
Nassim Nicholas Taleb, Author of Black Swan, on Bitcoin - tejasmanohar
https://medium.com/opacity/bitcoin-1537e616a074
======
ordinaryradical
This utopian streak running through the crypto community is what convinces me
most that it’s going to be a heartbreaker.

> But Hayek used the notion of distributed knowledge. Well, it looks like we
> do not even need that thing called knowledge for things to work well. Nor do
> we need individual rationality. All we need is structure.

Irrational exuberance is a good thing!

And while these ideologues are busy demonizing the central banks a handful of
individuals manipulate bitcoin to levels a central bank could never even
attempt...

~~~
jgh
I honestly hope the utopian dream is smashed in the cryptocurrency community.
It's not the kind of "utopia" I want to be a part of. I like the technical
ideas behind cryptocurrency, but the terrible political views are off-putting.

~~~
tenaciousDaniel
I'm legitimately interested in cryptocurrency; I think it's a really cool
idea. So what I'm hoping for is that everything goes as horribly wrong as
possible, the price tanks, everyone's dreams are smashed, and all the bullshit
takes disappear.

At that point, the people who are interested in building something worthwhile
will be the only ones who remain, and we can work in peace.

~~~
adwhit
Is there an altcoin which is indefinitely and exponentionally inflationary?
Such a coin would not have the gold-rush/ponzi characteristics which bitcoin
has, and there wouldn't be a such huge incentive to mine new coins so
hopefully it would avoid the incredibly wasteful mining arms race.

But no one would get rich quick, so it would probably never take off in the
first place.

~~~
pjkundert
I think the concept you're looking for is "value stable".

Right now we're seeing the tip of the iceberg of potential cryptocurrencies.
Pretty much only token-based (ie. non-ledger) based currencies, where we need
global BFT consensus to track the current position of _every_ _single_ _coin_.
This is crazy. And, as it turns out, unnecessary (see: Holochain).

When the iceberg capsizes (as Git capsized the CASE industry), globally
consistent ledger-based value-stable currencies based on peer-to-peer co-
signed personal blockchains will supplant these unnecessary globally
consistent token based ... things. (Do I really care that you just slid a
nickel across the table to someone? Nope). Same with crazy Turing-complete
globally consistent VMs implementing Smart Contract languages. Not necessary.

You are correct -- value-stable currencies won't have anyone getting rich
quick. But, when every sub-saharan goat herder and neighbourhood kid with a
collection of trading cards can independently monetize his/her wealth into a
value-stable currency, we'll see the face ripped off of the global Fiat
monetary systems...

------
ABCLAW
I always feel bad when I read some of Taleb's work and come away empty. The
guy is clearly smart, but I feel like he skips too many steps in his mental
algebra and then misses his own mistakes altogether too often.

>This gives us, the crowd, an insurance policy against an Orwellian future.

Here's a great example. Does it really, Nassim?

~~~
coffeeacc
Is the preceding sentence not useful?

> But its mere existence is an insurance policy that will remind governments
> that the last object establishment could control, namely, the currency, is
> no longer their monopoly.

~~~
tantalor
Bitcoin is no more a currency than gold.

~~~
splouk
But he talked about that too...

------
eggy
I hope Bitcoin perseveres. I missed the boat on buying it when it was valued
at ~$200 USD. I am more into the decentralization of currency. I don't buy the
fear-mongering.

And today, I am even more resolved. Bank of America rejected my father trying
to deposit $250 USD cash into my account at a local branch while I was out of
town. They made him go home to get his checkbook to write a check (money order
was an option). They no longer take cash deposits since December 2017 from
non-account holders. Any talk of preventing money laundering and the
customer's best interest is just a lame excuse to rid staff at branches.

The banks know it too, since they are rushing to develop cryptocurrency
instruments to ensure they insert themselves into the payment chain to collect
percentages.

I remember being at the first HOPE NYC in August 1994 [1], and listening to a
talk about crypto and currencies. I can't remmber the guys name, but he had a
cowboy hat on, long hair and beard. Jeez, I wish I were more visionary then.
It woke a spark of potential, and then I went on with other things.

    
    
      [1]  https://en.wikipedia.org/wiki/Hackers_on_Planet_Earth

~~~
simias
I see many people complaining about the banking system (often for a good
reason) and mention cryptocurrencies as an alternative but I'm not sure I see
it.

Take your anecdote for instance, what would be the equivalent in the crypto
world? If you actually need to deposit fiat you'll have to use an exchange and
it's basically the same problem (good luck getting an exchange to accept $250
in cash).

Of course the whole thing is that if everything switches to some
cryptocurrency then everybody will be able to manage their own money directly
without needing an institution. Well, in theory at least, in practice it seems
as likely as expecting everybody to host their own email servers instead of
relying on gmail & friends. In practice people won't want to risk losing their
funds because they made a mistake, lost their hardware token or got a virus on
their computer. In practice people will still want loans and insurance. So I
think crypto or no crypto banks won't go away.

~~~
kbutler
There are already more than 2000 bitcoin ATMs
[https://coinatmradar.com/](https://coinatmradar.com/)

~~~
simias
Right but as far as I can tell there's nothing "crypto" about that, it's still
a privately owned ATM which offers financial services, like every ATM does.
You still need some private entity to provide the service, like the parent
wants his bank to provide a service to transfer cash to his account.

One big difference with crypto is that if you actually own your coins on an
address you control then you could have several third party services competing
instead of having your money "stuck" in a bank, but again I don't expect most
people to do that.

------
fra
Sadly, NNT gets a key detail wrong: Bitcoin isn't controlled by its users,
it's controlled by the miners.

~~~
yasp
And yet ultimately the users can move to a fork if they are unhappy. To wit:
Bitcoin Cash, which is the true bitcoin. (With Bitcoin Cash, Nassim's
coffeeshop transaction would indeed be possible, and without needing to wait
for 10+ minutes, contrary to popular belief.)

~~~
sergiosgc
Read this as a comment from a cryptocurrency lurker.

> Bitcoin Cash, which is the true bitcoin.

I see this statement repeated often, to the point of sounding like a strategy
of "if you repeat a lie enough, people will believe it". Isn't Bitcoin Cash
the minority result of a Bitcoin fork? Isn't the majority result by definition
the true Bitcoin?

~~~
16th_hop
Bitcoin cash is much closer to the original implementation by Satoshi
Nakamoto. It's simply a much smaller, and IMO, cleaner codebase that just
increased one parameter to achieve scaling.

Bitcoin core (what we call BTC) has many more lines of non-Satoshi code that
was added to facilitate off-chain scaling.

~~~
lrns_
Bitcoin Cash is a non-evolving non-innovating whitepaper cult claiming to be
btc because they believe btc should be exactly what was defined on a piece of
paper 9 years ago, totally disregarding new/improved tech.

~~~
SnowProblem
Not true. Bitcoin Cash supporters (including myself) just want on-chain
scaling pursued. There's a lot you can do there (graphene, pruning, sharding)
before resorting to off-chain scaling.

------
focom
A pretty correct analysis imo

> [Bitcoin] not good enough to buy your decaffeinated expresso macchiato at
> your local virtue-signaling coffee chain.

Plus he has some humor.

~~~
zengid
His books are also quite funny, particularly _Antifragile_.

~~~
huphelmeyer
Was Antifragile supposed to be funny? I thought Taleb just came off as stuck-
up.

~~~
zengid
It's not really 'laugh-out-loud' funny, but he has a humorous dry wit
interspersed throughout his essays.

------
jerkstate
Wow, I expected Mr. "I don't eat or drink anything that hasn't been around for
1000 years" to write a lot more negative on this. I completely agree with the
statement that even if bitcoin itself fails, cryptocurrencies will ultimately
succeed.

~~~
huphelmeyer
>"I don't eat or drink anything that hasn't been around for 1000 years"

He'd love our office fridge.

------
rdlecler1
Governments could ban crypto sites, crypto trading, and conversion to
currency. While this won’t completely kill it, it marginalizes it to such an
extent that it won’t be an attractive medium for most folks because most
people are lazy and don’t want the hassle.

~~~
ethbro
Hell, China could reprice electricity rates for mining. That alone would
almost do it.

~~~
conanbatt
China can also block exports to the US and bring it down, for that matter.

------
the_gastropod
> But it is the first organic currency

I'm guessing Taleb hasn't heard of Cowry shells [1]...

[1]
[https://en.wikipedia.org/wiki/Cowry#Human_use](https://en.wikipedia.org/wiki/Cowry#Human_use)

~~~
conanbatt
Im pretty sure he means there is a central design with a distributed behavior
on monetary policy.

That is actually a very interesting thing as an economist. I would have loved
to see Hayek and bitcoin in the same era..

~~~
dragonwriter
> Im pretty sure he means there is a central design with a distributed
> behavior on monetary policy.

Classic standardized commodity (e.g. metallic) currency has central design and
distributed behavior.

Given that the name for the distributed actors key to Bitcoin and other
cryptocurrency comes from that for a key set of those responsible for supply
of metallic currency, I’m kind of surprised that this could be overlooked.

~~~
conanbatt
The gold has to be minted, which goes through centralization.

Old time gold that was traded without minting or governments had Eureka
related issues.

~~~
dragonwriter
> The gold has to be minted, which goes through centralization

Both gold and silver frequently traded based on weight and crude physical test
of purity; while it was minted, this was at many times and places not
centralized in any real sense, and no special position being given to coins of
the local mint.

> Old time gold that was traded without minting or governments had Eureka
> related issues.

So did gold that was traded with minting and governments; the existence of
those issues does not mean the currencies did not exist.

------
htormey
"When you trade gold, you trade “loco” Hong Kong and end up receiving a claim
on a stock there, which you might need to move to New Jersey. Banks control
the custodian game and governments control banks (or, rather, bankers and
government officials are, to be polite, tight together). So Bitcoin has a huge
advantage over gold in transactions: clearance does not require a specific
custodian. No government can control what code you have in your head."

Regardless of what you think of BTC and its ilk, I think this is a pretty good
point about investing in gold.

~~~
rwmj
Really though? Unless you're a millionaire you can store gold yourself - in a
cheap bank deposit box or (if you're daring) even at home.

~~~
htormey
True, but if you are going to be that paranoid how easy is it for you to take
your gold across the border?

“According to the Transportation Security Administration (TSA), it is legal to
travel with any amount of cash or other monetary instruments in and out of the
United States. However, you must declare your cash to customs if the amount
exceeds $10,000 or its foreign equivalent.”

[http://traveltips.usatoday.com/travel-airline-
cash-9937.html](http://traveltips.usatoday.com/travel-airline-cash-9937.html)

Traveling with more than 10k of gold or cash is much more noticeable than 10k
plus of BTC, aka a piece of paper Wirh some words scribbled on it.

~~~
rwmj
If I had a need to do such things I'd probably hire a yacht or a light
aircraft. Borders are very porous when you're not travelling in a "mainstream"
mode of transport.

~~~
lrns_
Well, with bitcoin you can transport 1 trillion with 24 words in your head
lol. Good luck transporting that amount in gold.

------
Changu
I was hoping to read his thoughts on Bitcoins market cap of about 200 Billion
Dollar.

I have the theory, that the value of a cryptocurrency is equal to the sum of
transaction fees people will spend in the future, discounted for inflation.

Currently Bitcoin users pay about $5m per day on transaction fees. That is
$1.82B per year. At this rate, it would take 109 years to reach those $200B.

So by that logic, the market predicts a strong future for BTC. Either it will
be around for very long or its usage will grow.

Personally, I am skeptical. I think there will be too much competition. It
might be hard to replicate the BTC ecosystem but I don't think it is $200B
hard. Especially since there will be rapid changes to the whole crypto space
in the coming years (offchain transactions, alternative mining forms etc).

I expect we will end up with a currency that does not need mining at all. I
think we will end up with a currency that uses signed transactions that are
simply broadcasted. The receiver asks a bunch of trusted nodes "Is this a
double spend?" and if they reply "no" then the payment is accepted.

That is simple, instantaneous and free. And has almost no real life downsides
compared to Bitcoin.

~~~
matthewbauer
Interesting thoughts but I think "the sum of transaction fees people will
spend in the future" is better as a value for mining (after rewards go to 0).
"Holders" really aren't wanting anything to do with transactions.

My Bitcoin valuation:

Bitcoin is worth as much as it costs to move to another blockchain.

That's the "first-mover advantage" basically and I'm afraid it's much closer
to $200 million than $200 billion.

~~~
Changu
That seems to imply that the BTC market cap is the result of speculation. Of
people holding BTC because they think some greater fool will buy them later.

Personally I believe in efficient markets. I think the $200B is the best guess
the market came up for the intrinsic value of BTC. Independent of speculation.

My feeling is similar to yours though. That BTCs value is closer to $200m then
to $200B.

------
rargulati
Payment processing and banking in the United States is woefully behind the
rest of the world. Globally, the system is complex, obtuse, and fragmented
enough to result in a shanty town of technological solutions that are just
lipstick on a pig.

The hope here is that the introduction of blockchains and cryptocurrencies
into public discourse, and public excitement regarding a digital mechanism to
store and receive value might be the kick in the pants that the banks need to
roll-out better banking tools and systems. Furthermore, the first bank to run
a publicly auditable ledger which can be validated externally will set a
precedent for transparency.

I'm not sure what the future of cryptocurrencies will be (though I'm bullish),
but those would be huge wins for society.

------
prepend
I like his expression of opinion. It’s probably closest to my own that BitCoin
is neat and a good technology, but not the investment hype that currently
exists.

------
zeesh
Don’t you all think insider trading will be significantly easier with crypto?
Why is there little talk about this?

~~~
lucozade
Not sure why insider trading would be a thing. What information would affect
the price? Most aren't based on anything substantive.

Front running and pump & dump are pretty easy currently. That's not a
fundamental thing though. More of a fact that the cryptocurrency environments,
especially exchanges, tend to be exceptionally opaque. Somewhat ironically.

~~~
jstandard
Employees at major exchanges can trade on insider information about whether a
major exchange will support a new coin. Employees at token-funded companies
can insider trade on that same information.

There's already some evidence these schemes are happening at major exchanges.
Coinbase's launches of Litecoin and Bitcoin Cash come to mind.

[https://medium.com/@bitfinexed/coinbase-insider-trading-
lite...](https://medium.com/@bitfinexed/coinbase-insider-trading-litecoin-
edition-be64ead3facc)

------
georgeecollins
> one can macroBS longer than microBS, which is why we need to be careful on
> who to endow with centralized macro decisions.

Taleb goes overboard sometimes, but he has been so great for calling BS on
finance pseudo-science.

~~~
davidw
I guess when you call everything 'BS', you're bound to be right some of the
time.

~~~
georgeecollins
I don't want to defend everything Nassim Taleb says because I don't agree with
it. But its facile and wrong to say that he calls everything BS. And his
earlier books were very much a clear attack on a poor use of statistics in
finance. Antifragile is the work of a crank. Fooled by Randomness is just
good.

------
deevolution
Two things are constant in this world: tax and death.

