Is Bitcoin too big to fail? (comment)

Peter Diamandis is the founder of the X Prize and Singularity University, which focuses on how AI will shape the future.

On Sunday, Diamandis posed the question to his 262K+ followers on X. Many of the answers were quite enlightening.

One respondent says Bitcoin has never failed to deliver on its promises. This is because it has never failed in 15 years to average a new transaction every ten minutes. It is also basically never hacked at the blockchain layer.

“Bitcoin has never failed to do what it was designed to do. Price is only a measure of adoption. Time,” one commenter wrote. “It can't fail because the world needs real money, and there is no second best,” said another.

The origin of ‘too big to fail'

In the year The phrase “too big to fail” came into common use during the 2008 financial crisis. Ultimately, the government stepped in to bail out many American banks and financial firms.

First, Congress appropriated $700 billion for the Troubled Asset Relief Program (TARP). But by the time Washington finished bailing out Wall Street, the price hikes were in the trillions.

At the time, bailing out private banks with public money was a hot topic. Opponents don't think it's fair to let true capitalism fail and make taxpayers foot the bill for corporate mismanagement.

However, supporters of the TARP bailout argued that the banks were “too big to fail.” In other words, their importance to the economy was too great to allow for the disruption that would come with going out of business.

Is Bitcoin too big to fail?

So if he wants to do something big that he doesn't succeed in, he will get help from the government. On this issue, Diamandis might ask: Does Bitcoin need collateral?

Of course, since cryptocurrency is neither a company nor an individual, there would be no way for the government to bail out Bitcoin. It is a decentralized database of accounts and transactions managed by an open source, peer-to-peer Internet network.

However, this question is a good starting point to explore the differences between Bitcoin and corporate banking.

Whenever the price drops too much, free markets use the Internet to prevent market participants from buying some of it for a profit incentive if Bitcoin goes back up again.

Long-term holders who have high faith in Bitcoin's value proposition buy BTC and hold on to it for dear life. It is a practice that has yielded results. BTC capitalization of long-term holders recently surpassed $10 billion for the first time.

Cryptocurrency critics love to brag about bitcoin's price going through major corrections every now and then, but it doesn't seem like it's in danger of going out of business entirely.