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Sebastien Meunier: Seven possible scenarios of Bitcoin destruction

ICO-LINK-NEWS-Sebastien-Meunier-Seven-possible-scenarios-of-Bitcoin-destruction

Financial consultant Sebastien Meunier suggested seven possible (and unlikely) scenarios for the collapse of Bitcoin, which could be realized in the next few years. Before we proceed to the assumptions, let's start with the facts - Bitcoin was declared dead more than 200 times. Despite the fact that the first cryptocurrency in the world for more than 9 years works practically without fail, it is still fashionable to predict its demise. Many experts are known for continuing to predict the death of Bitcoin, despite the fact that every day the network refutes their assumptions. However, if we assume that these people still have a certain level of intelligence, the only explanation for the failed predictions and emotional statements is that they did not devote enough time to studying the work of the network.

From a technical point of view, Bitcoin will work until at least a few computers are held by a working Bitcoin client. Only an extreme scenario could lead to the complete destruction of the blockchain. It is likely that in the coming years Bitcoin will continue to be the most popular cryptocurrency if the community does not destroy itself due to greed, negligence, or become a victim of external political pressure.

Scenario 1: Armageddon

Probability of realization in the next 5 years: close to zero

Potential Impact: Complete Destruction

If all sources of electricity, the Internet and data transmission were disconnected across the planet, Bitcoin's nodes would not be able to communicate with each other. Then the system will be useless. The temporary cessation of Internet operations around the world would certainly create confusion in the Bitcoin community, but it is important to note that the system will restart once again, albeit with certain losses when synchronizing network segments.

If a large part of the community suddenly loses interest in Bitcoin, even running the client in museums or on the computers of fans of outdated equipment will be enough for the network to continue working.

Scenario 2: A critical error in the code or concept

Probability of realization in the next 5 years: Low

Potential Impact: Temporary problems

In this case, updating Bitcoin may contain an error like the one that occurred in the infamous DAO project (based on the Ethereum blockchain), which compromises the integrity of the system. Even if the community agrees (which is not guaranteed) to fix the code, install a new version and restart the system, this will certainly lead to a price collapse and network fork. The Bitcoin community is aware of this risk: any modification of the code is checked by experts in accordance with the recommendations.

More destructive may be the revealed error in the very concept of the functioning of the detachment and the protocol. However, Bitcoin from all the existing cryptocurrencies is subjected to the heaviest loads and has already overcome (or is about to overcome) most of the possible "growth diseases". Therefore, the probability of this scenario decreases every year.

Scenario 3: Multiple simultaneous forks

Probability of realization in the next 5 years: Low

Potential Impact: Gradual disappearance

Bitcoin can branch out many times, if there are disagreements in the community about the ways of developing the network. Theoretically, several forks can occur simultaneously, which due to network separation can reduce its power. If this happens, Bitcoin may say goodbye to its dominance and begin to gradually disappear. Only the interest of the community does not allow this to happen.

Judging by the number of direct forks of the blockchain that have already occurred, this scenario is a more theoretical assumption, since of all the forks only Bitcoin Cash, by uniting all opposition to politics around the project, Bitcoin Core was able to take a prominent place in the industry, but it did not become really serious rival Bitcoin.

Scenario 4: Combining regulators against Bitcoin

Probability of implementation in the next 5 years: Medium to high

Potential Impact: Temporary problems

Governments cannot destroy Bitcoin by itself because of its decentralized nature. However, they can control and limit its use in its jurisdiction. For example, they can close bank accounts of cryptocurrency companies and prohibit the business of dealing with cryptocurrencies. If only a few countries prohibit the use of cryptocurrency, then the influence of regulators will be limited, as companies will simply move to more friendly jurisdictions.

This is what happened after last year's Chinas ban of the crypto-exchanges and ICOs. In addition, although the probability that one or several governments will declare war on Bitcoin is very high, a global ban is almost impossible.

In addition, Bitcoin is already legal in Japan. However, if the United States, the EU, the United Kingdom and China jointly bans the Crypto, this can cause serious problems for the community. Although it is more likely that they will regulate the cryptocurrency market for tax collection while protecting individual investors.

Scenario 5: Major hacking or attack on the network

Probability of realization in the next 5 years: Average

Potential Impact: Temporary failure

This scenario can be implemented in several ways.

In the first case, called an attack of 51%, attackers can try to slow down or suspend the network. This is theoretically possible, but the probability of this is very low. Attackers in this case would destroy their own source of profit. In addition, such a scenario now will require huge investments in mining equipment and electricity and can be solved by alternative methods, for example, by changing the hashing algorithm.

More likely to break into large exchanges or wallets working on top of the protocol. When the MtGox exchange went bankrupt in 2014, it sent up to 70% of all Bitcoin transactions to the network. This collapse led to stagnation of the course, which lasted more than a year. Today, the infrastructure of Bitcoin has become much more decentralized, and there are many cryptocurrency exchanges and wallets around the world. If one of them is hacked and a large number of Bitcoins are stolen, the price will temporarily fall, but Bitcoin will survive.

For example, recently, from the Coincheck exchange, NEM was stolen for $ 530 million. The price of NEM fell by 15-20% and recovered in one day.

Scenario 6: Stronger opponent

Probability of implementation in the next 5 years: Medium to high 

Potential Impact: Gradual disappearance

Is it possible that the "best" cryptocurrency will replace Bitcoin? ("Best" - more profitable for mining and with lower transaction costs for users, all other things being equal). Let us face it: it is more about economics and less about convenience. This cryptocurrency should be much stronger to overcome the network effect and brand value of Bitcoin.

The fact that this has not happened so far speaks for itself. In addition, for political and economic reasons (and not because of technical problems), the "universal" cryptocurrency is unlikely to appear in the next five years. At the very least, none of the existing cryptocurrencies has a significant technical and economic superiority over Bitcoin and has not yet passed through the "stress testing" that Bitcoin has been able to withstand for several years.

There is another way where savings could play a role: if electricity prices soared upward, then mining would become unprofitable. There will be only large data centers that can afford to continue working. Such a scenario will lead to a gradual reduction in the complexity of mining, which would be an unfortunate development of events from the point of view of network security. However, and this problem can be quickly resolved by having a consensus in the Bitcoin community.

Scenario 7: Market Fatigue

Probability of realization in the next 5 years: Low

Potential Impact: Gradual disappearance

If cryptocurrency start-ups cannot prove their tangible value in the real world, people can gradually begin to lose faith in cryptocurrencies and tokens. In this case, the growth of the market may slow down, and its value will eventually stabilize. Crypto market will lose its attractiveness from the investment point of view, which will lead to a further decrease and in the future the occurrence of an avalanche dip.

However, until now every year the distribution of cryptocurrencies and their adoption in the economy only grow. Especially illustrative is the example of Japan, where, after legalization, cryptocurrencies already accept tens of thousands of outlets, including large stores. In any case, the cryptology is still in its infancy, and we still have time. In addition, as history teaches us, the market is usually able to transform and rehabilitate if it retains the potential for growth and support for enthusiasts. 

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