The Bad Things that could Happen to Bitcoin

00:02 hey everyone so here’s a video by
00:04 popular request about the bad things
00:06 that could happen to bitcoin or what
00:07 could throw it off track or knock it off
00:10 the rails all of that so I’m going to
00:11 cover probably the top 10 things that
00:13 come up um so let’s start with number
00:16 one uh first off when people hear about
00:18 Bitcoin they think this is you know too
00:20 good it can’t possibly be real and then
00:23 uh you know once they figure out it is
00:24 their first concern is usually that the
00:26 government will ban it um first of all
00:28 technologically there is no way for the
00:30 government to ban Bitcoin uh China has
00:32 already tried to do that and people are
00:34 still using it all over China and just
00:36 technologically it’s a decentralized
00:38 distributed system so it would be as
00:41 difficult as Banning the internet and in
00:42 the case of Bitcoin it would even be
00:44 much more difficult because the
00:45 structure of the Bitcoin Network means
00:48 if any company or sorry if any computers
00:50 are running it anywhere then the Bitcoin
00:53 Network by definition is online and it’s
00:55 basically technologically impossible to
00:57 ban so that being said the government
00:59 could regul Bitcoin and they could make
01:01 it harder to use this was uh much more
01:04 of a concern prior to the approval of
01:06 the Bitcoin uh ETFs exchange traded
01:09 funds that happened in January of this
01:11 year 2024 uh after they approved the
01:14 Bitcoin ETFs it was essentially the
01:16 government’s stamp of approval that said
01:18 this is a legitimate asset class you’re
01:20 officially allowed to own this you’re
01:21 allowed to trade it you’re allowed to
01:23 you know have it in a brokerage account
01:25 all of that so the the probability that
01:28 Bitcoin will ever be banned uh is really
01:31 has effectively dropped to zero um and
01:33 it was close to zero prior to now but it
01:36 really is effectively zero now the
01:38 government could still make it harder to
01:40 do what’s called self- custody meaning
01:42 where you hold it yourself rather than
01:44 uh on coinbase or on Fidelity or black
01:47 rock or something like that uh so for
01:49 people like me who do not want to trust
01:52 any platform which means you know once I
01:54 accumulate enough Bitcoin I move it from
01:56 coinbase to something like bit key for
01:59 example but unless you have just a ton
02:01 of ton of ton of Bitcoin uh that’s not
02:03 something you have to worry about until
02:04 it’s a substantial part of your net
02:06 worth um but anyway the government could
02:09 make that harder to do uh which would
02:11 force more people to to store it on
02:13 coinbase or Fidelity or Black Rock but
02:15 the probability that the government’s
02:17 going to like ban Bitcoin or ban you
02:19 from owning it or holding it is just
02:21 almost I mean it’s effectively zero at
02:23 this point plus uh the courts would
02:25 almost certainly side with on the side
02:28 of Bitcoin so even the probability if
02:30 the government did try to ban Bitcoin or
02:32 make it you know illegal to self-
02:34 custody or something like that I just
02:35 don’t see any way that the courts would
02:38 uphold that meaning I think from a a
02:40 legal perspective with regard to the
02:42 government whether the J you know the
02:44 the executive branch or the legislative
02:47 branch I think the probability that
02:49 things bad happen to Bitcoin in a way
02:51 that you know significantly affect this
02:53 price because it’s illegal to own in the
02:54 United States I just think is
02:56 effectively zero so that’s number one on
02:58 the list that the government um you know
02:59 Bans it I really think that probability
03:01 has dropped to zero uh number two would
03:03 be that the government regulates it in
03:05 some huge way that makes it you know
03:07 effectively unusable again I think at
03:09 you know that probability is close to
03:11 zero as well and any kind of Regulation
03:14 the government put on bitcoin I think
03:15 would would not keep it from being you
03:17 know usable in all the ways I use it um
03:20 so third up is what about a security
03:22 breach what if there’s some sort of
03:24 massive hack of the Bitcoin network uh
03:26 the short take is I don’t see that
03:28 happening um the Bitcoin Network has
03:30 been going for 15 years5 15 years it’s
03:34 storing more than a trillion dollars of
03:36 value it’s open source software which
03:38 means all of the best software
03:40 developers in the world can troubleshoot
03:41 it look for bugs and even if there was
03:44 some sort of catastrophic breach it is
03:46 super easy in the Bitcoin Network to
03:48 roll the network back exactly to the
03:50 point before the breach and restart the
03:52 network from there now you know worst
03:55 case scenario if there’s some huge huge
03:56 breach it takes a couple hours to get
03:58 the network back online and they have to
04:00 redo some of the transactions and
04:02 essentially they just redo the network
04:04 without the nefarious activity but I
04:07 think the probability that happens is
04:09 again zero it’s dropped to zero so um so
04:12 anyway I think I think that one’s really
04:14 zero as
04:16 well and the preview for all of this is
04:18 I think all of the probabilities are
04:20 zero so or close to zero uh I would not
04:24 be promoting uh you know Bitcoin on
04:27 Facebook so much if I thought any of the
04:29 uh possible risks to it were meaningful
04:32 really at all uh the reason I am so
04:34 bullish on on bitcoin is because I think
04:37 the the the the potential harms or the
04:39 potential threats to bitcoin really have
04:41 dropped to effectively zero uh otherwise
04:44 I would be highlighting all of those
04:45 threats all over Facebook and the reason
04:47 I’m not is because back when I started
04:49 buying Bitcoin in 2017 there actually
04:52 was real threats to it back then uh but
04:54 at this point it’s just those again have
04:56 effectively dropped to zero and so I
04:58 feel like it’s a it’s a very investment
05:00 for those purposes but of course this is
05:02 not Financial advice it is not tax
05:04 advice want to be super clear about that
05:06 so probability of a security breach I
05:08 think has effectively dropped to zero as
05:09 well uh what about other technology
05:11 issues again there Bitcoin is supported
05:14 by a team of worldwide of the best
05:16 software developers in the world it’s
05:18 all open source software there’s
05:20 effectively a trillion dollar bug Bounty
05:22 if you can find something wrong with it
05:24 uh there’s just I just don’t see a
05:26 technology issue coming in you know
05:28 interfering with Bitcoin worldwide
05:30 adoption all right so what about Quantum
05:32 Computing what if somebody figures out
05:34 with Quantum Computing a way to hack you
05:37 know Bitcoin security somehow well first
05:38 of all if that happens way more than
05:41 Bitcoin has a problem at that point all
05:43 of the security that secures everything
05:45 that’s valuable in the world also is
05:47 subject to being hacked so if that were
05:49 to become a threat the software
05:52 developers that support the Bitcoin
05:54 Network I believe would um would find a
05:58 solution to that faster than any of the
06:00 software developers that are securing
06:02 your bank accounts or the stock market
06:04 or anything else of value in the world
06:05 so I think the probability that Quantum
06:08 Computing is a threat is also again
06:11 effectively zero uh because I think if
06:13 it became a threat the software
06:15 developers behind Bitcoin which is a
06:16 massive team of the best software
06:18 developers in the world spread all over
06:19 the world they would uh you know find a
06:22 solution before it became a problem and
06:24 you’re going to have way way way bigger
06:26 problems if that’s an issue uh for
06:28 example the the the question I addressed
06:31 of what happens if the internet goes
06:32 down uh will Bitcoin stop working it’s
06:34 like well your bank’s going to stop
06:36 working the ATMs are going to stop
06:37 working everything’s going to stop
06:38 working Bitcoin is going to be the least
06:40 of your concerns and it would be the
06:42 last thing to go down and the first
06:43 thing to come back up same with Quantum
06:45 Computing Bitcoin is just going to be
06:46 the very first thing that gets up
06:48 upgraded to Quantum Computing proof uh
06:51 security technology so um what about
06:54 Market volatility yes Market volatility
06:56 is something that will continue to
06:57 happen there will continue to be big
06:59 price swings uh over the course of years
07:01 those can be sort of eye-watering uh
07:05 levels of price Corrections over time
07:07 with the approval of the Bitcoin ETFs I
07:09 do think that that volatility will come
07:11 down substantially um so I do think that
07:14 in in some ways uh you know what we’re
07:16 dealing with with uh with price uh price
07:19 uh volatility with regard to bitcoin I
07:22 do think it’s it’s somewhat temporary in
07:24 that every time there’s a price
07:25 correction it uh it corrects to a sort
07:28 of a a lower level so in the early days
07:31 of Bitcoin it was dropping you know the
07:32 price Corrections were 94% 84% you know
07:36 and since then the price Corrections
07:38 have been coming down they’re still
07:40 large but significantly lower than they
07:42 were in the early days of Bitcoin and I
07:44 think with the approval of the Bitcoin
07:46 uh ETFs I think that volatility will
07:48 come down substantially as well and as
07:50 we get closer to 2025 especially the
07:53 second half of 2025 I’ll start talking
07:55 about what you know Bitcoin bare markets
07:57 look like because it tends to go through
07:58 a bare Market about once every four
07:60 years and historically that’s been the
08:02 year after the having in the second half
08:04 of the year after the having which if
08:06 that holds up would be in the second
08:08 half of 2025 so it feels like we’re a
08:10 long way from that uh it does feel like
08:13 we could certainly have 20% or 30% drops
08:16 uh in the price of Bitcoin but if you if
08:18 you wait for those it’s probably going
08:20 to go up 40 or 50% first and then it’s
08:22 going to drop 20 or 30% meaning uh
08:24 you’re still you know better off with
08:26 today’s price than you are waiting for a
08:28 market dip because Market dips are
08:30 completely unpredictable and as soon as
08:32 you think you’re going to wait for one
08:34 and buy Bitcoin usually they don’t
08:35 happen for a very long time and then you
08:37 know you’re stuck buying at a price
08:39 higher than you could have bought if you
08:41 just bought that’s usually what happens
08:43 um all right next up for potential
08:44 threats is scalability so right now the
08:46 Bitcoin network is maybe processing
08:49 three to 4,000 transactions every 10
08:52 minutes so obviously if it were to
08:54 become the new monetary system of the
08:55 world that the Bitcoin Network itself
08:58 which is designed to be the most sec
08:59 secure network uh the most distributed
09:02 the most decentralized the most secure
09:04 network that humans have ever built uh
09:06 is not going to be able to handle you
09:07 know many thousands of transactions uh
09:10 Beyond its current capacity uh I am not
09:12 worried about that because every other
09:15 Financial network is built in layers for
09:17 example uh fedwire the FED Network that
09:20 Banks use to settle between each other
09:22 for billions and trillions of dollars if
09:25 you try to do a wire transfer at your
09:26 bank it costs you $25 well obviously
09:29 you’re not buying a cup of coffee with
09:31 fed wire you’re not transaction on the
09:34 base network of the Federal Reserve to
09:37 buy a cup of coffee if you did it would
09:39 cost 25 bucks just like it does to wire
09:41 money from your bank um so there there
09:43 are layers on top of that for most uh
09:46 for most transactions it’s the Visa and
09:48 MasterCard Network which works great
09:50 with Bitcoin the coinbase debit card
09:52 works on the Visa Network and they
09:54 settle to the Bitcoin main chain every
09:56 so often and if you’re paying a $3
09:59 transaction fee to transact on the
10:01 Bitcoin main chain and you’re
10:03 transacting hundreds of millions of
10:04 dollars every time you do that it’s an
10:06 irrelevant amount of money uh Bitcoin
10:08 also has its own native payments uh
10:10 Network called the lightning Network
10:12 which also works great it’s not very
10:14 widely adopted around the world yet one
10:16 day it will be in the inter interim you
10:19 can just use the coinbase debit card
10:21 which uses again uses Visa so um anyway
10:25 the short take is I’m not worried about
10:26 sort of payments and the scalability of
10:29 the Bitcoin coin Network because that is
10:31 easily solved by uh layers on top of the
10:34 Bitcoin Network like Visa or Mastercard
10:37 or the Bitcoin lightning Network and as
10:40 the adoption of the lightning Network
10:42 increases over time or even Square block
10:45 they have their own sort of payment
10:46 network uh over top of it as well so as
10:49 all of those things get uh you know
10:51 better adopted and more broadly adopted
10:54 then none of that uh it’s basically not
10:56 going to matter what the price is to
10:57 transact on the main chain because of
10:60 the small transactions will happen above
11:02 that again if you want to transfer a
11:04 substantial amount of your Bitcoin into
11:06 self- custody to get it off the
11:07 exchanges you can do that and so what if
11:09 you it costs you $3 or $2 or $1 to do
11:12 that if you’re moving a lot of money it
11:14 doesn’t matter if it costs a dollar to
11:16 transact on the main chain so I’m not
11:18 really worried about scalability as all
11:20 as as well because there’s numerous ways
11:22 of solving that above the base layer and
11:24 the base layer which is you know that
11:26 holds the $1.4 trillion of Bitcoin value
11:29 all you care about for that layer is
11:31 that is the most secure the most
11:34 decentralized uh you know Network in the
11:35 world scalability can be handled above
11:38 that layer all right uh next up concern
11:40 is environmental impact so right now
11:42 something like one tenth of 1% of the
11:45 world’s electricity is going to power
11:48 the Bitcoin Network so is that a problem
11:50 well first of all the Bitcoin
11:59 in half every four years so right now
12:01 they’re getting 6.25 Bitcoin every 10
12:03 minutes in April around April 19th they
12:06 will get uh 3.125 Bitcoin half as much
12:10 and then in 2028 they’ll get half as
12:12 much again and 2032 they’ll get half as
12:15 much again and by either 2032 or 2036
12:18 99% of all the Bitcoin is already going
12:21 to be mine so the next 100 years they
12:23 will be finished mining the last 1% it’s
12:26 something like that it’s it’s heavily
12:27 Lop sided toward the front so um I’m not
12:30 really worried about environmental
12:32 impact for a couple reasons one it’s a
12:33 tiny percentage of world electricity use
12:36 two because the Habs keep happening it
12:39 the incentive to build more uh Bitcoin
12:41 mining Farms of huge massive Farms of
12:44 Bitcoin mining computers that secure and
12:46 audit the network that incentive drops
12:48 in half every four years and obviously
12:50 every time it drops in half the
12:52 incentive and therefore the capital to
12:53 deploy more mining Hardware drops in
12:56 half as well so not really worried about
12:58 that again because the incentive to
12:60 deploying more mining equipment keeps
13:02 dropping and I consider it a very good
13:04 use of electricity to secure and audit
13:07 the most valuable computer network that
13:09 humans have ever created so you know
13:11 it’s going to use some level of
13:12 electricity and it has to use some level
13:15 of electricity to secure and audit uh
13:18 the network um and then last stuff would
13:20 would be Network attacks what if
13:22 somebody tries to hijack the entire
13:24 Bitcoin Network which would require them
13:26 to gain control of more than half of all
13:29 of the Bitcoin
13:30 computers and all of the more than half
13:32 of all the electricity that’s being used
13:34 uh to power the Bitcoin Network again
13:36 I’m also not worried about that that’s
13:38 just statistically impossible even at
13:40 this point if the United States and
13:42 China and Russia and the United Kingdom
13:45 even if they all colluded to try to
13:47 hijack the Bitcoin Network in some way
13:49 there is no conceivable way on the
13:51 planet that they could amass enough
13:53 computing power because uh the Bitcoin
13:56 network is powered by specially designed
13:58 computers that do only that so it’s not
14:00 like computers you can just go buy on
14:02 the open market right now if you were to
14:04 try to get 51% of all the computing
14:06 power of the Bitcoin Network it’s just
14:08 it’s impossible that the computers are
14:10 not even available for sale and it would
14:12 take years and years and years even to
14:14 produce them and the whole time the
14:16 Bitcoin Network people are buying more
14:18 computers and bringing them online so uh
14:20 so all that to say back when I started
14:23 adopting Bitcoin in 2017 maybe half of
14:27 these potential risks were viable maybe
14:29 they only had a single-digit percentage
14:31 you know probability of risk but each of
14:48 those huzzle which dropped the last part
14:52 of the risks down to effectively zero um
14:55 so to recap I think the the likelihood
14:57 is effectively zero of the government
14:60 Banning it or regulating it you know
15:02 making it unusable due to regulations or
15:05 a security breach or technology issues
15:07 or Quantum Computing being a problem or
15:09 Market volatility which will continue to
15:11 be the case but as long as you can
15:13 stomach the ups and downs uh it’s not a
15:15 problem in 100% of assets that are are
15:19 going up very quickly in value have High
15:22 um have high volatility so there is no
15:24 asset that is growing at the rate that
15:27 Bitcoin is growing that does not have
15:28 high volatility that is 100% a part of
15:32 an asset that is growing this quickly is
15:34 it absolutely positively will have
15:36 volatility it’s just part of the ride so
15:39 without the volatility it would mean the
15:41 price was not growing as aggressively as
15:43 it is and so that’s just sort of baked
15:45 in uh the environmental impact is again
15:48 extremely small and um and as the havs
15:52 keep happening uh the incentive to bring
15:54 more computing power online uh will keep
15:57 going down but I’m not worried about the
15:59 security in auditing of the Bitcoin
16:00 Network because right now even right now
16:03 the amount of computing power uh used to
16:05 secure and audit the network is far in
16:08 excess of even the the $1.4 trillion
16:11 that is being stored so the short take
16:12 is the the network is far beyond the
16:14 point of being unhackable anyway and so
16:18 uh even as the incentives go down over
16:20 time for the miners they will still be
16:21 getting transaction fees even if they
16:23 get less Bitcoin uh as a result of the
16:26 minor rewards they get every 10 minutes
16:28 they still get all the transaction
16:29 action fees which you know earlier today
16:31 was between $1 and $3 per transaction so
16:34 they’re still getting all those fees as
16:36 a reward so I’m not worried about there
16:38 not being enough of a what’s called a
16:40 security budget uh to secure the network
16:42 because I think that’s going to be
16:44 plenty plenty plenty uh into the future
16:46 and then uh again Network attacks are
16:48 just mathematically impossible so all
16:50 that to say um as the risk reward
16:54 profile as the risk has come down on
16:55 bitcoin um the risk reward profile has
16:59 gotten better and better and better and
17:00 if you think well I wish I had adopted
17:02 Bitcoin way back way back way back way
17:05 back the farther back you go the higher
17:08 the risk so I would argue right now that
17:10 Bitcoin has one of the highest risk
17:13 reward profiles it’s ever had and the
17:16 reason for that is there’s still a huge
17:17 amount of upside left in the price of
17:20 Bitcoin as the world adopts Bitcoin but
17:23 the downside risk of Bitcoin as long as
17:26 you’re willing to hold for the long term
17:27 has dropped almost to Z Z in my opinion
17:30 and so as a result of that the risk
17:32 reward profile is hey maybe you could
17:34 have made you know the upside was Triple
17:37 you know two or three or five years ago
17:39 but the risk profile was probably 5x or
17:41 10x three or four or five years ago so
17:45 the risk reward profile which is what
17:46 matters in investing is uh is probably
17:49 the best it’s ever been for Bitcoin
17:52 because the downside risk is the lowest
17:54 that’s ever been in history and the
17:55 upside and the vast majority of the
17:58 upside is still to come uh paired with a
18:01 uh you know a price that’s that’s way
18:03 low so uh that’s the updates um the um
18:07 and and I would say as well to add thank
18:09 you David hamy for putting it in the
18:11 chat here yes uh as the price of Bitcoin
18:14 Rises the value of those transaction
18:16 fees in the blocks increases as well
18:18 which means they offset the price of the
18:21 having meaning there will always be an
18:22 incentive for miners to keep securing
18:24 and auditing the network because the
18:26 price keeps rising and offsetting that
18:28 which means I’m not again not worried
18:30 about the security and auditing of the
18:32 network because there will always be an
18:33 incentive to do that um but at least if
18:35 anybody’s worried about their sort of
18:37 Epic levels of uh you know of energy
18:39 usage related to Bitcoin mining that
18:41 again does drop with each of the Habs um
18:44 so anyway I think Bitcoin uh remains
18:47 just just about the best risk reward
18:49 profile it’s ever been and that is
18:52 combined with the fact that it is um you
18:54 know still very early in the adoption
18:56 process I think Bitcoin the price
18:58 longterm goes to at least $500,000 to $1
19:01 million per coin minimum again somewhere
19:04 in that range um it would have to
19:06 increase in value by about 10x meaning a
19:10 th% um or whatever yeah 10x would be a
19:13 th% uh in order to get close to the
19:15 price of gold I think Bitcoin far
19:17 exceeds should far exceed the value of
19:19 gold because Bitcoin is way better than
19:21 gold um I own uh still left over from
19:24 the past some gold and uh I really don’t
19:27 like it bit uh gold does not work well
19:30 it does not do any of the amazing things
19:31 Bitcoin does I was hopeful when I first
19:33 bought gold that it would it doesn’t
19:35 Bitcoin is way better and so I just
19:38 think Bitcoin at a minimum eventually
19:39 reaches the price of gold which I think
19:41 right now would be about
19:43 $650,000 per Bitcoin so that’s uh not
19:46 quite 10x but close to 10x the current
19:48 price um and last thing I’ll say I get
19:50 asked a lot you know should I wait for a
19:52 price dip again I mean you can but the
19:55 likelihood that you get left behind I
19:57 think is probably 80 to 90 % and the
19:60 likelihood that you catch some magic
20:02 price dip that lets you buy at a lower
20:04 price is probably 10 or 20% and when
20:06 you’re looking at 10x on the upside
20:09 trying to get a 10% price drop on the
20:12 downside and potentially sacrificing 10x
20:15 1,000% on the upside trying to catch 10%
20:18 on the downside it’s just to me it
20:21 strikes me as a fool there and so every
20:23 time I’ve tried to buy Bitcoin as soon
20:25 as the capital became availability me
20:27 available to me whether that was a wire
20:29 I was waiting on or some liquidity
20:31 related to some aspect of my finances uh
20:34 as soon as the capital became available
20:36 to me I immediately bought at regardless
20:38 of what the price was just because again
20:40 especially in a bull market like this
20:42 waiting for a price dip I just think the
20:44 probability you get left behind is about
20:46 80% to 90% And the probability that you
20:49 get uh catch some downside and buy it
20:51 cheaper is maybe 10% to 20% but again
20:54 it’s not that ratio is not just 5 to1 or
20:56 10 10 to1 when you multiply that by the
20:59 upside being you know the up the upside
21:02 being a 100 times greater than the
21:03 downside