One of the main problems with bitcoin I can see, is that the vast majority of coins are only held by a few people.
Plotting bitcoin’s wealth inequality
Aug 10, 2019 · 3 min read
There is about $15 trillion worth of negative-yielding bonds right now. Central banks across the world are fueling the economies by quantitative easing. With many countries flirting with zero interest rates, it is possible that central bankers may run out of ammunition to combat sluggish growth. When this happens, I won’t be surprised if a few central banks start embracing the Modern Monetary Theory (MMT). It means these banks stop caring about deficits and go on printing money. What is the biggest threat to the MMT approach? Inflation.
Inflation expectations are rising, and it is usually a self-fulfilling prophecy. When people expect it to increase, it does. The combination of MMT and rising inflation is like adding fuel to the fire. In such an environment, fund managers will seek shelter in a safe-haven. When the previous crisis hit the world, bitcoin was not around. Currently, there is much talk of bitcoin being a store of value and thus, a safe-haven.
The Lindy effect tells us that bitcoin has survived quite a few attacks in its decade of existence and therefore, is more resilient than ever at the moment. Though this is correct to some extent, we need to examine threats to bitcoin’s survival. Few of the greatest threats to bitcoin are -
The concentration of coins in the hands of few
Government attacks
Software bugs (such as the recent inflation vulnerability)
Based on the last ten years, one can say with adequate certainty that the most likely out of the three is the concentration of bitcoin.