I'm not sure on how mining economics will work out after the bitcoin limit is hit and miners will no longer get new bitcoins - has someone worked out the math on how much transaction fees will increase to cover mining expenses after that?<p>The implication is that bitcoin won't function without (lots of) miners, and if miners would be getting more money in an alternative currency where they can use their hardware, they'd leave bitcoin.
Bitcoin's value comes entirely from its utility as a currency, but its deflationary nature would mean people won't be willing to use Bitcoin to buy actual stuff. It'll be interesting to see how this plays out.<p>I suspect Bitcoin will occupy the same space that gold does now, as just another place to store your money during economic downtimes.
People loosing confidence in it. With no one & nothing backing it there is nothing to prevent the value from going to 0. The only thing keeping the value of bitcoin from being 0 is the willingness of people to trade them for other things of value.
Some potential scenarios are:<p>* A security or encryption issue discovered in the protocol that leads to compromise of most wallets. The bug could be fixed, but existing balances and trust may be wiped out.<p>* Government regulation that makes it illegal to exchange bitcoin for cash or goods at legal businesses. It may remain as a niche underground thing, but even drug dealers need a way to eventually buy <i>something else</i> with their bitcoin.<p>* Insecure exchanges that make it impossible to exchange bitcoin for cash. Exchanges seem to get hacked and disappear even without government "help". The result is the same: people need a way to use bitcoin for it to have any value.<p>* Another digital currency becomes more popular.<p>* Someone with enough computing power takes over the network. This could be a government agency aiming to shut it down, or perhaps a back-door in ASIC miners.
It seems that Bitcoins keep getting stolen from the bitcoin "banks." I've not followed closely in those cases but I imagine that people don't get those bitcoins back like at a real bank with real money. I suspect THAT will kill bitcoin.
The big one is obviously a critical flaw being found which makes it possible to counterfeit bitcoins or steal at will from (genuinely) protected wallets.
The government. It's obvious that people want to use it. Its popularity will only increase from here. The government is the biggest threat to bitcoin by far.