Will Bitcoin Be Worth Nothing in the Long Term?
In a recent blog post by the Thomas Belsham at the Bank of England, he dissects the value and function of Bitcoin and asks Will Bitcoin Be Worth Nothing in the Long Term? The key point that Thomas makes is that the current mining frenzy with approximately 158 million trillion hash attempts *per second* may become redundant in around 119 years when the fixed number of Bitcoins is reached (21 million). At that point the ecosystem of miners will need to move on to something else or shutdown for good. Without a community of miners it is possible that a single entity could come to influence the value of Bitcoins for their own purposes.
He also examines the relationship between Bitcoin and the real world, in that you can't easily spend a coin (or Satoshi) on your high street - partly due to the volatility of the value. Elon Musk boosted Bitcoin earlier in the year then reversed his decision based on the massive use of electricity to support mining, which is now 0.5% of the worlds total.
The evolution of Central Bank Digital Currencies is acknowledged in that they would become a new method of exchanging value based on existing currencies, rather than becoming new currencies in themselves.
More to read:
- The blog post the the Bank Underground site
- A regular blog by John Kiff (ex IMF) on CBDCs
- The CBDC tracker is here