If the experts and speculators were to be believed, Bitcoin collapse is not only possible but may be quite possible in the near future. Assuming that everyone just closed their eyes to the fuss around Bitcoin and the BlockChain technology and everybody hops onto the trending bandwagon. However, a quick glimpse into this version of future may clear things up a little.
Likelihood of Bitcoin Collapse
If the Bitcoin ever underwent a decline, the collapse may not even be visible in the initial stages to notice the change. All your transactions related to Bitcoin will accumulate in money pool, business as usual, before they show in block chain. The Bitcoin core capacity is ignored until this stage and all the transactions are visible in memory of node only. However, the change will issue will start to show when the core capacity hits 80% mark and time taken to confirm the transactions would increase to 20 minutes. But the problem will start when capacity reaches 100% and all the transactions will fall in pending status.
Bitcoin Core Capacity not equipped to Handle log jam
When the system creates backlog queue, the memory node will offset one of the three things – 1) node slips into pressure mode and slows the operation significantly, 2) node crashes when it tries to look for more memory and is unable to find or 3) core is started manually and notice that some form of collapse has happened.
All this while, the Bitcoin wallets are continually sending transactions to the node memory without knowing about the system’s inability to process the same due to capacity saturation.
Worst case scenario
The one possible way to handle this would be to increase the transaction fee. However, does that solve the problem? Not really! You keep paying higher and wait for the transaction to be confirmed, meanwhile the backlog keeps increasing and the more memory nodes will collapse under pressure.
Imagine when the information about all this chaos reaches the media. Bitcoin increasing fees inexplicably, problem of double spending across the world, hours it takes for confirmation, internal systems failing in blockchain system, etc-etc. As if Bitcoin hasn’t faced enough bad publicity already!
What happens as a result, the Bitcoin will fall into disrepute, the creators of it will be considered inefficient and people will begin to lose faith in the Bitcoin ecosystem and thus a well managed collapse of the entire Bitcoin bubble.