If you’ve heard Bitcoin explained for the first time, it is likely that it piqued your interest. Its total market capitalized has grown from $13 million in 2010 to over $1 trillion in roughly a decade. After such rapid growth, you may ask, is it possible for Bitcoin to crash to zero or practically become worthless?
The simplest answer is that there are many bad things that can happen to Bitcoin, such as a government crackdown or a major hack. If these events occur, the price of Bitcoin would likely drop significantly, but maybe not to zero.
This article considers three reasons why Bitcoin seems to have become too big to fail. Although this is not to be construed as investment advice, it will probably help you understand why many experts feel that Bitcoin has come to stay (forever).
Three Reasons Bitcoin Will Not Crash to Zero
1. Institutional Adoption
Let’s begin with the most obvious reason: Institutional adoption. The number of publicly owned companies holding Bitcoin, or investing in Bitcoin mining infrastructure, has grown significantly since the launch of the cryptocurrency.
According to one publicly available source, over 7.7% of the total Bitcoin supply (around 1.5 million BTC) is held by public companies and funds that invest in Bitcoin. Some of the world’s largest companies, including Tesla, Block, and MicroStrategy, have a vested interest in the success of the network, simply making it increasingly impossible for it to fail.
Bitcoin news also shows that it has also been adopted for payments by some very large institutions. Microsoft, Dell, Subway, and Expedia are a few examples of firms that now accept payments in Bitcoin. The involvement of these entities validates Bitcoin’s growing adoption and makes it more unlikely that Bitcoin will crash to zero.
2. Increased Regulation
Another factor contributing to Bitcoin’s stability is its increased regulatory oversight. After grappling with cryptocurrency in its early days, some of the world’s largest regulatory bodies have recognized and provided some sort of regulation for cryptocurrency.
In the United States, for instance, Bitcoin is recognized as a taxable asset. The industry is also overseen by regulatory bodies such as the Securities and Exchange Commission (SEC), Commodity and Futures Trading Commission (CFTC), and the Financial Crime Enforcement Network (FinCEN).
The increased regulatory framework being created around Bitcoin in several countries simply indicates that it is becoming widely accepted. This development makes the chances of going to zero more impossible.
3. Bitcoin’s Decentralization Safeguards It
Many who think that Bitcoin will crash to zero fail to recognize the decentralized nature of the Bitcoin network. The Bitcoin network is maintained by a massive network of computers around the world.
It is almost impossible for a crackdown by a single country to harm the network or cause the price to crash to zero. A good example of how Bitcoin’s decentralization secures it was demonstrated in 2021 when China (home to a significant amount of Bitcoin’s hash rate) banned mining operations. The network survived the scare and has continued to wax even stronger.
There is also a large global community of Bitcoin supporters, including key billionaire tech entrepreneurs, lawmakers, and even heads of state (as in El Salvador and the Central African Republic). Community is one of the strongest assets of any successful invention, and Bitcoin has a strong backing in this case.
Will Bitcoin crash to zero? The growing institutional adoption of Bitcoin, the increased regulation around the asset, and the underlying decentralized network mean that it is very hard for Bitcoin to crash to zero. That’s not to say it’s not impossible, but it’s less likely. Only a coordinated global government effort, or perhaps a large-scale hack (also less likely given Bitcoin’s 13-year existence), could affect the price so badly.
Brian is the news author at Research Snipers which mainly covers Technology News, Microsoft News, Google News, Facebook, Apple, Huawei, Xiaomi, and other tech news.