What Are The Biggest Threats To Bitcoin

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Investing is a personal choice; ever since I got into investing and found my way into crypto, I’ve had to listen to so much advice and read through so much content to get an understanding of how it works and what would be right for me. As someone who makes a living in the technology sector and understands the value of data and digital real estate, I’ve naturally gravitated to tech businesses, stocks and later cryptocurrency.

I’ve never been big on real estate or commodities as these are markets I don’t have an interest in or care to understand. I don’t know what the potential downsides are in every facet, and evaluating those markets for me on a high level, I am not comfortable distributing my capital in those areas.

To many, opting for Bitcoin and cryptocurrency seems crazy, irrational and I get it. If you only believe the surface arguments, you won’t bother to dive deeper and find out more about how this new asset class keeps getting bigger and stronger with time.

Zero-sum scenarios

  • A lot of people I’ve spoken to make these asinine arguments when it comes to Bitcoin like what if we run out of electricity or the internet goes down. Well then we have bigger problems then Bitcoin as all digital money would be frozen or lost.
  • Then it’s things like oh Bitcoin is backed by nothing, but so is fiat and I don’t buy the whole gold is used for jewellery and used in manufacturing backing. Money is merely a confidence game and people wanting to accept it knowing they can move it on to someone else for something they need. If Bitcoin is backed by “nothing” as you say is an argument, then all money is backed by nothing.
  • Then it’s the case of Bitcoin can be hacked, yes it can, so can all computer systems, but its distributed ledger technology and the amount of hashing power protecting the network make it far safer than any computer network around. You’re sending money via your bank, Venmo, PayPal so why are you turning your nose up at Bitcoin? It’s the same thing for the end-user, just the processes behind how it runs are different.
  • Then it’s about how quantum computing will destroy Bitcoin if that’s the case, why would I go after 200 Billion Dollar market cap industry when I could use that computing power to steal all the money in the world that is digitally represented and easier to pick off.

So these scenarios, while possible, I think are unlikely, but I’d like to tackle ones that are more likely but why I think they won’t happen and why it makes me bullish on Bitcoin.

Banning

The first one I often year about is governments could ban it; yes, absolutely, they can ban it legally, but can they stop you from using it?

No, any internet connection, any VPN service, any tor browser could easily ensure you can still access your Bitcoin. If it gets to a point where we need to do things offline, paper wallets and seed phrases can be used to transport UTX’s and transfer Bitcoin.

Banning Bitcoin when citizens, businesses and even banks, in some cases, holding it means you have to force the entire value chain to give it up.

It also means ALL governments have to do it, or companies and citizens will move to a country that is crypto-friendly, taking a brain drain and capital drain with them and hurting the country banning crypto.

So, could Bitcoin be banned in your region? Yes, can it be banned in the whole world, yes but it would be dumb. If one country doesn’t, they’ll bring in talent, capital and become a superpower overnight, which keeps this game going.

Usurped by a superior coin

There have been thousands of coins created in the altcoin market, and so many of them claim to be a better, faster version of Bitcoin. Unforutnly none have the hashing power, decentralisation, market cap, market dominance to dethrone Bitcoin yet.

The fact is, Bitcoin was first, and there is a history behind it. There is so much vested interest in it; even though it’s not the best code, we’ve already seen the network effect take hold. HTTP launched in 1991, and was it the best code ever?

No, but the network effects of building on top of it took hold by a small community. We ran with it till today. It took until 2015 for HTTP to be updated, so it shows that when the market agrees to build on something, it isn’t easy to update or move away from regardless of improvements over time from outside projects.

There could be a coin that takes over Bitcoin in the future, but I cannot see that happening. Bitcoin is a one-trick pony and does it well; for anyone to compete with that, they need to do it better, faster, more decentralised and cheaper, and that’s ALOT to ask of a project.

Self-inflicted wound

Could we one day see a bug exploit or a software patch open up BTC and allow someone to disrupt the chain? Yes, it’s very much a possibility, it would ruin the chains reputation and value of the coin, but I don’t see it being the end.

The chain can be forked with a snapshot, and we could continue before the bug; it would cause a lot of issues as we saw with ETH and ETH classic but look at it today, both projects are still being used, and I think it would be the same for Bitcoin.

Good government policy

If governments decided tomorrow, we are going to step back, roll back all the debt, start paying it off and reduce taxes over time, force banks to be fully collateralised, not mess with interest rates and live within their means. I think it would be horrible for Bitcoin but great for all of us; we’d see a massive depression, yes, but in future, it would be a stable economy we can all thrive in and live in.

However, I don’t see governments ever doing anything that does not serve themselves. So I doubt there will be good governance and financial policies put in place to take out Bitcoins rise to its ultimate goal as a reserve currency and new global asset class.

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice. It is for educational and entertainment purposes only. As of the time posting, the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency, as all investments contain risk. All opinions expressed in these articles are my own and are in no way a reflection of the opinions of The Bitcoin Manual

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