Here's a look at all the things that would make me bearish about ICP. Yes, I'm extremely bullish about ICP, and I talk about it just about every day. But that doesn't mean I'm unaware of all the ways this couldn't work out. I know I catch a lot of criticism for calling out other coins, because they get endless amounts of hype without almost any look at the real problems. Now, I don't put much time into thinking about these bear cases, because all the evidence I see seems to indicate they're pretty unlikely. That said, it doesn't mean they're impossible. I understand that I could lose everything investing in ICP, which is why this is not financial advice. I asked ChatGPT to make sure it looked at everything as well and prepared a document, so there's some structure to work from. A lot of these I was already very aware of, and there are a couple in here I hadn't thought about much. We're going to go through them in as much detail as possible, so I don't just wander and talk nonsense.
The Biggest Realistic Risk: Technology Without Paid Usage
The biggest realistic risk is the one everybody wants to point out: that ICP remains technologically impressive but never converts that advantage into enough sustained paid usage to support the token economics. Here's the thing, though. The lower the price goes for ICP, the easier it is for the tiniest amount of adoption to support the token economics. The higher the price goes, the more significant the adoption you need. This is exactly why I'm so bullish about ICP: the lower the price of the token, the more even modest adoption will mean the token price has to go up.
At the current price, if you calculate all the inflation for ICP, you're only looking at around $30 million a year or so in new ICP that's created after Mission 70. That's a relatively tiny amount of inflation. It means that, absent all the manipulation — and there's a lot of that — there would only have to be $30 million in spot buying throughout the year, whether for burning or for using the network, coming in versus going out, to make the economics work. At the current ICP price, with the technology and the adoption as they are, that looks easy. If you want a comparison, Bitcoin creates $40 million more of Bitcoin every day. In other words, just to keep the Bitcoin price even, there has to be net buying of $40 million a day — and again, I'm not even getting into all the market manipulation, which is a whole other story. By comparison, if the price of ICP were $20, then that would be $300 million more ICP created every year, which requires a whole other level of adoption. So right now, at $2, I see this risk as very low. But the higher the price goes, the more the economics can be a mismatch against the actual usage of the token.
The "Ghost Town" Claim
Let's go over the risk scenarios: the damage if each one happens, and how realistic it is. One of the bigger risks everybody likes to raise is: "It's a ghost town, nobody's using it." My question is: what kind of evidence is there to support that? Right now, when I go to things like the ICP dashboard, I see the block rate up to 194 blocks a second. The cycle burn rate has been pretty consistent over the last year while the block finalization rate has been up, internet identities have continued to go up, and transactions have been pretty consistent over the last year. Zero2Hero has done some outstanding videos talking about the Swiss subnet building and adoption and how long that takes. So the number one scenario, realistically, is that it looks like we have a lot of paid usage coming — but I'll admit this is the main leap of faith right here, right now.
Caffeine, Cloud Engines, and DFINITY Itself
Next scenario: Caffeine and cloud engines fail commercially. This seems unlikely to me given how big the problem is that they solve. Cloud engines allow you to move onto secure infrastructure and spin it up almost immediately, and Caffeine is in one of the highest-growth sectors right now, AI vibe coding. I've used it personally, so I have firsthand knowledge. Both Caffeine and cloud engines failing commercially doesn't seem that likely, but it's certainly possible.
One of my biggest personal concerns would be if DFINITY loses momentum, talent, or funding. However, even if that happened, somebody would likely buy them out — and that still has a very good chance of taking the ICP price up, with another foundation stepping in to run everything, probably rehiring half the people from DFINITY. At this rate, part of the price suppression could even be some other entity hoping they could buy DFINITY out. That seems lower likelihood. ChatGPT overrated the damage on this one; I'd say it's not a huge deal.
The Most Serious Long-Term Threat: A Genuinely Better Platform
Now here's what I consider one of the actual biggest risk factors, though it's not likely to happen in the foreseeable future: a genuinely better platform emerging than ICP. I did a video saying I'm married to ICP — but I was willing to get a divorce from my ex-wife, too. I'm willing to move to a better platform if it emerges. But you need to look into the details, because a better platform is not a testnet. It's not a research paper. It's not a white paper. It's not a prototype. A genuinely better platform would have to emerge and then actually take people away from ICP. That's not likely in the foreseeable future — it's a long-term risk. And here's the thing: the longer we don't see a genuinely better platform than ICP, the lower I see the risk of it happening, because the first-mover advantage keeps getting bigger and bigger. If Google launched something today that was as good as ICP and could actually host full-stack applications, that would be a huge problem. But the longer they don't launch something, the more ICP gets entrenched in that existing market, and the more difficult it becomes to overtake. Still, that is the most serious threat out of everything: if Google, Microsoft, or Amazon could launch a genuinely better platform that offers everything ICP does and more, and combine that with serious marketing, that would be a huge threat for ICP. That said, look at Bitcoin. There have been so many better versions of Bitcoin that have launched, and it's still number one in market cap today, despite all the criticisms I laid out in my recent Bitcoin video — search for Bitcoin on the Crypto Reviews channel.
Governance and Decentralization
Governance effectively becoming captured is not much of a risk at this point, because between DFINITY's voting power and all the people following DFINITY, governance seems to be pretty clearly controlled by DFINITY already. However, if you look at their behavior — like on the Mission 70 vote, they abstained from voting, let the community decide, and followed the community's decision. From what I've seen, DFINITY has been very considerate of the community so far.
Next: decentralization deteriorating over the medium term. The system is set up to encourage the best behavior out of nodes you could possibly hope for. Unlike all the anonymous nodes on other coins, on ICP, if you're KYC'd and publicly known and you misbehave with your node, you can be held liable both civilly and criminally. On other networks, outside of the network itself punishing you, you can generally get away with malicious node behavior. So this sets up a very good incentive structure. The one downside is that it can make the barrier to entry higher for becoming a node in the first place. But there's a lot of money to be made hosting an ICP node as well, especially if the network gets adopted. Fewer people participating as nodes seems unlikely, because as the network grows, you'd imagine more nodes from other companies onboarding. And with Bitcoin, the decentralization in mining is nearly gone. So this one is not a huge risk that I see.
Hacks, Upgrades, and Chain Key Risk
Application hacks destroying ecosystem trust: this is where education in the ecosystem matters. Take Sonic — that was almost certainly an inside job, which I actually predicted right before it happened, and a lot of people afterwards agreed it was an inside job. This is something we can do something about with education. Now, if something actually hacked through the ICP infrastructure itself, that would be a lot scarier — and that seems a lot less likely. Applications themselves can be exploited depending on the owner and how they build the application. If the community of people participating in ICP can't tell the difference between an application owner building a sloppy application that could be exploited, versus the ICP infrastructure allowing people to build what they want while providing all kinds of preventative security, that's on the community to learn. And that's why I educate in my videos.
There is the possibility of a protocol or NNS upgrade causing a catastrophic failure. So far, we haven't seen that in five years of operations. There is also the possibility of chain key assets being compromised. Again, this is a pretty low possibility, but it could be catastrophic if it does happen and isn't handled very quickly. You can imagine all the ICP haters — there must be a lot of pressure at DFINITY, because if something like this happened, all the haters would be all over it, and that's about the only coverage ICP is likely to get: "Oh look, there's this failure." So that's lower risk, but catastrophic if it happens.
Governments and Quantum Computing
There is the risk that governments suppress rather than adopt sovereign computing. That could certainly be an issue in the US and China. But a lot of other governments around the world have a lot to gain by supporting ICP and going with a sovereign computing solution instead of continuing to be held hostage by Google, Amazon, US Big Tech, and Chinese Big Tech, which take control away from their infrastructure. And I would imagine in the US, it's up to us too — we could embrace sovereign computing, and Google, Amazon, and Microsoft would want their infrastructure to be more secure and would probably prefer to cooperate. Most of the time, big companies cooperate. Amazon, Google, Microsoft, Apple — most of the time those big companies all work together. They cooperate much more than they fight. So governments suppressing ICP seems not too likely, because it offers governments massive solutions. Still, it is possible. It is a risk.
Then there is the issue of quantum migration being mishandled. Dominic is very aware of the needs in terms of quantum computing. He says the near-term risk is very low, but they are aware of it, and if it's not handled correctly, there could be a serious issue. The nice thing with ICP compared to something like Bitcoin is that quantum computing was on the radar from the very beginning, and ICP is so easily upgradable and flexible that it's much different from trying to upgrade something like Bitcoin. So that covers the most major scenarios.
What the Data Actually Shows
Let's cover a few more details I want to hit. Right now, yes, the ICP issuance was a lot higher before Mission 70 — it's gone down a lot now. ICP has also just recently fixed the potential death spiral in node rewards and locked those. One of the initial big concerns I had when I started in ICP three years ago was the potential death spiral of more and more node rewards taking up inflation, and they just put a stop to that. That said, if over the next several years the cycle burn rate doesn't go up significantly, that would be concerning. And if you don't get some significant adoption from medium to large enterprises and entrepreneurs over the next several years, that would be really concerning. The thing is, though, you can see that these things take a long time. You need a long time to really be able to analyze correctly.
For example, over the last year, the millions of instructions executed per second dropped — some of that could have come from technical changes they made to make the network more efficient, and some from Bob going down and no longer essentially just blowing canisters on people speculating. The cycle burn rate has been pretty consistent — there are some bigger spikes in there — but it does seem to be trending upward consistently over time. The block finalization rate is very bullish; it's an indication you've got some new infrastructure spinning up, that there's increased capacity getting prepared. On internet identities, you have hundreds of thousands of new internet identities in the last year, and internet identities are not like Bitcoin addresses. You don't need to keep creating a bunch of different addresses — once you have an internet identity, it can create a whole bunch of addresses across all of ICP.
I look at all of this information because there are so many data points to watch, and I don't see any big problems in any of the data. If suddenly the amount of ICP dissolving just shot up, that would be concerning — but it's not right now. You've got 43% of the entire supply locked, and that has been very consistent. There were a lot of early VC and early token unlocks, but now nearly all of that — like 99% of it — is done, and the staking has been very stable. So what I see is that ICP is very stable. When you look at almost everything in the data, it's extremely stable.
Canister State and Early Indicators
Another thing I watch is the canister state — is it trending up? Well, a year ago, there were seven terabytes on chain, and today there are ten and a half terabytes. The entire Bitcoin blockchain is around a terabyte, so you've essentially put three Bitcoin blockchains' worth of data onto ICP. All these data points are things to watch, but the challenge is they can take a significant amount of time to move. Some of the early indicators would be serious, sustained spikes in things like the cycle burn rate, more and more subnets getting added, and the other data points starting to go up — those are things that could happen before the ICP price runs.
A year on, everything's going up on ICP besides the price — all the rest of the data is looking good and pointing in the right direction. Well, the transactions are a little lower now than they were a year ago; there was a little spike, but transactions are pretty close to where they were a year ago. And if you look back at all the metrics, almost everything has consistently grown over time, even though the transactions have been pretty stable — and they have done some things to optimize the network. What would be concerning to me is if there were declines.
And here's what's remarkable: lots of times in crypto, the only action some of these coins get is in a bull market, and all they do is drop in terms of their metrics the whole rest of the time. If you look at the metrics for Solana and a lot of these other coins, they have this spike alongside the price spike, and then everything just plunges constantly after that. Meanwhile, on ICP, all these other data points are not plunging. If anything, lots of them are staying stable or going up, despite the lowest price ever. In my judgment, that is very bullish.
DFINITY, Red Flags, and What I'm Actually Watching
Now, I did have a little concern with Yan leaving and then supporting Monad, which seems ridiculous. And DFINITY laying some people off was a little bit concerning, but they still have the largest research and development team. If DFINITY stopped innovating, that would be a big, big red flag. I do miss the research and development reports on their YouTube channel — I'm not sure where those have gone, but they were always talking about some new feature and demoing it. If you want the full version, I've put all of this in more detail in a separate post: ICP Bear Case Scenarios. You can also talk with me and ask me all the questions — schedule a private one-on-one call with me if you want to go deeper, because these are exactly the kinds of questions people are asking me in private calls, and that's why I made this post.
So to wrap it up: the worst-case scenario is not that the ICP price goes down. So much fixation is on the price. In fact, the more the price goes down, the easier real ICP adoption will be to bring the price back up. The price is often wrong. The real nightmare is that the technology stops advancing, customers don't pay to use it, governance gets too concentrated, or something better proves it can do the job. Those are the things I'm watching. Until I see the tech and its development go downhill, the team go downhill, the decentralization, the paid usage — all of that other stuff — the price is not evidence that there's a problem with the underlying foundation. These are what I keep an eye out for, and I go through them regularly on my ICP Crypto playlist.
And finally, I'm not loyal to ICP. I'm loyal to the best investment I can possibly find — the best infrastructure I can see, the most undervalued crypto, the biggest asymmetric opportunity. That's what I'm loyal to, along with where my money does the most for the world and where my content creation does the most for the world. Right now, that's ICP. If some other thing came along that actually was better than ICP in most ways, my opinion might change then — I might have to change the name of the channel away from Jerry Banfield ICP. But at this point, that looks less and less likely.