Peter Diamandis, founder of X Prize and Singularity University, a high-tech business incubator focused on how AI will shape the future, posed this question to his more than 262K followers on X this past Sunday. Many of the responses he received were remarkable.
One respondent pointed out that Bitcoin has never failed to deliver on its promises. Over the past 15 years, Bitcoin has never failed to deliver a new block of transactions every 10 minutes, on average. It has also never been attacked at its underlying blockchain layer.
“Bitcoin has never failed to do what it was built to do. Price is just a measure of adoption. Really,” one commenter wrote. “It can’t fail because the world needs real money, and there’s no better option,” another said.
The Origin of “Too Big to Fail”
The phrase “too big to fail” became popular during the 2008 financial crisis. The government had to intervene to bail out a number of US banks and financial companies with poor balance sheets.
Congress initially authorized $700 billion for the Troubled Asset Relief Program (TARP). But by the time Washington finished bailing out Wall Street, the cost had passed the $1 trillion threshold.
At the time, bailing out private banks with public money was controversial. Opponents argued that true capitalism would let them fail and that it was unfair that taxpayers should pay for corporate mismanagement.
However, proponents 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 accept the disruptions that letting them go bankrupt would cause.
So “too big to fail” used to mean a government bailout if needed. In this case, Diamandis might want to ask: Will Bitcoin ever need a bailout?
Of course, there is no way for the government to bail out Bitcoin, because the cryptocurrency is not a company or an individual. It is a decentralized database of accounts and transactions run by an open-source, peer-to-peer Internet network.
However, this question is a great starting point to explore the differences between Bitcoin and corporate banks.
The free market uses the Internet to “bail out” Bitcoin whenever the price drops to such a low that investors can’t resist buying some to profit if the price rises again.
A huge community of long-term holders with high confidence in the value of Bitcoin buy BTC and hold on. This is a practice that has proven to be effective. The actual capitalization of long-term investors in Bitcoin recently surpassed $10 billion for the first time.
Cryptocurrency critics love to brag when Bitcoin's price goes through a sharp correction, but it never seems to be in danger of going completely bust.
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