What I worry about is the effect that market price can have on the security of the network (via global hash rate).
The system will reach equilibrium when the revenue generated by mining is equal to the amount spent on mining. When the value of BTC goes down, mining generates proportionally less revenue (if miners are valuing BTC at market price, which they may not be), and the global hash rate will drop.
Imagine if the price plummeted, the hash rate dropped, and someone launched an attack on the network. At that point, consumer confidence in Bitcoin would possibly never recover, and its long-term viability would be severely damaged.
There is an incentive for miners to not have confidence in bitcoin damaged. It's a bit of an interesting Nash equilibrium kind of game.
In general, I think these things will balance out assuming rational actors.
Yes there could be a crisis of confidence but I can't see it spinning out to completely cancel out its utility e.g. usefulness in international remittances. At the very least it will replace or significantly threaten the Western Union business model.
Where I think there may be cause for concern might be the irrational actors. People or organizations prepared to invest and lose money with the aim of bringing bitcoin down.
It gets a bit tinfoil hat to suggest that e.g. the Federal Reserve or world governments would want to spend billions on killing bitcoin, but it's at least an interesting thought experiment. I'd love to hear a defence from a strong bitcoin proponent against the 'irrational' actors. Irrational meaning not obviously acting in the interests of their own holdings. I've raise it before but not heard convincing arguments of how bitcoin would be safe against 51% attacks like that.
The system will reach equilibrium when the revenue generated by mining is equal to the amount spent on mining. When the value of BTC goes down, mining generates proportionally less revenue (if miners are valuing BTC at market price, which they may not be), and the global hash rate will drop.
Imagine if the price plummeted, the hash rate dropped, and someone launched an attack on the network. At that point, consumer confidence in Bitcoin would possibly never recover, and its long-term viability would be severely damaged.