Bitcoin, the pioneering digital currency, has revolutionized our understanding of finance and money. However, amidst evolving technology and changing external factors, Bitcoin confronts significant structural challenges that could impact its future existence and growth. Explore the key threats that could potentially become a "black swan" event for the cryptocurrency.
One of the commonly cited major threats is the rise of quantum computing. Nic Carter, General Partner at Castle Island Ventures, concisely responded to Lyn Alden’s question, the founder of Lyn Alden Investment, about the biggest structural risk for Bitcoin in the next 5-10 years: “quantum computing.”
In fact, future quantum computers could break the encryption algorithms securing Bitcoin, like Elliptic Curve Digital Signature Algorithm (ECDSA) protecting Bitcoin wallets. If a sufficiently powerful quantum computer emerges, it could falsify digital signatures, allowing attackers to steal BTC from any wallet with an exposed public key.
According to River’s research, a quantum computer with 1 million qubits could falsify a Bitcoin address. Microsoft also claims that its new Majorana chip is paving the way towards this crucial milestone. This raises an urgent question: how long does BTC have before it needs to become quantum-resistant?
Beyond technical challenges, some investors fear that the increasing involvement of governments and institutions may become the biggest risk for Bitcoin in the next 5-10 years. As highlighted by investor MisterSpread, “the biggest structural risk is the friction between Bitcoin’s decentralized ethos and the growing push towards centralized regulatory oversight.”
Indeed, data from BitcoinTreasuries shows that over the past five years, BTC holdings of private companies, public companies, governments, and ETFs have surged over 12 times, rising from 210,000 BTC to over 2.6 million BTC. This increased involvement of institutions could lead to legal pressures or unwanted changes to Bitcoin network fundamentals.
Bitcoin is a store of value, a safe haven for retail investors. However, the recent months have seen a massive accumulation by institutions and significant sales from individual investors:
“I estimate all the remaining Bitcoiners and individuals will sell their BTC at $140,000. The irony is that after a decade of holding, the Bitcoiners will have no more BTC The billionaires will own them all, and their price will reach unimaginable heights. It will be sad to see.” wrote expert Aimass on X.
This phenomenon could harm Bitcoin in the long term. Moreover, the BTC mining sector is facing a similar fate. Only large-scale infrastructures capable of withstanding low income and competition can survive.
In conclusion, as BTC continues to evolve, industry leaders warn that quantum computing and increasing regulatory surveillance could threaten its security and decentralized nature. Experts emphasize the urgency of implementing quantum-resistant measures before a potential “black swan” disrupts the network. The challenge will be to quickly reach a consensus within the Bitcoin community to adopt these solutions in time. Decentralization is also questioned, with the massive accumulation by large institutions.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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