The Five Things That Could Kill Bitcoin

My predictions of the most likely threats to Bitcoin's existence

Despite its resilience leading to many premature obituaries —chronicled amusingly at 99bitcoins.com—Bitcoin continues to mystify and disappoint those who view it merely as a speculative bubble. Its longevity and escalating value, even after 15 years, challenge the skepticism surrounding its foundational principles: as both a store of value and a medium of exchange.

However, Bitcoin is a human creation, and like all human creations, it is imperfect and liable to failure. Let us explore the most plausible scenarios that could precipitate Bitcoin's decline. This discourse isn't to predict Bitcoin's demise but to understand its potential vulnerabilities better.

While clarifying the potential vulnerabilities facing Bitcoin, it's important to note that the scenarios I've outlined are not predictions that I consider likely but my assessments of the most plausible risks. Bitcoin critics have leveled many challenges — regulatory crackdowns, advancements in quantum computing, the emergence of competing cryptocurrencies, global catastrophic events, and security breaches. My focus here is identifying the risks that, while not necessarily probable, pose the most significant threats to Bitcoin's stability and value.

Note: By "dying" I mean situations where Bitcoin's value evaporates. This doesn't necessarily mean the disappearance of Bitcoin as a technology or a network but a drastic reduction in value. For instance, imagine a critical flaw that simplifies extracting private keys. Even if this issue could be rectified with a fork of the Bitcoin blockchain, existing Bitcoin holdings would be rendered worthless. The fork might allow the blockchain to continue functioning like its original state, yet the value of pre-fork Bitcoin could be wiped out.

1. Human Extinction

The ultimate existential threat, the end of humanity (as we know it), is the foremost risk to Bitcoin's survival. My concern gravitates not towards cataclysmic events like asteroid impacts or nuclear warfare, but the prospect of misaligned artificial intelligence—a scenario I deem significantly probable. I won’t try to convince you of my concerns here, but you can read them on my other Substack: futureoflife.substack.com.

2. Community Failure

Bitcoin's resilience partly stems from its decentralized nature, free from the confines of a central governing body. Bitcoin hasn't had a single leader since Satoshi Nakamoto, the creator of Bitcoin, progressively stepped away from the project around late 2010. The continuity of Bitcoin's ethos relies on the stewardship of leaders who embody its core principles. Should the community succumb and be captured by external pressures—such as governments, opportunistic schemers, or others who want to deviate from foundational values—the user base might seek refuge in alternative protocols. This risk doesn’t seem very likely now, but once Bitcoin is worth many trillions of dollars, capturing control from a small ecosystem becomes lucrative by superpowers with unlimited resources.

3. Human Irrelevance

Aside from human extinction, human irrelevance is another possibility. Imagine humanity being invited to join a galactic civilization with their own version of Bitcoin. Joining a galactic market with an established currency system would likely lead the world to adopt the galactic standard over Bitcoin.

While such a first-contact scenario seems highly unlikely, a rapid economic expansion driven by AI—whether these agents are autonomous or human-directed—is both likely and imminent. AI systems could choose Bitcoin as their currency, given its global, decentralized nature that operates independently of traditional institutions. It facilitates near-instant, high-frequency, low-cost transactions, thanks to layer 2 networks.

However, AI systems, potentially surpassing human capabilities in technology and coordination, might not favor pushing improvements through the comparatively sluggish Bitcoin community. They might opt instead for their native currency.

Given the expectation that AI systems will direct most economic activity within a few decades, the monetary system they adopt is poised to become the global standard.

4. A Global Return to the Gold Standard

Bitcoin emerged as a response to the limitations of both fiat currencies and the traditional gold standard. A resurgence of a credible, globally accepted gold standard could undermine Bitcoin's raison d'être. However, the likelihood of international consensus on such a standard remains slim, given the political and economic incentives that favor fiat currencies. Even discussions among BRICS nations about a potential gold standard seem more theoretical than actionable. Moreover, the digital and decentralized nature of Bitcoin presents advantages that a gold standard cannot replicate, such as ease of transfer, divisibility, and security from physical theft. These characteristics could ensure Bitcoin's continued relevance, even in a world where gold-backed currencies are prevalent.

5. The Emergence of a New, Sound Multinational Monetary Standard

If another nation established a new global reserve currency to replace the dollar, AND that currency was hard money, perhaps by being backed by gold or other assets, the Bitcoin projects could also fail. But which currency could that be? The potential contenders -- China, India, Russia, the EU, etc.-- are all even worse than the US regarding the soundness of their money. Even in the face of a global economic collapse, it seems unlikely that any new superpowers would have the trust to establish a trustworthy new global monetary standard -- not when Bitcoin is already known to exist.

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Here you have it—my assessment of the most likely reasons Bitcoin could fail. The only scenario I wouldn’t wager against is the first. Then again, perhaps it’s not a risky bet, considering I wouldn’t be around to pay out if I were wrong.