There are many possible ways how Bitcoin will fail. In fact, in the past 10+ years, many well-known investors have made the arguments for how Bitcoin will fail, citing varying reasons. Here are some of the reasons put forward by Bitcoin’s opponents as to how Bitcoin will fail.
How Bitcoin Will Fail
- Bitcoin has been banned
- Cryptocurrency is not real
- Bitcoin is internet money
- Crypto and Bitcoin are a Ponzi scheme
- Cryptocurrency is used to launder money
- Bitcoin is used by criminals on the dark web
- Cryptocurrency is unregulated
- Bitcoin can easily be hacked or stolen
- The Crypto market is too volatile
In this article we will play devil’s advocate, giving you reasons how Bitcoin will fail. In contrast, we give reasons why Bitcoin has a good chance of succeeding and provide our Bitcoin price prediction for the future. We also talk about why Bitcoin is important to our financial future and why the price is likely to go much higher.
On Friday, September 24, 2021, China banned Bitcoin again. China’s top regulators banned all trading and mining of any cryptocurrencies in the country. However, it should be noted that this is not the first time that China has tried to ban Bitcoin.
Timeline for Cryptocurrency Bans in China (Source: Coinbase):
- June 2009 (BTC value $0.0001): Six months after Bitcoin was invented, China announces it will prohibit virtual currencies, primarily out of a desire to prevent gamers from using in-game money to purchase real-world goods. (Bitcoin isn’t mentioned.)
- December 2013 (BTC value $900): The People’s Bank of China (PBOC) prohibits Chinese banks from engaging in Bitcoin-related business, although individuals can still trade. Prices drop 13% after tech giant Baidu stops accepting BTC and crypto exchange BTCChina is temporarily unable to accept yuan deposits.
- January 2014 (BTC value $850): Prices fall again after e-commerce behemoth Alibaba follows Baidu’s lead, proactively banning bitcoin transactions and sales of mining equipment. (This week, the company published a reminder about this policy.)
- September 2017 (BTC value $4,000): The Wall Street Journal reports on Chinese authorities’ plan to shutter all Bitcoin exchanges: “the government’s attack on Bitcoin comes amid a focus on preventing capital from fleeing to digital currencies.”
- May 2021 (BTC value $37,000): Despite previous bans, China remains the global hub for bitcoin mining, with about 46% of the average hashrate as of April, according to a Cambridge University estimate. After government officials begin a widespread mining crackdown, miners begin to halt Chinese operations and migrate abroad — especially to North America. Mining power has steadily recovered since.
- September 2021 (BTC value $43,000): As the PBOC reiterates existing restrictions on trading and mining and moves to close a loophole around offshore crypto accounts, some vestiges of crypto activity (including over-the-counter trading) begin to shut down. Notably, the possession of crypto still appears to be legal — and many longtime local traders took advantage of low prices to add to their holdings. “These policies are not new to us, so we view them as a buy signal,” one Shanghai-based crypto investor told Bloomberg.
Bitcoin: Banned But Unstoppable
As you can see, Bitcoin has been banned many times by the Chinese government. Yet, the demand and price for bitcoin continues to grow. Clearly, a government ban of cryptocurrencies cannot stop them from being used.
Before diving into how Bitcoin will fail, it is important to understand what Bitcoin is, as well as what makes it valuable. In addition, we discuss the history of Bitcoin, why it was invented and what makes it valuable. This will help you better understand our Bitcoin predictions.
What is Bitcoin?
The largest and oldest cryptocurrency, Bitcoin is a Peer-to-Peer Cryptocurrency Payment System
Bitcoin is an open-source, block chain-based technology that was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method that can be conducted semi-anonymously among individuals. It is intended to be a digital cash. The other intent of Bitcoin is to solve the double spend, trust problem that had been encountered in the past with electronic currencies.
Using block chain technology to maintain its functionality, Bitcoin miners contribute to the system. For users to send and receive bitcoin, the block chain depends on miners. Moreover, computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.
Satoshi Nakamoto Issued the Bitcoin White Paper in 2009
In January 2009, Bitcoin was born. It is unknown who invented bitcoin; however, a developer named Satoshi Nakamoto (probably a pseudonym) released a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” The Bitcoin white paper describes Bitcoin’s purpose and how it works. Finally, Bitcoin was the first cryptocurrency to experience widespread use and adoption. However, its use case has evolved over the years from a peer-to-peer payment method to a store of value model. Many Bitcoin users hold bitcoin much like you would hold silver or gold in an investment portfolio.
Bitcoin Limited Supply
Only 21 Million Bitcoins Will Ever Be Mined, Making Bitcoin Inflation-proof
There is a limited supply of Bitcoin, which directly effects the Bitcoin price prediction 2024. Only 21 million Bitcoins will ever be mined for circulation. Therefore, by definition, Bitcoin is a deflationary money. This is in stark contrast to how central banks around the world like the Federal Reserve Bank print more money, continuously creating inflation.
Currently there are approximately 18.5 million Bitcoins that have been mined for circulation. In theory, there are only 2.5 million Bitcoin left to mine. This means that 88% of all Bitcoins that will ever be produced are already circulating. When 21 million Bitcoins have been mined at some point in the future, no more coins will be produced, and the mining of Bitcoin will cease. Although opponents of Bitcoin will give reasons how Bitcoin will fail, the reality is that Bitcoin is a deflationary asset, drawing in many new investors every minute.
You Will Probably Never Own 1 Bitcoin
There are only 21 million Bitcoins available to the entire world. As a result, Bitcoin supply is limited. The world population is currently almost 8 billion people. In theory, this means that even if everyone wanted a Bitcoin, there are not enough Bitcoins to go around. As a result, most people will only be able to own a fraction of a Bitcoin. Specifically, economists interpret this situation as a low supply, and growing demand economy. Furthermore, this is the kind of economic situation that drives prices higher and makes Bitcoin price expansion easier to understand.
Bitcoin Adoption is Growing Rapidly
When refuting the argument for how Bitcoin will fail, there are a couple of things to understand about Bitcoin’s growth. First, Bitcoin is growing in popularity and use worldwide. Users are adopting Bitcoin as a store of value like gold and using it as a payment method in places where banks don’t exist. For example, in mid-2021, the central American country of El Salvador officially adopted Bitcoin as it’s official currency for payments. Second, Bitcoin is growing in price, year after year. Although opponents of Bitcoin only say how Bitcoin will fail, Bitcoin adoption is rapidly growing.
When users began mining Bitcoin on laptops in 2009, it had little value. Yet today one Bitcoin is equal to $40,000+! In the year 2020, billions of Dollars of institutional money began to flow into Bitcoin investments.
Institutions Investing in Bitcoin
Examples of Institutional Money Investments in Bitcoin (converting dollars to bitcoins):
- ARK Investment Management and Kinetic Portfolios Trust, two large investment funds representing wealthy clients, have begun investing in the Grayscale Bitcoin Trust.
- Wall Street billionaire investor Paul Tudor Jones has invested approximately 2% of his investment portfolio in Bitcoin
- Michael Saylor, Founder and CEO of MicroStrategy invested over $400 Million in Bitcoin in 2020.
- Twitter/Square CEO Jack Dorsey invested $50 Million in October 2020 in Bitcoin.
- PayPal announced on October 21, 2020 that it would be launching a cryptocurrency service that allows users to buy and sell cryptocurrencies.
There are many other known examples of institutional investors who have begun investing in Bitcoin. In 2021, investment continued a large scale in Bitcoin, with big players such as Elon Musk (Tesla), additional investment from MicroStrategy, and many more.
More Reasons Given How Bitcoin Will Fail
Bitcoin is “Internet Money” and Not Real
Many people believe that Bitcoin cannot survive because it is not real. Some have called Bitcoin “Internet Money.” Statements made like this in the past are typically made by individuals who want to quickly dismiss Bitcoin as a technology. Often, those who do not fully understand new technologies such as blockchain, become dismissive. It is human nature to fear new things that may change how we currently operate.
However, as previously outlined, Bitcoin is a block chain ledger of transactions and communications. A network of computers all over the world performs complicated computations (all while verifying with other network participants) so that each block can be completed to mint new Bitcoin and complete transactions. For over 10 years, Bitcoin miners have been creating safe, secure Bitcoin.
Bitcoin is a Ponzi Scheme, Used by Criminals on the Dark Web to Launder Money
According to Investopedia, A Ponzi Scheme is defined as:
A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.
Upon closer examination, Bitcoin is not a Ponzi scheme. In a Ponzi scheme, late coming investors must put in more money so that early investors receive high returns. However, Bitcoin is bought and sold on open markets. No one is promised high returns. In addition, investors returns do not depend on new money for payment. Although Bitcoin is volatile in price, investors are aware of the volatility. Many Bitcoin investors believe in its technology, its decentralization and want something more secure than that of fiat currency, like the US Dollar.
Bitcoin and Criminal Activity
Regarding criminal activity: there will always be criminal activity on earth as long as there are criminals to commit crimes. According to the United Nations website,
The estimated amount of money laundered globally in one year is 2 – 5% of global GDP, or $800 billion – $2 trillion in current US dollars. Due to the clandestine nature of money-laundering, it is however difficult to estimate the total amount of money that goes through the laundering cycle.
Furthermore, the primary currency used in money laundering operations worldwide is the US Dollar. Yet no one wants to talk about national currencies such as the US Dollar or the Euro being used for money laundering. It is a touchy subject.
It should be noted that crimes occur around the world using all sorts of payment methods. There is no disagreement that Bitcoin, US Dollars, Euros, and other currencies have been used in crimes and on dark web sites. However, blaming Bitcoin or other currencies is like shooting the messenger.
Bitcoin is Volatile, Unregulated and Easy to Hack
There is no doubt that Bitcoin markets have had a history of volatility. Historically, there have been several market corrections that exceeded 50% (declines in price). However, the same argument might be made about the US Stock Market as well. Since 2000, there have been three US stock market corrections greater than 33%, and over the same time, there were nine corrections in double digit territory. Yet investors continue to fan the flames of the stock market.
Bitcoin, although not fully regulated, has been slowly adopted as a form of investment in the United States. The SEC and the FTSC have both acknowledged that Bitcoin is here to stay, and that future regulation is needed. Companies like Coinbase, Gemin and BlockFi have paved the way in working with regulators to make crypto legal in the US. In addition, numerous companies have applied with the SEC to obtain permission to create the first Bitcoin ETF.
The security of the Bitcoin network has proven itself time and again. Over the 11-year history there have been many challenges to the network that could have spelled failure. However, cryptocurrency lives on. For example, a large Bitcoin hack occurred in 2014. Moreover, $800 Million was stolen from the Mt. Gox cryptocurrency exchange. However, it’s important to note that many of the most infamous hacks have been of the exchanges that handle cryptocurrency. As a result, experts have faulted the exchanges lack of security for the hacks and not the Bitcoin network itself. However, the cryptography that is imbedded into the Bitcoin block chain system is considered nearly impossible to penetrate.
Reasons How Bitcoin Will Fail – Unlikely and Unproven
As you can see, although the critics have put forth arguments how bitcoin will fail, they have failed to prove their case. Bitcoin has been successfully operating since 2009, proving that the Bitcoin blockchain project is a success and a part of the future of money.
Bitcoin Price Prediction: $100,000 and Higher!
Anthony Pompliano: $100,000-$400,000
Anthony “Pomp” Pompliano of Morgan Creek Digital made the Bitcoin price prediction $100,000 in late 2021. Well, there’s not much time left for that to happen, but anything is possible. However, in August 2020 Pompliano doubled down on his Bitcoin price prediction. He’s now predicting $400,000 Bitcoin with an overall market capitalization of $8 Trillion. At this level, Bitcoin would be more valuable than the gold market.
Max Keiser: $100,000-$400,000
Much like Pomp, Max Keiser has also made a very bold Bitcoin price prediction. Max has been in the Bitcoin space for many years and has been bullish for years. He originally began predicting that Bitcoin would shoot up to $100,000. However, recently he has moved up his prediction to the $400,000 range like Pomp.
In February 2020, Max spoke with radio host Alex Jones about Bitcoin. He stated,
“I am officially raising my target for Bitcoin and I first made this prediction when it was $1. I said this could go to $100,000. I’m raising my official target for the first time in eight years. I’m raising it to $400,000.” -Max Keiser, February 2020
Bitcoin Future Value Predictions – Prediction of Bitcoin Price
Mike Novogratz: $350,000-$400,000
Former hedge fund manager, Mike Novogratz, has gone on the record several times predicting bitcoin market capitalization. Furthermore, he believes Bitcoin will ultimately surpass the market capitalization of gold and reach approximately $7.5 Trillion. This equates to approximately $400,000 Bitcoin price prediction.
Chamath Palihapitiya: $1,000,000
The founder of Social Capital, Chamath Palihapitiya, has been trading bitcoin since 2012. He allegedly owned approximately 5% of the total volume of Bitcoin in existence at one time. Mr. Palihapitiya made a Bitcoin price prediction of $100,000 in the next few years. He also believes Bitcoin will reach $1,000,000!
Future Bitcoin Price Prediction
$50,000 – $250,000 Price Range for Bitcoin Based on Gold Market Capitalization
It seems clear that Bitcoin has begun its next phase of expansion and adoption. As a result, Bitcoin’s price will likely go much, much higher in 2022, 2023 and 2024. We at Piggy Bank Coins believe the future is bright for Bitcoin. We have made a clear case that Bitcoin is a strong store of value, a deflationary asset with limited supply, strong security, and a growing network of users.
Historically, Bitcoin price has fluctuated, which hurt its reputation. However, Bitcoin price has stabilized over the past 2 years. As the world economy stumbles through a massive recession and the US Dollar struggles to maintain relevance in a changing world economy, Bitcoin may be the answer.
Future Bitcoin Market Capitalization $1 – $5 Trillion is Reasonable
According to the Visual Capitalist, the world gold market is valued at approximately $10.8 Trillion. Less than half of the value is in jewelry. Therefore, we can assume that gold, the world’s favorite “store of value,” is a $5 Trillion market. Bitcoin, a new “digital store of value” has a market cap value of only $775 Billion (7% of gold’s value). Imagine what Bitcoin will be valued at when it begins to realize it’s place as the world’s new store of value. A Bitcoin with a market capitalization of $1-$5 Trillion is not beyond reasonable calculation.
A Bitcoin market capitalization of $1-$5 Trillion equates to $50,000 – $250,000 Bitcoin, priced in US Dollars. Pricing Bitcoin in this range does not require much imagination. In addition, we have not factored in price impacts such as US Dollar devaluation/failure, other money supplies moving to Bitcoin (M1, M1, M3, etc.), institutional adoption, and so much more.
How Bitcoin Will Fail: Wrap Up
Clearly, the reasons how Bitcoin will fail are outnumbered by the reasons Bitcoin will succeed. Bitcoin has a promising future as a store of value and a part of the world’s monetary system. It has demonstrated clear stability in the past 12 years, with price and network strength pushing forward year after year. As more people continue to adopt Bitcoin worldwide, it seems obvious that the Bitcoin price will only go higher over time.
It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals, and some equities.
In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, to help you make the best choice for you.