- Bitcoin faces risks, but it’s hard to see something destroying it.
- Pompliano mentioned that bugs in the code are rare but remain a potential risk.
- Quantum computing could theoretically attack the blockchain, but it would harm Bitcoin’s value.
- Community stagnation may slow Bitcoin’s growth, but it won’t kill the asset.
Bitcoin is resilient, even as risks exist that could hurt it. Last week it reached its all-time high since July at $68000.
So, in a recent discussion between Phil Rosen and Anthony Pompliano, the two experts examined potential risks to Bitcoin. They claim that it’s hard to imagine anything completely killing the asset.
Bitcoin Unique Resilience
According to Anthony Pompliano, the number one rule of investing is to “not get blown up.” He explained that although portfolios can manage setbacks, it’s vital not to let an asset become worthless. So, he said, “I think that Bitcoin is unique in that ability to say, ‘Hey look, it’s really hard to see something that could completely make it worthless.’”
Phil Rosen asked about the biggest risks Bitcoin faces. Pompliano laid out three primary concerns, starting with a rare but possible self-induced bug. “Developers are updating the code… but that’s always a potential risk,” he said. However, he quickly downplayed the likelihood, calling it “nearly impossible” because of how slow and intentional the development process is.
Quantum Computing and External Threats
Pompliano identified another potential risk which is quantum computing. So he described a scenario where “some sort of advanced technology, like a quantum computer,” could theoretically be developed by a non-economic actor. This person would attack the blockchain not to steal Bitcoin but to destroy it. Pompliano stated that stealing Bitcoin would ultimately be self-defeating. Because, as he put it, “the whole value of Bitcoin is that the blockchain’s never been hacked before. If you steal the Bitcoin, it loses all its value.”
Furthermore, he compared hacking Bitcoin to grabbing water, “For a second, you think you’ve got the water, but then it just squeezes out of your hand.” Even though this threat is theoretical, it’s another factor that investors must consider.
The Risk of Bitcoin Community Stagnation
Pompliano also pointed out stagnation within the Bitcoin community itself. So, he noted that Bitcoin’s rigid nature is part of its strength—it’s stable, having secured “a trillion dollars of value.” However, he cautioned that too much rigidity could slow down progress. “Part of the value of Bitcoin is that it’s very rigid… but there’s a balance between being very rigid and being able to use new technologies.”
He highlighted recent upgrades to Bitcoin, which were generally seen as positive by the community. But the challenge is to find a balance between preserving the asset’s stability and embracing innovation. So he cautioned that while these risks wouldn’t kill Bitcoin, they could slow its growth. “If that risk is taking 10% a year off, so it compounds at 10% less every year, the gap widens over time.”
Dealing with Bitcoin Wounds
Pompliano stressed that although Bitcoin may face these challenges, none of them are likely to destroy it. He sees Bitcoin’s risks as wounds that investors must manage. “Investors can deal with wounds in their portfolio, but the number one rule of investing is always, you know, don’t get blown up, don’t have an asset get killed.”
Pompliano said that is why so many people have such high conviction in Bitcoin. “It’s really hard to see something that could completely make it worthless, but there are things that are challenges or obstacles that it’s got to overcome.”
The “Greater Fool” Theory
Phil Rosen shifted the conversation to the criticisms Bitcoin faced in its earlier days, particularly the “Greater Fool Theory“. This theory suggests that people only buy an asset because they believe someone else will pay more for it later, rather than for its inherent value.
Rosen asked Pompliano if, given Bitcoin’s increasing adoption by both Wall Street and retail investors, the asset had moved beyond this critique. Pompliano responded bluntly, “Every asset is part of the greater fool theory.” He explained that even stocks operate on the same principle: “Unless you are going to start buying stuff with the stock… you have to sell it to somebody.” So, the person selling a stock does so because they have “less confidence in the future value of that stock than the person who’s buying it.”
He said this applies to all financial assets, not just Bitcoin. “The traditional finance world… benefits from a system that they then somehow try to twist as a negative critique of Bitcoin.”
Pompliano argued that Bitcoin, just like stocks, has value because people believe in its future. “The fact that Bitcoin has a greater fool theory means that it has just as much value as the stock market.”
Conclusion: Bitcoin Future
Pompliano provides details on why Bitcoin continues to attract investors, even in the face of risks.
The challenges outlined—bugs in the code, quantum computing, and community stagnation—are real but not existential. Bitcoin may face wounds along the way, but according to Pompliano, it’s unlikely to be killed.
Pompliano status; Image source
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from cryptonewsbytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from the company.
