Chamath Palihapitiya predicts a Bitcoin collapse and warns about permission risks

A radical prediction

Chamath Palihapitiya, a former Facebook executive and venture capital investor, said on the Moonshots podcast that Bitcoin was “limited” and that a possible artificial intelligence attack could send it to zero. He supports his view with three points: the network's limited fungibility, insufficient financial privacy for central banks, and the possibility that sophisticated AI systems could compromise the protocol's cryptographic mechanisms. This position contrasts sharply with his earlier predictions, when he considered a price of $1 million per Bitcoin and recommended holding 1% as insurance against financial instability.

Palihapitiya also says a transition to quantum-resistant cryptography would be “practically impossible” because of Bitcoin's contentious governance. He specifies that these threats remain hypothetical and that no catastrophic vulnerability has been demonstrated to date. His warning comes after he sold most of his Bitcoin holdings, exchanging them for shares in Digital Currency Group to avoid the risks associated with direct ownership.

Phishing in crypto

Phishing involves deceiving a user into giving up a secret or granting permission. In cryptocurrency, fraudsters often imitate a legitimate site, use urgent messages or impersonate official support. A request for a recovery phrase, for example, is equivalent to handing the wallet's private keys to the attacker, giving them full access to the associated funds.

Nexorena notes that simply connecting a wallet to an application does not mean authorising a contract to spend tokens. Separate permission must be granted, and it may remain active even after disconnecting from the site. Revoking that permission requires a paid transaction and does not recover assets already transferred. Therefore, even when using a hardware wallet, vigilance remains essential: signing a transaction does not guarantee that the action is safe if the request itself is fraudulent.

Securing permissions

Before confirming a transaction, check the contract address, network, asset, amount and scope of the requested permission. A high allowance can expose users to lasting losses, especially if the malicious contract retains the right to move tokens each time it is used. Revoking these rights is a separate operation that involves gas fees and does not protect against an already compromised recovery key.

In practice, users should ensure the site's domain matches the expected entity, stop any unexpected request and, where possible, consult an independent source before signing. Wallet warnings provide valuable help, but do not replace a clear understanding of the action being authorised. Combining good digital hygiene with careful permission reviews is the best defence against phishing attacks and the risk of losing funds.