How Bitcoin can go to $0 if the internet shuts down.
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What would happen to financial markets - specifically crypto markets if the internet shut down? Would it go to $0? Let's talk about it.
HOW WOULD THE INTERNET SHUT DOWN?
A solar flare with a powerful CME (Coronal Mass Ejection)
WHAT IS A CORONAL MASS EJECTION?
In contrast to a solar flare, a coronal mass ejection is a superstorm of ultra charged plasma that creates geomagnetically induced currents that could affect the Earth's crust and temporarily shutting down all power.
WHAT WOULD HAPPEN TO FINANCIAL MARKETS?
If a CME hit us that would mean a disruption to our electrical grid which would potentially cause a worldwide blackout which would also affect satellites in outer space. This means navigation systems would stop working, we wouldn’t be able to call people or use social media, our computers wouldn't turn on, gas stations, and pretty much anything that uses credit cards - including banks - would stop working for a period of time. Airplanes wouldn’t be able to take off and that means no more traveling and arguably the worst consequence is health because hospitals need electricity to run. All of this to say, the financial markets would not be the top priority.
WOULD THIS BE THE END OF BITCOIN?
Bitcoin needs the internet because it relies on miners to run its ledger which is an online record of every single transaction that has ever taken place. There are currently about 11,000 nodes running on the network.
A node is someone who stores the Bitcoin ledger. Every miner is a node, but not every node is a miner. As long as 1 miner survives, Bitcoin will too. But if a global event like that happened, Bitcoin’s price would nosedive, people would lose all faith and all hope in the system, a lot of people would run for the exit and Bitcoin would be left with a choice. Continue mining, or destroy itself.
WOULD BITCOIN GO TO $0?
If there is only 1 miner left - they would have 100% control of the network and that’s never happened before except one other time - when Satoshi Nakomoto created Bitcoin.
If only 1 miner is left interesting things begin to happen because Bitcoin was designed to adjust its difficulty depending on the hash rate. If the hash rate decreases, the difficulty to mine Bitcoin would also decrease which means the lonely miner would have a lot of incentive to keep Bitcoin alive.
BUT WHAT IF EVERY COMPUTER GOES DOWN AT THE SAME TIME?
The financial markets would shut down and trading across the world would stop.
In 1858 two steam-powered battleships met in the middle of the ocean to link a 2,500 mile long cable bringing the North American and European continents together so we could telegraph each other.
The first message we sent took over 17 hours to arrive. Today there are over 380 of these cables underneath the ocean spanning over 745,000 miles. That’s our internet and it connects our continents together which means if a CME causes a large enough disruption - it could damage those cables.
NOTE: Even though fiber optic cables are not affected by Geomagnetically Induced Currents - because the cables are so long, we installed repeaters at certain intervals to amplify their signal - and the repeaters are susceptible to disruption which could cause an entire cable connecting two continents to fail.
WHAT ARE THE CHANCES OF THIS HAPPENING?
According to the Proceedings of the National Academy of Sciences the odds of another Carrington magnitude event like the one that happened in 1859 happens once every 150 years or so. The last time a Carrington class event happened was in 2012 and fortunately it missed us by just 9 days.
HOW MUCH WOULD IT COST TO FIX?
It is estimated to cost the economy 2 trillion dollars.
HOW DO I PREPARE IN CASE IT HAPPENS?
Watch the video, enjoy!
*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
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