The Cryptocurrency market is unstable, and there is always a huge risk of losing money when you choose to invest in cryptocurrencies. One month, the currency may be reaching an all-time high, and in the very next moment, the value might come crashing down.
Being a crypto investor is beneficial; however, you always have some kind of risk dangling over your head. Unfortunately, this is just the way things happen in the cryptocurrency market.
But have you ever wondered what will happen when a cryptocurrency’s value goes to zero?
Before we even go ahead and answer this question let us first figure out, can the value of crypto go to zero at all or not?
Can Crypto go to Zero?
From scammers to hackers to manual error, numerous things may go wrong in the cryptocurrency market, leading to a currency’s downfall.
So let us assume that you have invested in a certain cryptocurrency. However, in a couple of months, you learn that the currency’s value has fallen and is nearing zero. So, what will you do then, and is it possible for cryptocurrency’s value to become zero?
Mostly when a user checks the price of a certain token, the exchange usually shows the last traded price of the coin. To display the price, that token has to be bought or sold recently for a value greater than zero (even if it is a tiny amount). On a Crypto exchange or trading platform, the price quote indicates what customers are willing to offer to buy or sell it.
A cryptocurrency can go to zero only if it is delisted by every crypto exchange wherever it is being traded. Even still, people can trade cryptocurrency between themselves. So technically speaking, the value of a cryptocurrency can never reach zero, but the trading volume obviously can. For the price of a cryptocurrency to fall to zero, it would mean that customers would be exchanging the currency among themselves without getting any value; i.e trading for free.
The security around blockchain
Another major reason why a currency goes to zero is if the blockchain is hacked.
A blockchain works as a digital ledger. It stores every single crypto transaction made from a trader’s account; a cluster of computers mainly manages a blockchain network. Cryptocurrencies developed on blockchain networks are decentralized, as no central governing body exists.
Simply put, a blockchain maintains all the time-stamped digital records of every transaction. Every data is encrypted, and there is no centralized version of the information. This makes a blockchain unhackable and is way more secure than the traditional methods of digital data storage. However, in recent years, even this highly secured technology is not immune to hacks.
Do you remember the 2019 case with Ethereum Classic (ETC)? In January 2019, a popular Crypto exchange noticed something was wrong with ETC, and they eventually found out that the blockchain was under attack. Somehow a hacker had gained control over 50% of all the main ETC networks and then used it to rewrite all the transaction history. This made it possible for anyone to spend crypto more than once.
As a central organization does not monitor the data, the data can be accessed by anyone. Along with the data, anything built on the blockchain is open and transparent. In this case, we are talking about cryptocurrency.
Before the attack on ETC, attackers already had 51% control over small cryptocurrencies like Bitcoin Gold, Verge, and Monacoin and had stolen approximately 20 million dollars. In the next couple of months, hackers had stolen 100000 from Vertcoin. The attack on ETC cost the market approximately 1 million dollars.
Most cryptocurrencies are prone to 51% attacks, as most use proof of work to authenticate their transactions. These attackers can easily gain control over the mining power of a certain network and can defraud other businesses by sending them payments and developing an alternate version of the blockchain where these transactions were never present.
What happens if the price of Crypto falls to zero?
Cryptocurrency is a digital asset with no value as it is not monitored or backed by any government or centralized authority. However, the value can become zero if every user stops investing in it.
If investing in cryptocurrency becomes illegal, that would be a huge drop, costing users billions of dollars. And assuming that cryptocurrencies, one day, lose their value and usage, people must find new ways to make money. Many firms will have to close down, and there will be mass unemployment and chaos worldwide. It will also have a big impact on the global financial market.
Even though it is theoretically possible, crypto currency never goes to zero. This is because it would have a huge global impact on the financial market, especially if big cryptocurrencies like Bitcoin become zero. And with that knowledge, keep yourself thoroughly informed with several new notifications in the crypto world, with Koinx.