this post was submitted on 01 Feb 2025
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I don't think the belief in its value is going to collapse on its own. It is already accepted to have value by enough people, to sustain that belief. (A bit like a religion, if you think about it)
The downfall of bitcoin will lie in it's technological design. The whole premise of the underlying blockchain technology relies heavily on Moore's Law to keep working indefinitely. The complexity of the cryptographic calculations that have to be solved for each BTC transaction increases with each transaction, so it relies on exponential growth of computing power, or rather energy efficency of computing (which is a bit differen than Moore's Law), to remain useful. The more widely adopted the bitcoin becomes and the more it is traded, the greater the challenge to keep it operational. That is a very impractical limitation for it to be useful as an everyday currency. If, at some point, the time and or cost-efficiency of the crypto-calculations cannot keep up with the number of BTC transactions anymore, the operational cost (or inconvenience) will limit its use. And at that point, I think, the speculation bubble will collapse eventually.
Now when that is going to happen, I cannot possibly know. I'd invest in leverage products against it, if I did.
Maybe progress in chip manufacturing will still continue to exceed my expectations. Maybe a breakthrough in quantum computing will enable the BTC to become a universally accepted currency or maybe it will break its underlying cryptography and kill it dead.
Whatvever it may be, but my prediction is, that if the bitcoin is to collapse, it will probably have a reason rooted in technology.
That's not how the complexity of the mining works. It doesn't increase with every block. It scales depending on how many miners there are (essentially). So if many people stopped mining, the complexity required would decrease.
These things change. People once believed that diamonds were a valuable rock and essential for proposing marriage, but now people are starting to think that's BS. There was massive social pressure, plus expensive propaganda from deBeers trying to keep people buying diamonds. But, people woke up.
So much of crypto's promise is that there will always be another sucker who will buy your bitcoin for more than you paid for it. But, if actual real currencies that people pay taxes with can collapse, crypto could collapse a whole lot faster than that.
I don't know why you're connecting paying taxes with a currency with it being legitimate. I don't think those things are related
Because actual money has sources and sinks. If you look at MMT for example, they talk about government spending not as being a way for the government to distribute money, but actually as a way the government creates money. When the government taxes money, it doesn't just collect it, it destroys it.
So, based on how much a government is spending and taxing, it's adjusting the supply of money in the economy. The fact that government spending is roughly the same year-to-year, and that taxes are roughly the same year-to-year gives a stability and flow to actual money. There's a constant demand for it because every year the US government requires that people and businesses submit $4.5 trillion in taxes. There's a constant supply because the US government spends more than $6 trillion.
Bitcoin doesn't have those sources and sinks. There's no constant demand for bitcoin every year to pay taxes. There's no constant supply as a government spends bitcoin into the economy. The "realness" of money is intimately tied to taxes and government spending.