Black Swan author Nassim Nicholas Taleb: Bitcoin is neither money, nor a store of value, and even fails as a financial hedge

For the author of the Black Swan, Nassim Nicholas Taleb, Bitcoin is neither money nor a store of value. Moreover, he argues that the cryptocurrency has even failed in a financial hedge against tyrannical regimes.


The well known Lebanese-American essayist and risk analyst, Nassim Nicholas Taleb

This is why Nassim Nicholas Taleb said Bitcoin is not seen as money nor as a store of value

Once a Bitcoin supporter, author Nassim Taleb has recently become a scathing critic of cryptocurrencies. He released a new report, entitled “Bitcoin, Currencies, and Bubbles” with four main arguments against cryptocurrency.


Six-page draft paper titled “Bitcoin, Currencies, and Bubbles”

Taleb opens the report by questioning Bitcoin’s ability to become a universal store of value:

“It is also a reasoning error to claim that an innovation, bitcoin, can become the “new gold” when gold wasn’t decided to be so by fiat thanks to a white paper; it organically became the reserve ex-post, throughout centuries of competitive selection against other modes of storage, payment, and collectibles.”

Bitcoin can neither be a short nor long-term store of value. “Gold and other precious metals are largely maintenance-free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time,” he said. He added: “Cryptocurrencies require a sustained amount of interest in them.”

Furthermore, according to him, Bitcoin has failed to meet the concept of “currency without government”. One of the main functions of money is that it must be stable enough to serve as a unit of account, something that BTC at the moment cannot satisfy. Or rather, in fact, Bitcoin is not even a currency.

“The total failure of Bitcoin in becoming a currency has been masked by the inflation of the currency value, generating (paper) profits for large enough a number of people to enter the discourse well ahead of its utility,” he said.

Secondly, he assures that it is false that Bitcoin is a safe haven. He confirms that instead of maintaining its value over time, “Bitcoin appears to respond to liquidity, exactly like other bubble items.”

In third place, he denies that BTC serves as a protection against oppressive regimes:

“In the cyber world, connections are with people one has never met in real life; infiltration by government agents is extremely easy. The slogan “Escape government tyranny hence bitcoin” is similar to adverts extolling the health benefits of cigarette.”

And finally, he mentions the Fallacy of the Agency dependent problem: Instead of evaluating on Central Banks and governments to be able to use money, a society utterly on Bitcoin would be relatively dystopian and dependent in turn on large corporations and individuals who took advantage to acquire BTC in its early days:

“One would have the illusion that, by being distributed, Bitcoin would be democratic and reduce the agency problem perceived to be present among civil servants and banks.”

Taleb ends the report by saying that great technology doesn’t mean useful and argues that society is still close to nothing with the blockchain.

Such arguments are harsh to many BTC maximalists. Anyhow, this is just Taleb’s opinion. You can refer to and accumulate that point of view to enrich your investment knowledge.

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