Can Bitcoin Lose Its Value?
By the time you start researching about its value, you already know what Bitcoin is, and you're probably thinking about investing in it. This cryptocurrency's price hit its all-time high price at the end of 2020 and the beginning of 2021. At this time, its price was over $60,000, and many people began wondering what would happen next for this virtual currency.
But even with this exponential price increase, some detractors argue that Bitcoin will eventually collapse and lose its value. Some investors have even argued that Bitcoin is technically worthless, and therefore, can't invest in it.
However, institutional investors have started investing in Bitcoin. These include prominent companies like Tesla, MicroStrategy, and Square that have now included Bitcoin in their corporate treasuries. Crypto exchanges like the Bitcoin Revolution have also experienced a boom, with more people and institutions rushing to acquire this virtual currency. Essentially, these platforms allow people to purchase Bitcoin with fiat money.
Some people argue that institutional investment is what caused Bitcoin's Bull Run. And this proves that Bitcoin, whose market capitalization exceeds a trillion-dollar, is going nowhere. But why would Bitcoin lose all its value?
Can Bitcoin Have Zero Value?
Some experts have examined the possibility of Bitcoin's value collapsing to zero within a day. The historic Bitcoin returns have helped such experts to calculate the risk-neutral disaster possibility, and they haven't ruled out the possibility of this virtual currency crashing to zero.
However, some experts argue that this virtual currency will eventually lose its value due to its lack of intrinsic value. On the other hand, supporters retort this argument saying that mathematics and consumer confidence back Bitcoin.
While most people frame Bitcoin in opposition to traditional government money, both fiat currencies and Bitcoin lack the physical commodity like gold that backed them once. Thus, they, too, don't have any intrinsic value. Nevertheless, some people argue that debt supports the U.S. dollar.
Arguments against Bitcoin
A common argument against Bitcoin is that it's an elaborate scam by a nefarious group or entity for stealing people their hard-earned money. Some people have even argued that Bitcoin is a modified Ponzi scheme.
What's more, some individuals say that Bitcoin is not decentralized. On the contrary, a central developers' committee controls Bitcoin. And only those in power positions stand to benefit from this virtual currency. But this argument ignores the fact that competent individuals can submit their Bitcoin Improvement Proposal for consideration. What's more, users can fork the entire protocol if they discover undesirable changes.
Additionally, all miners and nodes can choose the client to run. Ideally, a client with more combined work forms the canonical chain. Consequently, Bitcoin units on these chains always have value because of the resources and computational work involved in the network's integrity maintenance.
Other skeptics argue that people overvalue Bitcoin since it lacks utility. However, this is not true because Bitcoin has an increasing database of users. Initially, Satoshi Nakamoto wanted Bitcoin to be a peer-to-peer payment system. However, online trading is now the thing that everybody wants to do with Bitcoin.
Regardless of what happens, Bitcoin will most likely have value. The only thing that can make Bitcoin valueless is if all governments ban it or render it illegal. However, this consensus is almost impossible to reach. What's more, people would still access their digital wallets and crypto exchanges online. The globally spread nodes and decentralization of the Bitcoin network give Bitcoin value, especially its blockchain proposition. Thus, Bitcoin can lose some worth, but it is unlikely to lose all of it.