• Nassim Nicholas Taleb railed against bitcoin
• BTC labeled as “contagious disease”.
• Cryptocurrencies are not suitable stores of value
Risk analyst and former Wall Street options trader Nassim Nicholas Taleb has changed his attitude towards Bitcoin 180 degrees in a short space of time. While the holder of the chair for risk analysis at the Polytechnic Institute of New York University praised Bitcoin as a solution to recurring financial crises triggered by the banking system in 2017, he is now very critical of the cryptocurrency.
advertising
Cryptocurrencies have corrected sharply over the past few weeks. Speculative investors now trade CFDs on the world’s most popular cryptocurrencies with leverage and 24/7 availability with Plus500.
77% of retail investor accounts lose money when trading CFDs with this provider. You should carefully consider whether you can afford to take the high risk of losing your money
He only recently made this clear again when he harshly criticized the original cyber motto with a series of tweets, in which he found unflattering words. He described Bitcoin as a “contagious disease” and called all those who would bet on the digital currency “idiots”:
View BTC as a contagious disease. It will spread, spread & its price will rally until saturation, that is ~every sucker stupid enough to buy the story is invested. When all suckers are in, the prevailing belief will make it an “obvious” investment. That’s maximal fragility.
– Nassim Nicholas Taleb (@nntaleb) January 17, 2022
Taleb stresses “fragility” of cryptocurrencies
In the past, the “fragility” of Bitcoin has given Taleb a reason to speak out against investing in the original cyber currency. In July 2021, for example, the financial mathematician published a so-called Black Paper entitled “Bitcoin, Currencies and Fragility”. In the paper, Taleb explains why cryptocurrencies in general and Bitcoin in particular would not represent an actual currency, a store of value or an inflation hedge from a financial and economic perspective. Accordingly, the economist warned all those who would see Bitcoin as a way to keep their money safe.
Here Taleb also sees a crucial difference to gold, which is also preferably used as a store of value. As to why the value of bitcoin is zero, the black paper states: “Gold and other precious metals are largely maintenance-free, not decaying over a historical horizon nor requiring maintenance to refresh their physical properties over a period of time longer period of time. Cryptocurrencies require an uninterrupted interest in them”.
However, if this expires, the speculative bubble around the digital currency will burst, similar to how it was with alternative currencies in the past. According to Taleb, bitcoin is just another tulip bulb, just “without the aesthetics and disguised as a ‘currency’,” as the financial expert wrote in a tweet in October 2021.
Editorial office finanzen.net
Image sources: Parilov / Shutterstock.com, Marko Aliaksandr / Shutterstock.com