• Nassim Nicholas Taleb doesn’t believe in bitcoin
• Central banks have created the “malignant tumor”.
• Bitcoin investors would understand nothing about finance
Bitcoin is often touted by its fans as a good alternative to gold, after all it was designed by its inventor Satoshi Nakamoto as a decentralized, state-independent and non-inflationary means of payment. However, there are also many experts who believe that Bitcoin does not live up to this claim. One of them is the renowned financial mathematician Nassim Nicholas Taleb.
advertising
Trade Bitcoin and other cryptos with leverage via CFD (long and short)
Bitcoin and other cryptocurrencies have recently corrected significantly. Trade cryptos like Bitcoin or Ethereum with leverage at Plus500 and participate in rising and falling prices.
Bitcoin not comparable to gold
Interestingly, Taleb initially had high hopes for Bitcoin, but since 2021 he has switched to the camp of his opponents. In January 2023, in an interview with the French magazine “L’Express”, he explained that in his view Bitcoin is not a currency at all: “He [der Bitcoin] cannot be a store of value in the short or long term, cannot serve as a reliable hedge against inflation and, worst of all, it is not remotely a shield against government tyranny or a means of protection against catastrophic situations,” he explained.
He thinks the comparison with gold is “pretty poor,” Taleb said. After all, one cannot assume that something that is actively maintained by interested and motivated people – and this is exactly how Bitcoin works – will retain its properties. In addition, one cannot know how the interests and mentalities of future generations will develop. “Technology comes and goes, but gold remains, at least physically. However, if bitcoin is ever neglected for a short period of time, it will inevitably collapse,” warned Taleb, author of such successful financial books as The Black Swan: The Power of Highly Unlikely events”.
Central banks created the tumor
The former stock exchange trader sees the origin of the cryptocurrency hype in the fifteen-year phase with low or even negative interest rates. This has led to the financial markets stopped working properly because low-risk investments were hardly generating any returns and investors therefore turned to speculative offers. Therefore, low interest rates would create asset bubbles without necessarily helping the economy. As a result, “malignant tumors like Bitcoin” emerged. Central banks created these tumors by flooding markets with liquidity, Taleb said.
Inexperienced investors
Besides that the crypto universe attracts scammers, Nassim Nicholas Taleb sees another problem there. It is full of “young people who have no experience, who bought bitcoins early and who got rich temporarily, but who don’t know anything except computer programming”. According to the renowned finance professor, these young bitcoin owners don’t understand anything about finance, they don’t realize that bitcoin does not offer reliable protection against inflation.
According to Taleb, there is an urgent need for the economy to return to normality – with interest rates of four to five percent. Then the situation would clear up.
Editorial office finanzen.net
Image sources: Oleg Kozlovskyy / Shutterstock.com, Lightboxx / Shutterstock.com