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Why bitcoin will fail
18 Jan 2022 (727 views)  

Bitcoin aims to achieve following goals:

a) A store of value. People buy bitcoin in the believe that it will increase in value as the supply is limited and the demand is potentially unlimited.

b) As a digital currency for people to make payments.

c) Free from government control.

These goals are not sustainable or contradictory for the following reasons:

a) It cannot work as a currency because its value is volatile. Furthermore, it is costly to make a payment using bitcoin (although this high cost could be mitigated by using more efficient platforms to make the transactions.

b) Its freedom from government control allows money laundering and financing of criminal activities. This leads to government imposing bans on bitcoin and other crypto currencies.

Another big disadvantage of bitcoin is that its "mining" operation uses a lot of energy and is highly wasteful. It is possible to change the "mining" operation to be less energy wasteful, but this requires agreement among the vested interests, i.e. miners.

Another threat to bitcoin is that many other crypto currencies could be created to compete with its role as a store of value or as a currency. It does not have a monopoly.

Due to the inherent inefficiency of bitcoin, I expect it to fail and be worth nothing in due course.

I expect some crypto currency to survive as an efficient currency or a smart contract platform (using blockchain), but the market will be crowded with many platforms and it would be difficult for any one platform to gain a large market share. 

This is based on my knowledge, research and uncommon sense.

Tan Kin Lian
 


Why bitcoin will fail
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Bitcoin aims to achieve following goals:

a) A store of value. People buy bitcoin in the believe that it will increase in value as the supply is limited and the demand is potentially unlimited.

b) As a digital currency for people to make payments.

c) Free from government control.

These goals are not sustainable or contradictory for the following reasons:

a) It cannot work as a currency because its value is volatile. Furthermore, it is costly to make a payment using bitcoin (although this high cost could be mitigated by using more efficient platforms to make the transactions.

b) Its freedom from government control allows money laundering and financing of criminal activities. This leads to government imposing bans on bitcoin and other crypto currencies.

Another big disadvantage of bitcoin is that its "mining" operation uses a lot of energy and is highly wasteful. It is possible to change the "mining" operation to be less energy wasteful, but this requires agreement among the vested interests, i.e. miners.

Another threat to bitcoin is that many other crypto currencies could be created to compete with its role as a store of value or as a currency. It does not have a monopoly.

Due to the inherent inefficiency of bitcoin, I expect it to fail and be worth nothing in due course.

I expect some crypto currency to survive as an efficient currency or a smart contract platform (using blockchain), but the market will be crowded with many platforms and it would be difficult for any one platform to gain a large market share. 

This is based on my knowledge, research and uncommon sense.

Tan Kin Lian