Bitcoin boom or bust to zero? Here’s what could go wrong
People have always doubted Bitcoin. When Nobel Prize-winning economist Eugene Fama said it will eventually be worthless in 10 years, the world took notice.
Then Bitcoin smashed records.
In November, Bitcoin broke through the $100k milestone for the first time, fuelled by optimism that Donald Trump’s pro-crypto stance could spark a new boom.
The US president, back in the White House now for the second time, has backed stablecoins over a digital dollar and even proposed a strategic Bitcoin reserve. Bitcoin stood at $97,186 at 7:47 am GMT on Thursday (February 6, 2025).
Why Fama believes Bitcoin will go to “zero”
While crypto supporters extol its value all the way to the Moon, not everyone is convinced.
Fama, the “father of modern finance,” believes Bitcoin’s biggest flaws will lead to its downfall:
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Too volatile – Businesses can’t rely on it for everyday transactions.
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No central backing – Unlike traditional money, Bitcoin’s value is based on demand alone. If that fades, price = $0.
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Not a real currency – If it’s not widely used for payments, does it even qualify as money?
Critics assail Fama’s arguments, citing Bitcoin as not just a currency — it’s evolving into “digital gold”.
Fixed supply (21 million coins): Bitcoin’s fixed supply of 21 million coins introduces a concept of scarcity, meaning that only a limited number of bitcoins will ever exist.
This scarcity is designed to protect against inflation and is enforced through a process called “halving,” which reduces the rate at which new bitcoins are produced approximately every four years, as per CME Group.
The limited supply of Bitcoin adds scarcity, which can benefit Bitcoin by increasing interest over time. This scarcity feature adds unique attributes like rarity and exclusivity, making Bitcoin a more attractive alternative for those who want to diversify their portfolios.
Immune to inflation, government control: Bitcoin is often seen as immune to inflation and government control due to its fixed supply of 21 million coins. Unlike traditional currencies, which central banks can print endlessly, Bitcoin’s scarcity prevents devaluation through excess supply.
Its decentralised nature means no government or financial institution can manipulate its issuance or transactions. This makes Bitcoin attractive as a store of value, similar to gold, particularly in times of economic uncertainty.
However, critics argue that regulatory actions and market sentiment still influence Bitcoin’s price, making its immunity relative rather than absolute.
Despite this, many investors see it as a “hedge” against inflation.
Here’s the elephant in the room
Gold isn’t used in daily transactions either, but it’s still valuable.
Bitcoin’s volatility, rather than being a weakness, could be part of what makes it valuable — a scarce asset that people trust over time.
But what could kill Bitcoin?
For Bitcoin to truly collapse, it would take major disasters like:
Yet, history shows Bitcoin is a survivor.
It has faced crashes, crackdowns, and countless skeptics — only to bounce back stronger.
Betting against Bitcoin? So far, that hasn’t worked out well.
Arguments against Bitcoin’s scarcity:
Some critics argue that the perceived “scarcity” of Bitcoin is a myth. For example, economist Peter Schiff has dismissed Bitcoin’s scarcity, stating that anyone can create a meme coin with a fixed supply at practically no cost.
This makes the potential supply of fixed-supply digital assets infinite.
So while Bitcoin’s fixed supply creates a sense of scarcity, which can drive demand and potentially increase its value, the true impact of this scarcity is subject to debate among economists and financial experts.
The verdict: Uncertain but unstoppable
Bitcoin’s future is still a wild debate — some say, including Fama and chiff – it’s doomed.
Others see it as a financial revolution.
Bitcoin, and cryptocurrencies in general, are not done evolving. Its fate will be shaped by adoption, institutional support, regulation, and market forces.