- BTC’s scalability issues make it unfit as a global payment system, with long transaction delays and reliance on centralized custodians.
- Extreme volatility prevents BTC from being a reliable unit of account, keeping it a speculative asset rather than a stable financial tool.
- Bitcoin’s long-term security model may fail as block rewards shrink, risking inflation changes, 51% attacks, and loss of confidence.
Bitcoin’s viability as a financial system is under intense scrutiny. Crypto analyst Justin Bons argues that BTC fundamentally fails as money. He highlights three critical attributes of money—medium of exchange, unit of account, and store of value.
According to Bons, Bitcoin falls short in all three aspects. Consequently, its role as a global financial system appears unsustainable. He asserts that BTC lacks scalability, remains too volatile, and cannot maintain long-term security. Moreover, he predicts that these flaws will lead to a financial crisis within the next decade.
Bitcoin Fails as a Medium of Exchange
BTC’s ability to facilitate transactions remains a major weakness. If everyone wanted to make one transaction, the queue would last 40 years. Besides, even current BTC holders moving their assets would face a two-month delay. Hence, Bitcoin cannot function as a reliable payment system at scale.
Additionally, mass self-custody is nearly impossible. With BTC’s network limitations, only centralized custodians can facilitate transactions efficiently. This reliance contradicts Bitcoin’s original vision of decentralized finance. Consequently, BTC no longer serves its foundational purpose, making its use as a currency impractical.
Volatility of Bitcoin undermines its status as a unit of account. As opposed to stable assets, the value of BTC changes unpredictably. Moreover, it lacks the underlying utility of serving as a price floor. Consequently, firms can neither apply BTC to price services nor goods. Such volatility ensures that Bitcoin is a speculative product and not a stable financial instrument.
Bitcoin’s Store of Value Narrative Faces an Impending Crisis
BTC’s long-term security model is unsustainable. As block rewards decrease, security funding relies on transaction fees. However, Bons argues that these fees will be insufficient within 8-12 years. Consequently, BTC developers may have to raise its inflation rate beyond the 21-million cap.
This change would destroy Bitcoin’s scarcity promise. Moreover, declining security could expose BTC to 51% attacks and censorship. If panic spreads, a bank-run scenario may unfold, further eroding confidence. In such a crisis, BTC’s store-of-value narrative collapses entirely.
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