The author of The Black Swan, Nassim Nicholas Taleb, has revised his outlook on the leading cryptocurrency by capitalization. Taleb unveiled that he had had a change of heart, regarding Bitcoin’s potential, in his latest publication dubbed Bitcoin, Currencies, and Fragility. Reportedly, the former options trader believes Bitcoin has failed to deliver on its promise of becoming a decentralised currency. He also believes that Bitcoin (BTC/USD) has also failed to function as an inflation hedge and as a safe haven investment.
Explaining why he believes BTC is worthless, Taleb said gold and other precious metals do not require maintenance. Additionally, they do not lose value over a historical horizon. On top of this, Taleb noted that such assets do not need updates to refresh their physical properties over time. However, BTC and altcoins need a sustained amount of interest to thrive.
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In the six-page publication, Taleb not only bashed BTC but the blockchain as well. He said that there have only been a few assets in financial history that have been more fragile than BTC. Per Taleb, a lot of proponents argue that while BTC runs on great technology despite having several flaws. However, he believes the blockchain is not great technology because despite all the praise the blockchain has received, its applications are limited. According to him, technology is judged by the problems it solves, not by its attributes.
Bitcoin’s volatility remains a matter of concern
According to Taleb, BTC/USD plunged by a larger margin than the stock market in March 2020. The BTC/USD market, however, recovered after investors bought into it. To this end, the essayist believes that the coin cannot function as a tail hedge against systemic risks. He went on to note that BTC/USD depends heavily on liquidity. As such, it is unclear what would happen to the cryptocurrency if an outage occurs amidst a financial crisis.
Taleb also pointed out that BTC/USD has had a volatility of between 60% to 100% since its inception, a shortcoming that prevents it from displacing fiat currencies. While he relishes the idea of having a real currency that is not controlled by a government, Taleb’s idea of such a coin is entirely different from BTC/USD. According to him, such a currency should track a weighted basket of goods and services with marginal error to be an efficient store of value.
This news comes after Taleb touted the cryptocurrency in the foreword to The Bitcoin Standard. At the time, he said Bitcoin was an excellent idea that would meet the needs of complex systems due to its decentralized design.
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