Is Bitcoin Dead? A Comprehensive Analysis

Bitcoin price has plummeted by 55.55% this year, sparking doubts about its survival and potential recovery.

In the past year, its value swung between $68,789 and $17,708, underlining its extreme volatility.

These sharp fluctuations strengthen the claims of critics who believe it is losing its viability.

Is Bitcoin Dead?
Is Bitcoin Dead?: Photo (Forbes)

According to 99 Bitcoins, 17 respected news sources and influencers proclaimed Bitcoin’s demise in 2022.

The latest declaration came from the left-leaning magazine Jacobin.

Bitcoin Hash Rate

Bitcoin’s hash rate signifies the total computing power in use by its network. It gauges network decentralization and security.

As per, Bitcoin’s hash rate is on a bullish trajectory, hitting a record peak on June 12, 2022.

This underscores that the product’s network support through computing power is nearing an all-time high, boosting its security level.

Despite Bitcoin’s recent sub-$20,000 price, some miners operated at a loss, per Mining costs exceeded Bitcoin’s value.

So, why did hash rate surge to a high when mining returns were minimal?

Bitcoin Supply

Bitcoin’s supply is capped at 21 million coins. Currently, over 19 million exist, leaving around 2 million yet to be mined.

Approximately 1 million bitcoins mined by Satoshi Nakamoto remain untouched in their original wallet, presumed locked indefinitely.

Over time, many have lost access to their Bitcoin wallets’ private keys.

If not retrieved, these Bitcoins could be lost forever, further reducing the available supply.

This scarcity makes Bitcoin an exceptionally hard asset to obtain due to the high production cost (mining) and the fixed cap of 21 million.

Institutional adoption of Bitcoin is growing, with more organizations seeking to include Bitcoin in their balance sheets.

This signals a tightening supply situation ahead.

Bitcoin Lightning Network

The Lightning Network, a Bitcoin network layer, enables off-chain transactions for faster and cheaper Bitcoin transfers.

It effectively addresses Bitcoin’s scalability challenge, allowing millions of transactions per second and low fees.

Bitcoin Logo
Cryptocurrency trading: Photo source (Forbes)

According to Arcane Research’s report, the Lightning Layer is driving Bitcoin’s integration as the internet’s native currency, with users and transactions growing rapidly, nearing 4,000 Bitcoin transactions.

Paco De La India’s global journey using Bitcoin showcases the Lightning Network’s prowess.

On day 282 of his 400-day, 40-country journey, he utilizes Bitrefill to spend Bitcoin via the Lightning Network.

Bitrefill facilitates purchases and payments by converting Bitcoin and settling vendors in their local currency.

Digital assets regulation

World governments are becoming more open to digital assets, creating rules to benefit from the tech.

Some adopt fully like El Salvador, others regulate exchanges and tax gains.

Notable rules include Australia’s Bitcoin ETFs, Binance’s Dubai license, Canada’s Purpose Bitcoin ETF, EU’s asset laws.

Firms struggle with bans, but as more places set rules, confidence in Bitcoin grows. While other factors affect price, Bitcoin’s basics improve, shown by above factors.

Exchanges might contribute to drops via practices like rehypothecation. Limits on withdrawals suggest exchanges owe more than held assets.

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