Totally possible, but I don't think it will happen simply because there will always be some percentage of miners who aren't making ideal financial decisions, or who are using free electricity. Those miners will eventually bring the network back into operation, although you're right, it might take months.
Having said that, the bitcoin core developers really ought to be considering ways to fix this risk without making bitcoin too vulnerable to network splits (which is the flip side of the same issue - if there was suddenly a world war and the internet gets split into many country-nets, how do we want the network to behave?)
We seem to have lots of these. In the last few months, the price of bitcoin is down 60%, yet the mining rate has barely decreased. Surely at least some miners have been priced out of the market now?
As the hash rate gets more and more decentralized price tolerance approaches infinity. Some guy running a small number of ASICs at his house is going to have near zero price sensitivity.
Theoretically, BTC could make a similar adjustment and avoid the doomsday scenario that you outline.
BTC has tonnes of drawbacks, but the drawbacks are stable and known. And this confidence in Bitcoin stabilizes bitcoin, beleive in bitcoin because it has critical mass.
This may of course all be wrong, something may go wron tomorrow and completely hose the thing. But people generally don't think that.
The relative simplicity is a feature, not a bug. As soon as you add features, you add complexity.
PoS opens up its own can of worms. Namely, it is vastly more complicated and not as well understood or executed in as large of a scale as PoW currently is. The Merge is honestly terrifying to me given the amount of money on the line.
As a software engineer who's built large distributed systems. I've always relied heavily on having robust test suites so that I know that when I'm deploying code, there is little risk of failure. In this case, the devs have had years to get the test suite passing [1] and the plan is to launch in a few months. I really wish that this was looking a bit better than it is at this point.
There also isn't a published set of plans for what happens if things go wrong. We could end up with a forked chain and ETC situation again and I'm not sure it would survive that.
So yea... I'm optimistic, but I'm also a doubter. I'm more than fine with them taking as long as they need to get it right. The current rush seems entirely unnecessary to me. Especially since the devs claim they don't care about the price.
I had a lot of doubts too about the pace of dev but the shadowforks and ropsten testnet makes me thing it's going to happen.
I think that even if the devs don't care about the price, they care about the image and they want to get rid of the stigma that eth is bad for the environment.
When that stigma became so widespread is when eth went all in on the PoS development.
If ETH PoS was the end all solution of PoS, we wouldn't need Mina. Everyone would just focus on making ETH PoS better (or just getting it shipped). In a similar way that there is just one Bitcoin, the rest of the contenders (BCH/BSV) are just shitcoins nobody cares about.
Instead, we have dozens of competing PoS chains which have little value, debatable security (there just isn't enough of a financial / political target to attack, yet), and even less real world utility (because nobody is developing apps for them). While ETH PoS is sitting there with broken unit tests.
Hopefully that explains my arguments a bit better.
It will crash. It might even crash all the way back down to pre-pandemic levels. But it wont bankrupt. If you cant see this you are really missing the forest for the trees.
I mean, one person buying all the bitcoin would be an excellent way to cause the value to go to zero. If every bitcoin is held by a single person, who else would care?
- pay the salaries of state workers
- pay your tax
It may not look like much, but it's the reason why a regular currency is always worth at least something : some people are legally bound to using it.
There are many fiat currencies that went to zero and no longer exist. Most recently is the Zimbabwe dollar which ceased to exist some years ago and the country had to start using USD and ZAR.
pay the salaries of state workers
When the fiat currency collapses like in Zimbabwe, state workers no longer accept salaries in the currency and demand something else.
And also, when I say one person buy it for a million in actuality the probable “floor value” scenario is a million speculators trying to buy it for a billion dollars.
Bitcoin has been unleashed on the world and it will forever have a life of its own. Unless, of course, enough governments ban it and enough citizens obey the ban. Eventually even this scenario will become impossible.
I think you're right but I'm pretty sure you missed GP's point...
> You really think there isn't a single person on this planet willing to put in 1-10 million to buy up all the bitcoin?
Of course there are people/companies willing to do this: they'd short squeeze the entire supply if they could but... It's not GP's point: GP's point is that there exist a scenario in which the "work" (the "proof of work") required to find one block would be so expensive compared to the value of BTC that it'd be impossible to ever mine a new block on the blockchain. That's be a "death spiral": a PoW forever too high and nobody willing to put in the $$$ in electricity required to mine one block and let alone the huge number of blocks required before the PoW difficulty is lowered. These blocks would be mined at a gigantic loss. The problem is made worse by the PoW only being able by -75% at most: so should some big miner mine at a loss for a very long time, the -75% difficulty "easing" may not be enough.
If anything, of all the dramatic scenario about Bitcoin since it came out, this death spiral has always been the most concerning one.
Compared to the rest of the whitepaper/code this part of Bitcoin always seemed very weak due to poorly choosen parameters (way too many blocks before the difficulty adjusts itself). This poor choice of parameters may be Bitcoin's eventual downfall.
Now... There's a group of devs who basically control the code and you can bet that should the death spiral happen, these devs would magically agree with miners and big players to "vote" on adopting new parameters / relaunching the chain/mining with a much easier difficulty.
That's why I think you're right: it's highly unlikely BTC would go to zero because there'd be an army of people coming to its rescue. But it's quite a range between $18 K (as I type this) and zero.
Again: missing the first for the trees.
I expect that in the "hope dies last" spirit some of the miners will double down, to get higher share of the fees. Whether that's going to be enough to carry through till the network algorithm adapts.. I don't know but wouldn't underestimate the zeal.
Conversely there's an outside chance a really big crash will make it useful.
A sufficiently large crash of Bitcoin will leave most current holders burned. Those that have Bitcoin as a purely speculative play will take some big losses, and get out (maybe permanently).
Ridding Bitcoin of speculators will maybe improve Bitcoin usefulness as currency - but I think main-stream will ignore it and it'll become niche.
At its heart Bitcoin cannot decide if its a fast-appreciating asset, or a currency, and it can't be both. Perhaps a really big correction now can kill the fast-appreciating asset approach for good.
Unfortunately though it seems like as a currency its primary benefit seems to be making risky (aka illegal) face-to-face transactions safer, and hence will likely aquire an ever seedier reputation.
A real solution would be truly decentralized. It needs controlled inflation to avoid incentivizing the capture of the supply and it needs CPU only mining to prevent the eventual emergence of parasitic mafia miners.
Less than zero, because you have to keep putting energy into the network to keep it running.
If the hash rate and BTC/USD became very low (on their way to the 0 you're mentioning), there'd quickly be an incentive for deep pockets (it's HN, so read "VCs") to start mining operations and create a new speculation wave they'd be well-positioned to benefit from.
Hey man, you're _totally free_ to pay the price of a used car to process a transaction. Ain't it grand.
Meanwhile I can send instant bank transfers for free all day long.
It's free for you, but not for the bank (work & time) and nether for a merchant (fees)
Also you are likely talking about Defi or NFTs on ETH which got ridiculous expensive. However that's contracts driving up the fee. Money sending fees rarely got above normal international banking fee prices and are usually WAY below.
I should have specified that I'm thinking of intra-EU bank transfers. They're as close to free for all parties involved as something can be.
One year I paid more than $500 banking fees in a year with zero monthly fee. For withdrawals abroad, exchange rates for deposits and withdrawals, calling with a more specific problem, etc.
Also as a merchant I do pay a fee on incoming swift transfers just to have a little automation. (Plus a monthly fee to use my company name instead of private name) Nothing is free
Edit:// also you can't send instand swift transfers on a holiday or Sunday. Sometimes not even Saturday. (or at night for that matter) Sometimes delaying up to 4 days (Easter) It's a imperfect solution either way.
'Low' amounts (varies by country, call it under €20,000) are processed at evenings and weekends too.
https://www.ecb.europa.eu/paym/integration/retail/instant_pa...
The protocol adjusts the hash rate every 2160 blocks, or about once every two weeks, and the maximum negative slew rate is -75%. If sufficient miners pull out of the network within a fortnight or two, it's conceivable that Bitcoin will enter into a death spiral.
It goes something like this:
1. Miners realise that their operations are unprofitable, and do some mix of raising tx costs and/or turning off their kit.
2. The tx rate drops, so instead of one hash found per 10 minutes, it might be one every 20-30 minutes or even slower. The competition to get into these blocks heats up, further pushing up tx costs.
3. Bitcoin is no longer usable for small transactions, because the tx cost makes it a total loss. Small-to-medium users panic, as they realise that Bitcoin is not only plummeting, but that they can't get their money out without spending a significant fraction of it.
4. There's a rush to withdraw lump sums, creating a "run on the bank". This nearly instantly skyrockets tx costs.
5. Bitcoin value keeps plummeting, because nobody in their right mind would put USD into the system, and everyone wants to get out. Miners won't shut down their equipment at this point, because with high tx costs they're still profitable or nearly so. But they're paid in Bitcoin, so the real value of those tx fees is plummeting also.
If the above happens fast enough and with the right timing, with the most precipitous downturn happening right before a difficulty epoch, then the difficulty might not adjust enough downwards at the right time.
Then there's a chance that Bitcoin will go to 0 in the subsequent 14 days as miners walk away from their operations and users loose all faith that there's any value left in their coins.. and even if they do believe in that value, there's nothing they can do with their coins because hashes are found only every few hours and it costs the price of a new car to get into those blocks.
"It'll just adjust", you say. Sure... -75% after that fortnight[1], and if that's not enough, it'll be nearly a full month of an absolute crypto bloodbath. How long did it take Terra/Luna to crater? Days?
Caveat: Having said that, I suspect there's enough momentum in the system because of all the HODL-ers and self-interest in the miners. The miners have much of their earnings tied up in Bitcoin. If they let the system crash, they lose their profits. But there is a point where they'll realise they're throwing good (fiat) money after bad (crypto) and literally pull the plug and turn off the kit.
[1] Or longer! Remember, it's every 2160 blocks. If too many miners give up mining all at once, this could be over a month.. or longer.