The 4 Biggest Threats to Bitcoin
Biggest risks to Bitcoin
As we move along the crypto timeline and into a new world of harder, smarter and safer money, it’s important to remain grounded and balanced in our views. The art of smart investing lies within the ability to listen to and consider arguments that go against our beliefs, our hopes and our biases and even our money.
The volatility of Crypto goes well beyond small market caps that allow whales to easily manipulate prices as they move huge amounts of money in and out of a given coin. The truth is that crypto, bitcoin and other alt coins are so incredibly powerful, they have the ability to shake the world’s biggest banks, institutions and governments alike. Anything that can steer the course of history into a vastly different direction, particularly when it undoes old institutions that stand to lose so much, is bound to face multiple barriers, challenges and in a sense, outright war.
As such, the following four scenarios are situations where Bitcoin could, in theory, collapse, sending any investment you have made to zero. Let me start by saying I am one of the biggest fans of Bitcoin and have invested my time, my name, my reputation and my money into its future. None-the-less, as much as I love this innovation, this technology, this concept, this and this opportunity, I would be cheating my viewers and myself if I didn’t explore the strengths and weaknesses to this powerhouse crypto.
I encourage you all to contribute to the discussion by leaving comments below for or against anything explored today. Consider doing so with a timestamp if you’re speaking to a specific point in the video. Remember, the true power of diversity is not in colour, gender or religion, but thought, expression, speech and ultimately, collective intelligence.
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Right, let’s get into this as I list the least probable to most probable scenarios that pose a threat to the survival of Bitcoin.
1. Global communications lost – this is a worst-case and least likely scenario, but one that does often come up and should be discussed.
In the event that every computer, mobile phone, phone network, communication line, radio transmitter, hard drive and satellite was entirely and simultaneously wiped off the face of the earth (and in the case of satellites that enable the blockchain – obliterated from orbit) yes, Bitcoin would be at risk. In theory, Bitcoin’s entire chain of blocks that have been mined and confirmed over its life has millions upon millions of copies. The difference between stopping transactions on the SHA-256 algorithm (or any crypto algorithm) vs wiping out the entire history of any transaction ever made is substantial. The former is temporary until the network is up and running again, while the latter is (short of a nuclear-type holocaust wiping out everyone and everything on and around earth) is a permanent and Armageddon-type scenario that raises far bigger issues than ledgers, wallets, accounts or money at large.
In either case, all fiat globally could not be transacted beyond hand-to-hand transactions as at its core, the same infrastructure and IT used by digital fiat currencies is also used by digital cryptocurrencies. Thus the outcome in favouring fiat over Bitcoin in this theoretical situation cancels one-another out. More importantly, if the globe does face some a nuclear holocaust, solar flare or asteroid strike that simultaneously wipes out everyone and everything on and around the earth, I don’t think it will matter what colour or style your money is. If you’re the sole survivor, there won’t be any vendors selling you anything anywhere, and money will be the least of your problems. But, for argument's sake, lets’ say there are a few humans left on earth, maybe gold and silver will be the currency of choice, or perhaps it will be fresh water and rice. In any case, it won’t be your stocks, bonds, fiat currency, bitcoin or any other digital assets.
Ultimately, short of everything being lost everywhere, the Bitcoin ledger will live on somewhere. That ledger will ensure your holdings are yours. More importantly, if you do have to move or flee your location in a disaster, unlike gold or dollar bills, there is no size or weight considerations as you can carry as much crypto as you want on a hardware wallet as small as a thumb drive or simply remember a string of seed words to access as much Bitcoin as you have stored accordingly. Moreover, unlike digital fiat, there is no central body that can cease or steal your money whenever they feel like it (let alone having their own records compromised).
At the end of the day, in this scenario, we’ll all likely have bigger issues to worry about than money, irrespective of its form. Suppose your thoughts lead you to not investing in Bitcoin because you think the world as we know it will end in spectacular fashion, then I can respect that and wish you well in stockpiling precious metals, water and rice, over Bitcoin and other potentially life-saving assets.
2. The next scenario involves a Quantum computing hack – There is a theoretical argument that quantum computing could achieve a 51% or private key attack on the Bitcoin Blockchain and all its crypto wallets. However, the counter to this argument is that landport signatures with large hash functions would still maintain the network’s security under such an attack. Concurrently, as the security of Bitcoin is not fixed, the theory involves attacking a present network with a future technology instead of applying an approach that considers how the “future network” would stand up to the “future attack”. That is, Bitcoin is more secure today than it was last year, and even more so that last decade. In other words, the more Bitcoin is used, the more secure it becomes.
This is something that goes against all traditional storage or access models. For example, if you think of a government or commercial entity’s intranet, the more people who use it, the more possibilities is has to be compromised. With so many users, there are so many vulnerabilities that a bad player could use to get into that system. Bitcoin amazingly presents us with the complete opposite outcome. That is, the more miners there are confirming blocks, the harder it is to corrupt the data. Equally, as quantum computing evolves, so too does the opportunity for Bitcoin to leverage upon the technology to make its own network even more secure.
Ultimately, after a decade, Bitcoin has never been hacked, even when it was at its weakest and even with some very serious attempts to do so. Ironically, the more Bitcoin is attacked, the stronger it becomes. It’s kind of analogous to those scenes from a sci-fi movie where a military launches missiles into an enemy to destroy it, only to watch it use the energy from those missiles to grow bigger and stronger. In this scenario, the more you attack Bitcoin the stronger it becomes. Equally, the more technology evolves to attack Bitcoin, the more opportunities are created to use that same technology to defend it. This is one the truly amazing and almost magical powers of Bitcoin that has captured the attention of the most qualified coders, the most anxious bankers, and the most curious entrepreneurs.
3. The third biggest risk to bitcoin is the attempt by governments to have it Bitcoin - This in my mind, is the biggest risk to Bitcoin but you’ll note I haven’t listed it as the most likely in this video – We’ll get to that one next. Allow me to explain: Governments have been slow to learn about the power of Bitcoin. That’s because for too long, they have taken the privileged and unreasonable supremacy to make and control all money within a given economy for granted.
Beyond taxes, the artificial control of an economy through the dilution of money via printing it (either physically or digitally) is at its essence, the macro and micro-economic foundation of market failure. We see this through debt-based economies globally, who continue to kick the can down the road as everyone’s savings are lost through the invisible tax of inflation. Greece, Zimbabwe, Cyprus, Argentina, Venezuela, and many more nations are blindingly obvious examples of what happens to an economy in the long run when money is faked by governments.
The rules of the markets, economics and maths are equally applied to every economy as numbers are blind to race, religion, ethnicity, gender, flags or social beliefs. As governments globally choose the quantitative easing (or in other words – money printing) option to continually pump more fake money into society, in place of adopting a mathematically compliant economic reform, they begin to realise they can only do so for so long AND, they can only play this game of fake money if they gate keeper to ALL money.
When populations learn of the catastrophic effects of hyperinflation – not through attending university to study it in theory, but actually experiencing it firsthand when the wheel barrow holding piles of cash becomes more valuable than the millions of dollars in notes it carries within it, a shift to alternative money rapidly occurs – not because of a fad, a theory or a belief they’ll one day be able to buy a lambo, but because it literally becomes a matter of life vs death. We saw this in Venezuela when citizens wher looking to everything from the US dollar and Crypto, to mothballing fridges and washing machines to protect whatever money they had left from the devastating outcomes of hyperinflation. At this point, governments blinded by their incompetence and corrupted by their own thirst for power intervene and ban all money, except of course, for their own. This only makes the matter worse as more money is printed, more poverty is experienced and eventually, civil unrest ensues as people take to the streets desperate for reform. If you thought you saw some crazy behaviour in the supermarkets when people thought they were going to run out of toilet paper, just watch what happens when a parent thinks their child is going to run out of food.
Here we see the dichotomy of Bitcoin. The people love it, because it cannot be corrupted by their governments through endless dilution - hence inflation. Moreover, it cannot be ceased, blocked or stolen by banks who are in bed with the governments they dually support in controlling the population. Conversely, governments and their coalition of banks hate Bitcoin as it takes away every artificial financial power they have used to rein over the people for the better part of the last century. Money printing, quantitative easing, fractional reserve lending, account freezes and transfer blocks are all financial weapons stripped away from banks and governments alike when the people walk away from the world’s biggest Ponzi scheme that is Fiat, and instead opt for arguably the greatest financial innovation in the history of humanity – Bitcoin.
By banning or criminalising Bitcoin, governments and banks can attempt to maintain their unnatural fiscal power, hence “ultimate control” over everyone, everywhere. But they do so a greater long-term danger to their country, their citizens, their customers and themselves. Desperate people do desperate things. Again, if you think toilet paper shortages were stressful – “you aint seen nothing yet.” Watch what group of hungry youths will do when they’re desperate and all hope is lost.
The creation of money was never meant to be a function of government or cartels such as banks. Money was and is a language by the people, for the people. Its form and value, if operating within the fiscal and social laws of the universe, is determined in the free laws of a market, not behind the closed doors of a luxurious and often corrupt board room.
When you rob people of their savings, their homes, their futures, their freedoms, and their lives they will rise, and there will be consequences. This goes beyond history repeating itself – it is an objective truth of reality. In nature, environments eventually reach homeostasis, which is to say: any change will be corrected by negative feedback that will bring the parameter back to its original or natural point of balance. While these changes and consequent feedback processes may take days, weeks, years, decades or even centuries to be realised, eventually, equilibrium will be met no matter what flag you fly, what speech you prepare, what law you put in place, or what printing press you crank up.
Half a century after US President Richard Nixon completed the process that covertly commenced in the 40’s through the Bretton Woods agreement, we begin to see the laws of the universe delivering its blind and natural justice globally. When gold was completely delinked from the USD in August 1971, it triggered a chain of financially catastrophic events for economies, not to be fully understood until decades later. As inflation skyrockets and economies continue to collapse, the balance of nature and the laws of mathematics are now being apprehended. That’s because anything that operates in market failure, can only do so for so long until it eventually reaches its unavoidable demise.
Bitcoin is the ultimate equalizer of money and wealth distribution globally. It is blind to your affluence, your company title, your artificial economic levers, your weapons, or your desires to magically and illegally print more of it forever.
While I wish I could legitimately say that all governments globally are putting their people first – we sadly know that no matter what side of politics you are on, or which side is in power, this is simply not always true. For now, governments that allow Bitcoin to operate do so for two main reasons:
- They don’t understand its power comparative to fiat; and or
- They see it as a way to raise revenue by taxing it
In either case, the short-term power fiat provides to governments and banks, is a drug so addictive, that no truth, reason, logic or reality applicable to the rules of nature or the markets will free centralised bodies from their clutches on an imaginary money that provides their illegitimate control.
For this reason, the single greatest threat to the single greatest money in history, is the bank-led and government-backed banning of crypto. In such a case, it will be done so a small few can temporarily maintain their unlimited wealth and power to merely delay and amplify the total collapse of the utterly ludicrous make-believe money we have all been tricked into using today. A money that is called fiat – a Latin word that by definition, admits to its own fraud via and authoritative yet arbitrary order of financial decree.
At the end of the day, Bitcoin cannot and will not be stopped by governments because ultimately, it is based on the greatest truths of time, space, physics and reality – the truths of mathematics. Even if governments do try to ban the hard, pure and fair money that is Bitcoin, they will never succeed as even the most honest and law abiding citizens will choose a money that can buy food for their starving family, over a corrupt law designed to keep a very select few in power whilst they holiday on their private jets and luxury yachts at the cost of everyone else.
No soldier, no citizen, no policeman and no public servant will idly stand by and watch their family suffer so they can serve a corrupt government that pays them in a worthless currency. Don’t believe me, pull out the history books and learn how the richest and most powerful empires of the past collapsed without soldiers to defend it – you may like to start with the Roman empire and go from there.
4. Finally, I present to you what I believe could be the most probable threat to Bitcoin – IF there is any threat at all. And that threat would be a repeat of the Bretton Woods agreement – parallel to or in conjunction with banning Bitcoin, a hypocritical threat to Bitcoin is its confiscation by governments in exchange for worthless fiat. While this may seem an odd concept to some, this is exactly what the US government (that waves a brand: land of the free) did to its citizens via Executive Order 6102 in 1933, where it was a criminal offence for US citizens to own or trade gold anywhere in the world. This order was quickly followed by the passage of the Gold Reserve Act of 1934. At that time, President Franklin D Roosevelt who essentially made it illegal for US citizens, companies or the Federal Reserve to hold their own gold in either the precious metal itself or on paper. At that time, all gold or gold certificates had to be surrendered to the United States Department of the Treasury at a predetermined and set price of $20.67 per troy ounce. Immediately following the passage of the Act, Roosevelt increased the statutory price to $35. In other words, the government made everyone surrender their gold to the government, at a price determined by that government, and then immediately and magically increased the price of the gold they just confiscated by more than 50%.
A repeat of this would involve the US and or other international governments making it illegal for an individual or corporation to hold any bitcoin, and then forcing everyone to sell their bitcoin to the government at a price determined by that government. Once this phase has been completed, the government or governments would then try to artificially inflate the price of Bitcoin they had just robbed from their citizens. Even as I say this it sounds utterly absurd, but again, this is exactly what happened less than a century ago by the most powerful country in the world that lives and dies by the brand “land of the free”. While history may not always repeat itself, it most certainly rhymes.
The good news in this hypothetical scenario, is that Bitcoin holders would not lose everything as they would be compensated for the Bitcoin they surrendered. The bad news is there is no way of knowing how much a government would pay and worse yet, they would be paying holders in the imaginary monopoly styled money of dirty, corrupt and inflationary fiat. Further, if this were to occur at a time when the holder was demanding a high price, it would of course be paid with money created from thin air further diluting everyone’s money, including those who had nothing to with Bitcoin in the first place. If and when this scenario were to occur, the market cap of Bitcoin would likely be in the trillions, if not quadrillions of US dollars. The only way to pay for this (even at an enforced discounted rate) would be through turning on the old money printing press. And no, if a government was going to confiscate your digital gold, there is no way on earth, they would do so by surrendering their physical gold. That is, the government would not pay for your Bitcoin in gold, as they would likely be confiscating that too as they scramble to clean up their mess, with your savings. Don’t believe me, look into the bail-in laws throughout the world where banks can legally steal your savings to bail themselves out of their own corrupt incompetence.
A Bretton Woods “2.0” per se would be more difficult to enact than the 1.0 due to the interconnectivity of the modern global financial community. The manner and speed in which the world operates today is vastly different to that of 1934. Consequently, if one government were to try this approach, it may in fact play a strategically financial, thus militaristic advantage to the governments who allowed the laws of the free market to prevail. Perhaps for this reason, super powers such as China, Russia and Iran have made long-term investments in mining and stockpiling both Gold and Bitcoin. In accordance with the laws of the free market and the SHA-256 algorithm, they have wisely hedged their bets on the future of money. This has, in turn, provided them with more wealth, more options and more security than nations who have chosen to hang onto olden-day imaginary money, whilst threatening to imprison their own populations who don’t submit to the ironically dictatorship-type rules - Populations to which the government was supposed to serve and protect, not enslave and incarcerate.
At the end of the day, Bitcoin is bigger than any government. Not because of a name, a price, a market cap or an ideology. Bitcoin is bigger than any government or bank with whit is sleeps because it is completely open, borderless, neutral, censorship-resistant, immutable, and permissionless – something that no person, no corporation, no party, no cabinet, no military and no super power can stop.
Most importantly, Bitcoin adheres to only one law, one language and one truth found within the markets, the purest language of the universe that can never ever be compromised no matter how much they kick and scream…. and that my friends is the beautiful integrity of mathematics.
If you want to be on the right side of the greatest wealth shift in the history of humanity, use the links below to instantly and safely buy Bitcoin that you legitimately own based on the true global price detrmined by the people, for the people.
I’m Adam Stokes, thanks for listening, happy investing, don’t forget to hit like, share and subscribe. and I’ll talk to you next time.
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