Will Bitcoin ever reach zero?

Bitcoin is the world’s largest digital asset, yet many still question whether it could ever plunge to $0. Given its extreme volatility and increasingly stringent regulations, this scenario is not entirely impossible. However, bitcoin possesses characteristics that make such an outcome highly unlikely.

1. Could Bitcoin ever hit rock bottom?

As the world’s largest cryptocurrency, bitcoin currently holds a market capitalization of $811 billion at the time of writing. At its peak, this figure reached $1.22 trillion. If bitcoin were considered a company, it would rank as the 8th largest globally, surpassing Berkshire Hathaway ($788 billion) but still trailing Meta Platforms ($966 billion). Meanwhile, the world’s most valuable company today is Microsoft, with a market capitalization of $2.92 trillion.

Beyond being just a cryptocurrency, bitcoin is also regarded as a valuable investment asset, held by major corporations such as MicroStrategy, Tesla, Coinbase, Block, and even an entire nation—El Salvador. Moreover, bitcoin’s growing popularity has paved the way for financial derivatives, such as exchange-traded funds (ETFs), allowing investors to gain exposure without managing a wallet or directly interacting with the blockchain.

Since the approval of bitcoin ETFs in the U.S., this type of fund has quickly become the second-largest ETF commodity in the country, second only to gold and surpassing silver. This demonstrates bitcoin’s strong liquidity and high level of investor interest.

According to estimates by River, between 81.7 million and 130.4 million people worldwide own bitcoin. While figures may vary depending on the source, it is evident that tens of millions of investors have placed their trust in bitcoin.

The biggest question remains: could bitcoin ever lose all its value? In theory, this is not impossible, but the likelihood is extremely low.

For bitcoin to drop to $0, a series of catastrophic events would need to occur, such as:

• The complete collapse of the cryptocurrency ecosystem, leading to a total loss of investor confidence
• A global ban on bitcoin, eliminating its ability to be traded or used
• A critical vulnerability in the blockchain being exploited, completely compromising bitcoin’s security and value

The emergence of a superior financial technology that renders bitcoin obsolete

However, considering bitcoin’s massive market capitalization, high liquidity, vast user network, and increasing institutional adoption, the scenario in which bitcoin falls to $0 is virtually impossible in the foreseeable future.

2. What are the risks of Bitcoin?

Transaction fees may be insufficient to maintain Bitcoin network security

One of bitcoin’s unique characteristics is its fixed supply of only 21 million coins. This scarcity makes BTC a deflationary asset, in contrast to fiat currencies like the USD, which can be printed indefinitely and lose value over time.

However, this limited supply also presents a potential long-term risk for the bitcoin network. The system relies on miners who use specialized hardware and consume significant amounts of electricity to validate transactions and secure the network. These miners are compensated through block rewards and transaction fees paid by users.

Currently, block rewards remain the primary source of income for miners. However, bitcoin is programmed to reduce these rewards every four years in an event known as “halving.” Specifically:

• As of 2024, the block reward stands at 3.125 BTC per block.
• By around 2028, this will decrease to 1.5625 BTC.
• This process will continue until the final bitcoin is mined, which is projected to occur in 2140.

The concern is that as block rewards continue to diminish, miners will have to rely primarily on transaction fees to sustain operations. If transaction fees are not high enough or if transaction demand declines, many miners may exit the network, leading to a reduction in overall computing power (hashrate). This, in turn, could make bitcoin more vulnerable to attacks and weaken its inherent security.

Recently, initiatives like bitcoin ordinals (which enable data storage on the bitcoin blockchain, similar to NFTs) have driven up transaction fees significantly. However, it remains uncertain whether this is a lasting trend or merely a temporary surge.

The threat of quantum computers

Quantum computing is a revolutionary technology that has the potential to transform the field of computation. Unlike traditional computers, which process data in binary (0s and 1s), quantum computers can perform multiple calculations simultaneously, solving complex problems exponentially faster.

At present, quantum technology is still in its developmental stage and is not yet powerful enough to threaten bitcoin’s encryption. However, in the future, if quantum computers reach a sufficiently advanced level, they could break bitcoin’s existing cryptographic algorithms, specifically:

• Deriving private keys from public keys – which could allow attackers to access users’ bitcoin wallets.
• Compromising digital signatures – which could undermine the security of the entire network.

Fortunately, bitcoin developers are aware of this potential risk and are actively researching post-quantum cryptographic algorithms. If bitcoin successfully upgrades its encryption system, a new type of bitcoin address will be introduced. At that point, users will need to transfer their BTC to these new addresses to ensure protection against quantum attacks.

States are cracking down on Bitcoin

Bitcoin is designed to be censorship-resistant, allowing it to survive despite crackdowns from governments or financial institutions. Originating from the cypherpunk movement, bitcoin operates in a decentralized manner, requires no intermediaries, and is difficult to fully control.

Even under restrictions, bitcoin can still be traded in various ways, such as being sent via radio waves or stored using paper wallets. These features enable bitcoin to persist even in tightly regulated environments.

While it is impossible to completely ban bitcoin, governments can make it difficult to access by shutting down exchanges, restricting related businesses, or imposing heavy taxes. This reduces accessibility and discourages investors.

If major nations collectively tighten regulations, bitcoin’s price could drop significantly due to weakened liquidity. However, peer-to-peer (P2P) transactions would still allow bitcoin to exist, albeit with less convenience and potential legal risks.

The chances of bitcoin disappearing entirely are very low, but its value could be affected by severe crackdowns. The future of bitcoin depends on how it adapts to regulatory barriers. What do you think? Share your thoughts.