(CBS Marketwatch): Just one year has passed since bitcoin enthusiasts forecasted that the cryptocurrency would hit a price of $1 million.
But that was then. With the price of bitcoin BTCUSD, +2.06% having fallen almost 80% from its peak, and now trading well-below the support level of $6,000, everyone is wondering where it goes from here.
The answer is, a swift and painful drop to zero.
In a MarketWatch column I wrote last April, I explained what it would take for bitcoin to become worthless. Bitcoin is getting close to that point. As I argued, once Bitcoin’s price falls below its cost of mining, the incentive to mine will deteriorate, thrusting bitcoin into a death spiral. That is, without the mining activities supporting the ledger that maintains the records of who owns what — bitcoin is, after all, a set of encrypted numbers that cannot establish the ownership of anything — bitcoin will become worthless.