risk.

If you can take my word for it, I can assure you that Bitcoin can never have $0 value. It's built into the fundamentals of Bitcoin that once it attains a value, that value can only go up. Unless every single person is forced at gunpoint not to use Bitcoin thus Bitcoin has non-usage, then perhaps yes.

$0 is utterly unrealistic and almost certainly would never happen, even if SHA256 was smashed and there was an apocalypse there would be some nutcase collector who wants to catch them all, he'll pay you some cents for the almost worthless Bitcoin.

However, Bitcoin falling under $10 would be devastating and would signal the end of Bitcoin for sure, for there must have been a good reason to drop that low and effectively wiping out the hundreds of millions of USD invested into the Bitcoin ecosystem.

There is only one real scenario where Bitcoin dropping below $10 and close to $0 being a semi-good thing, that is if a large holder were to unload onto the market (think:Satoshi) there are several people who could bring the price under $10, however this effect would be limited and the price would certainly recover if it became obvious to the world that a single manipulator was causing the mayhem. (If the world thinks it's the market at large and not the actions of a single person, then people might panic and mass sell offs could destroy the confidence in Bitcoin)

It's a semi good thing because if the price recovers, then it was effectively a redistribution of wealth to the Bitcoin community, however if the market at large panic sold and everyone got out, then the price may not recover, and that would be bad.

Possible situations where Bitcoin drops to $0-$10 and never returns mostly would deal with competition.

The competition so far has been weak (think:Litecoin) but is growing stronger every day (think:Monero, Ethereum) and it's possible that some form of competition becomes attractive enough to start drawing money out of Bitcoin.

However, I don't see Bitcoin being fussed by this competition anytime soon, at the moment the competition fights among itself.

At the end of the day, diversifying a little is the best bet. My current recommendation is to keep 1% to a maximum of 5% of your CryptoCoin wealth in some of the alts that actually have utility and 99% to 95% in Bitcoin, as no serious competitor really exists yet.

You'll need to define what you mean by "value" here, because Bitcoin has attained a value in the past that is much higher than its current value.

The fundamentals regard the technical aspects of the coin, not the human element, which is responsible for the price action.

Hand of God

If there is a nuclear war and all human die off, then bitcoin will certainly be worthless.

What caused every single human to die off?

Most of the research and analysis I have read about nuclear war shows that a large portion of humanity would die and civilisation as we know it would be over, but I've never heard of a scenario where every human would die from a nuclear war.

Of course there are and always will be external elements. Market manipulation, hysteria and mania, technical glitches, trading bots etc. But the law of mathematics backing Bitcoin is that, when something has a value and is deflationary, that value cannot but go up. So as long as Bitcoin is used, it will have a value and that value, fundamentally speaking, can only increase in time. As like the value of fiat money that is inflationary, fundamentally speaking, can only decrease in time

Unless another technology came along and made Bitcoin obsolete, then it doesn't matter how deflationary it is if everyone using it goes elsewhere.

The possibility that something better comes to market is certainly real, and it could drive Bitcoin to sub $1 even if only one Bitcoin existed in the entire world.

When the world can no longer support basic infrastructure, internet will cease to operate and hence render bitcoin and blockchain in-operational.

What's with these doomsday threads? Turn off your computer and go for a walk.

http://en.wikipedia.org/wiki/IP_over_Avian_Carriers

Nope! Well there will be  many orphaned blocks :P

No, this is wrong on so many levels.  There is *nothing* about a deflationary currency that says anything about what its value will be or how it is determined.  Instead, people ascribe value to things.

When you talk about the value of something, you need to ask the question, "To whom is it valuable?"  Bitcoins are traded in an auction-style market.  Bitcoins are only valuable to its users and indirectly to non-users who are impacted financially by BTC users, or more simply put, bitcoins are valuable to those who believe they are valuable.  All it takes is for people to believe they aren't valuable or to stop buying and using them altogether for them to become worthless.

You can have inflation in a deflationary-currency market (like we have right now with BTC).  You can also have deflation in an inflated fiat currency market.  In neither scenario is there any information that tells us how to calculate or predict the value of a currency.

It's axiomatic that if you take away the people that ascribe value to BTC then BTC would have no value.  Value comes from those who subjectively ascribe it.

Exactly, there will always be someone that will try to collect all of them. Imagine owning an entire currency, even if a deceased one, it would be the first crypto currency. It would have historical value. I think there would be people wanting to pay a big amount for it, just like a museum.

If one other person is using bitcoin then it will not go to zero. For zero to happen I think one or more of the following would be the cause.

1. Breaking of SHA. If this happens there will be chaos until stronger encryption is added to the protocol. It would mean a "hard fork" that would leave earlier versions of bitcoin unusable.

2. Loss of net neutrality. This could be serious. If the internet becomes a walled garden then your overlords my want to block ports and detect bitcoin software. They will then decide if you are going to use bitcoin or not. Your job will be to shut up and do what you are told.

3. Global loss of internet connectivity. In the event of a major nuclear war, catastrophic pandemic disease, asteroid strike, etc.; bitcoin may go away permanently.  Although, it may be the least of your worries.

It's not, however, going to go to zero from speculation. As long as it is being used it will have value. And as long as it is the cheapest, fastest, and most secure way to send money anywhere; it will have a high value.

What's preventing you from making blockchain copy, turning your computer off the internet, and having the whole bitcoin to yourself - right now? What most of you neophites do not seem to understand, is that the code and blockchain and everything is a digital, trivially copyable asset. The one and only thing which gives cryptocurrency it's value and any meaning is the hashing network and resulting bitcoin evolution consistency. No network = no currency.

And that is why most/all alts have no future. Their networks could disappear in a blink of an eye, while bitcoin is constantly moving into dedicated professionally operated hashing DCs.

Thought it is the network effect of supporters from not just miners, but merchants, traders and consumers give the coin value.

True, but miners are crucial for the coin to even exist, the stronger the network - the higher amounts of value it can handle. Different types of consumers just add usability, liquidity, convenience - which are very important for the currency aspect, but not that much important for the store of value aspect.

none, wasn't even at zero at launch, even if only one person(rich one) use it , would make it worth something

Probably the popular double spending issue could make bitcoin's value crash, but I think that it will recover, btc won't die.

 ::) Take a look at Bitcoin's past price development, please.

For me, it's a short list.

• An effective attack on the crypto - partial preimage attacks on 2SHA256, preimage attacks on RIPEMD160, forgery attacks on secp256k1. In this situation, the ledger becomes unusable and it becomes a game of he-said she-said to get a "clean" snapshot for forking to sounder algorithms.
• A 75%+ hashpower vandal able to maintain that position for months. With a clean supermajority a bad actor can keep parallel blockchain branches within 6 confirms of each other (thereby keeping the ledger from converging and making it unusable) as long as they maintain that supermajority.
• System failure of the Internet. Bitcoin is useless without the gossip network; we've discussed how to theoretically fail over to HAMs but I doubt that'll ever get built.

I think Shamir User A dumping their 2.8MBTC would push us pretty low, but it'd be temporary. I think the development of a significantly better Bitcoin-like system would cause most people to jump ship, but there'd be folks left who'd keep swapping them as collectibles. I think successful, high-profile reorg attacks ("51% attacks") would shake confidence in the system to its core, but that's a wound that the network can heal by changing its behavior. Those are all scenarios that could conceivably push us below the $2 wall that I've (colloquially) referred to as impenetrable, but zero? Zero is a long way down; even those debased Zimbabwe Dollars go for a couple bucks a bill (http://en.wikipedia.org/wiki/File:Zimbabwe_$100_trillion_2009_Obverse.jpg) just for the novelty value. Bitcoins becoming worthless would imply, at least to me, that something had changed such that ownership itself couldn't be established anymore.

Never read (the book) or seen (the movie) on the beach? It's quite good :) http://en.wikipedia.org/wiki/On_the_Beach_%28novel%29

The market gives bitcoin it's value, however it is backed by the network (miners) who give bitcoin it's security.

So... you arent answering the question at all? You're just saying all sorts of happy thoughts for no real reason?