Bitcoin has been around for a few years now. As of July 2022, 19.1 million bitcoins were
in circulation. Because there are only a finite number of
bitcoins, their value could potentially increase over time. But some people believe that bitcoin is headed
for a crash and that its value will decrease to zero. So, is bitcoin headed for a crash? And what would happen if it did? Let's take a closer look. In 2018, two Yale University economists (Yukun
Liu and Aleh Tsyvinski) published a report titled 'Risks and Returns of Cryptocurrency,'. In which they examined the risk of Bitcoin
collapse in the span of a day. By using Bitcoin's historic returns to calculate
its risk-neutral disaster probability, the authors found that the likelihood of an unspecified
disaster crashing Bitcoin to zero.
Ranged from between 0% to 1.3%, and was around
0.4% at the time of publication. For comparison, Tsyvinski stated that the
euro has a 0.009% chance of the same. But Can Bitcoin crash to zero? Bitcoin critics have continued to share unfavourable
opinions of it. Their main argument is the fall of Bitcoin
to zero as they say its story will end. But it is not that simple. Instead, Bitcoin has placed itself as one
of the most significant commodities in the digital world. Bitcoin volatility has created fears as the
investors don’t want to lose capital. These speculations for its price coming to
zero have been based on the proposition that the speedy losses won’t know any end before
taking it to zero. The collapse of Terra UST has led to furthering
these fears, but Bitcoin is something different. You need to understand how Bitcoin works before
believing in predictions regarding its collapse. Bitcoin has a wide network consisting of 100,000
nodes, while most of its investors are here for the long term.
Also, some of the investors have a firm belief
that it will someday become legal tender. So, it would take a lot of effort to bring
Bitcoin to zero. One of the only plausible scenarios that could
cause the Bitcoin to be banned by all world governments. 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. But this would be nearly impossible. Sending the price of Bitcoin to true zero
would be a monumental task and could be near impossible. Other sceptics argue that people overvalue
Bitcoin since it lacks utility.
However, 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. If you want to know about the most profitable
coins to invest in? Check out other videos on our channel and
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