Can Bitcoin drop down to zero and become worthless? Since its inception sometime in 2009, Bitcoin has grown in popularity and has drawn the attention of a lot of investors, large and small, all over the world.
It has also raised a significant amount of interest in the celebrities and sportspersons who have invested billions of dollars in Bitcoin in particular along with other different types of crypto coins as well.
This has increased its demand taking its value to soaring heights given the fact that it has a finite supply which cannot be manipulated by anyone since there is no central governing body.
Now, the question is, can the value of Bitcoin drop down to zero and become worthless.
Well, this is not an unnatural question to ask especially when it is known that cryptocurrencies are extremely volatile and prices can fall dramatically within a short time without any prior notice.
And since Bitcoin price is the measuring rod for the value of other crypto coins, this concern is all the more applicable to it.
Here is an article that will clarify all your doubts surrounding the value of Bitcoin, its future, and the future of the crypto market on the whole.
Ideally, several crypto experts, market critics, big investors, prominent economists, and even traditional banks feel that there is a high chance of Bitcoin value dropping down to zero.
Add to that, there is also a chance, though just 0.4%, that the coin will become worthless in the future.
This is said on the basis of the daily disaster probability calculated by some eminent professors of economics of different renowned universities.
If you too look at the price data of Bitcoin for several years till now, you will agree to this probability as well.
Can Bitcoin Drop Down to Zero and Become Worthless?
Ideally, economists and market critics say that the chances of the value of Bitcoin falling down to zero are created by the inception of the newer currencies into the crypto market, though all these coins may also become worthless in the future.
Such predictions are made by them on the basis of the probability of failing by the government-backed world currencies such as Euros, Australian dollars, Canadian Dollars and more.
These currencies have a much lower percentage of probability of failing in the future as compared to cryptocurrencies, Bitcoin in particular.
This is a massive risk that needs to be taken into account while investing in Bitcoin.
Still, people are investing in Bitcoin as well as in other types of crypto coins as they feel that the blockchain technology itself seems to be sound and fair enough to take on such risks head-on.
They believe that it does offer a huge chance of making big, as a lot of people already have.
But the question is how long things are going to stay like it is or improve.
Is there any chance of the belief that Bitcoin will replace gold one day in terms of store of value coming true? These are all million dollar questions.
Considering the current scenario, economists and experts think that the value of the crypto market may be in trillions of dollars someday and Bitcoin will disrupt gold.
It will be much better than gold as it is now in terms of the properties of money.
They think so because they know the principles of economics well. It says that the value of an object is ideally determined by its scarcity.
And, gold is scarce, which is why this yellow metal is called GOLD.
Similarly, Bitcoin is also scarce with only a 21-million supply cap and therefore is valuable.
However, it is better than gold because it is easy to carry (or not carry physically), it is durable, and it is fungible.
Therefore, you may ask, why then Bitcoin has not replaced gold by now.
This is because, as the Bank of England warns, it can become ‘worthless.’
And, since one Bitcoin is equal to ONE BITCOIN, it does not make Bitcoin necessarily a currency. They have some good reasons to support that.
Ideally, it is believed that any fast-growing crypto can pose a significant amount of threat to an established financial system.
This can put the investors at risk as well. This is why governments and central banks are reluctant to integrate cryptocurrencies into the financial system.
They are concerned about the probable big price correction that will affect other markets and market players seriously.
As a result of the price variance of Bitcoin it may theoretically or even practically reach to zero value, they warn.
It is due to these chances that integrating crypto into the financial system may result in triggering a financial meltdown since a lot of people have invested millions in crypto.
As for Bitcoin, out of its 21 million total supplies about 19 million are already in circulation in the market as of now.
The rate at which new coins are mined, it is expected that the total supply of Bitcoin will be reached sometime around February 2140.
Now, the question is whether or not the system itself will survive and sustain till that time.
Economists believe that by that time the process of backward induction will have started which might cause this virtual money to get exhausted and out.
And, if that happens, the investors in this coin are sure to lose everything.
According to some market reports and price data it is revealed that due to the extreme volatility of Bitcoin, the price of the coin has increased six times over the years.
However, the same charts and reports also revealed that the price of the coin fell by about 50% at the same time.
This means that there is a constant risk of rise and fall in prices of Bitcoin, and that cannot be controlled or ruled out in any way whatsoever.
However, the primary concern of the banks is that, as the market intelligence suggests, a majority of the crypto assets, including Bitcoin, is held by the retail investors.
Add to that, the growing interest among people regarding crypto assets along with its allied services provided by payments system operators and other institutions establishes a link between it and other systemic financial markets.
If and when the prices of crypto assets fall dramatically, there will be a huge impact on the economy of the nation, economists believe.
When the excitement regarding Bitcoin wears off and liquidity dries up, the value of it will go down to zero, for sure.
Future in Metaverse
The crypto world as well as the Metaverse both are good ideas that offer a lot of opportunities to make people rich but cryptocurrencies will not be useful in the Metaverse.
These currencies will be as useless there as they are now because it will not be about creating a decentralized paradise in which people will prosper, albeit a small group of them.
A Metaverse is a possibility for sure and it is already there in the form of video games, digital collectibles called the Non-Fungible Tokens or NFTs, and even crypto coins. Given its popularity it may be soon that Facebook will assemble a portion of it.
However, as of now it is quite unclear whether there will be one or more Metaverses or will there be anyone at all.
Still, this place is considered to be a world that provides infinite possibilities and wonders.
This virtual world is visualized by the technological utopians as a place that connects multiple virtual worlds where the users can create their ‘digital twins.’
Everything here can be done virtually, whether it is attending gigs, buying an art form or having any relationships. The opportunities seem to be endless.
However, there is no element of commerce linked with Metaverse but still it is the land that provides people with an opportunity to prosper.
However, when you look at it deeply you will see that there is of course some sort of financial incentives offered here, especially for the crypto enthusiasts.
The NFTs, which allow one to own physical or virtual assets that are stored on a blockchain, will become the main component of the Metaverse as well as the crypto coins that will be used to buy them, including Bitcoin.
In the virtual Metaverse, the NFTs will typically represent a piece of the virtual land.
The surprising factor is that several such pieces of land have been sold already for crypto coins worth hundreds of thousands of dollars.
The Metaverse is actually a vague fantasy and at the same time it is marketing offensive because it is endorsed as a technology that will provide alternate things magically to people that will allow them to make a lot of money out of it.
This actually means making money out of nothing at all!
Therefore, the natural question that may arise in your mind as well as in the minds of others is that why, in the name of God, would you spend your hard-earned crypto coins for something that is not there at all.
For example, you can own virtual clothes in the Metaverse but you will need real ones to use in the real world.
Therefore, instead of spending money on a ‘Utopian world’ you would rather spend your tokens on something that you can use in the real world as well.
This means that even if Metaverse becomes a future of the internet, prudent crypto users would not be extremely enticed to spend their money on it.
Since everyone needs real money to buy food, clothes and shelter, spending crypto on items of the Metaverse is nothing less than flushing them down the drain.
Therefore, the future of crypto in the Metaverse is quite bleak and unreal just like the virtual world itself.
Moreover, there are lots of risks and inherent costs in spending cryptocurrencies as you may know already.
Therefore, spending crypto on Metaverse will cost you much more than the value of the object themselves.
There will be exchange fees and others and most importantly you will be exposed to the volatility of crypto, which it is infamous for.
There is no reason to spend your valuable Bitcoin tokens in the Metaverse and lose the opportunity to make huge profits given the fact that the value of Bitcoin will be extremely high in a couple of years.
Most people invest in crypto without really understanding what it is.
And, the concept of an elusive Metaverse now seems to be its perfect partner to confuse the people more and make them invest, if not lose their crypto, in obfuscating and even objectionable objects of the Metaverse.
It is just a good source to make some quick bucks, though for only a privileged few.
Therefore, cryptocurrencies including Bitcoin, in other words, will have as little use and value as money in the Metaverse as they have in the real world.
Significance of Being Rational
However, there is no need to panic at this point because it will take some time for Bitcoin to become worthless or even drop down to zero value.
It is very important to be rational so that you do not hit the panic button and take any decision that you should not take and regret later on for doing something which you surely could have avoided doing or postponed.
Just as it is in any type of investment, it is never good to be under-confident or over-confident.
Considering Bitcoin value, it is certainly not the time to be overconfident but to be rational.
Just as the economists say, it is good to know what you do not know so that you know exactly what the other person means while expressing strong opinions about Bitcoin.
Ideally, people are either in a marketing mode or are unaware of the complexities and that is why they are often biased when they opine.
It pays to be rational and consider all other underlying factors such as the future prospects, market shares, and correction possibilities in a market before you make any comment on the market condition that may seem to be apparently very convincing.
And, as for Bitcoin just as the Fear of Missing Out or FOMO may cause an increase in its price, there are several other external factors that can also cause its value to fall, and that too to zero.
However, Economics say that economies are expected to grow because these are severely impacted and strongly driven by external factors such as socio-economic conditions, politics, unmatched fiscal outlay, insistent monetary policy, and lots of other factors.
Therefore, you will be better if you are rational even when, and if, the value of Bitcoin falls down to zero or becomes worthless.
Another good thing of being rational in these conditions is that you will be able to avoid making mistakes, especially those common mistakes that people often make while making an investment.
Even if you do make a mistake, it is due to your rational thinking that you will be able to recognize the mistake and act accordingly to mend the situation.
You will then be able to hold your position with more conviction come what may, knowing that, following the principles of economics, the situation is bound to turn around.
This will save you from making the most common and inevitable mistake – react in panic.
You will also not be a victim of confirmation bias and take decisions based on prejudice.
Your focus should be more on the risk factors and place a lot of importance on opportunities that may arise when the economy tries out something new.
This means that you will make the right decisions based on the risk ratio cap and risk-budgeting point of view.
This will enable you to decide the safe and meaningful proportion of coins to hold considering the prevailing scenario.
A common saying that does rounds in the investment market is ‘Do not chase the market after that horse has bolted’ and this saying applies to the crypto market as well.
You should be happy with the portfolio you have and the way it has performed and decide the probability to prosper in the next three to five years and then take your decision.
If only you are rational you will not be swept away by the outcomes in the short term.
You will be able to know the uncertainties that way as well as the risks existing but hiding in plain sight.
There will be a lot of pressure created on the market as well by different government policies and regulatory measures that may even cause the price of crypto coins to fall to zero at some point in time.
However, instead of succumbing to panic, be rational. This will enable you to assess whether or not those pressures will be transitory or prove otherwise.
Wait for things and the market to normalize but never be complacent – that is the key to success.
And, of course, you must know about the concept of price bubbles.
If you are not rational or knowledgeable about it you will be in a state of delusion and commit mistakes that most people do in such situations.
Often these delusions force people to follow the madness of the crowd or FOMO or cult-like behavior.
When you see most people are performing in this way, the most important thing to do in such a situation is to stay rational.
You should not bother whether you are popular or unpopular with the crowd but stick to your decision that you took rationally.
Having said all that, there is no need to be too skeptical about the value of Bitcoin or any other crypto coin as of now.
The blockchain technology has a lot of potential to disrupt several industries and have a profound implication on the economy.
You should believe in it and expect that the rise in popularity of crypto will continue to be as it is now and someday most central banks would think on the lines of issuing crypto backed by private assets so that the virtual currencies have more common use.
Till that time be rational, think rational, and take rational decisions.
The value of Bitcoin can drop down to zero and it can even become worthless in the future, a lot of people believe. If you had any doubt about it and thought otherwise, you surely know now through this article how mystified you were.
I have special interest in crypto and intend to help common people to gain knowledge about the digital asset as well as its potential. Follow Me at Linkedin.