Author of “Black Swan”: Bitcoin has a value of zero and cannot become a fiat currency or a “shack”

The author of the book “Black Swan” said in a recent study that the world’s largest digital currency did not meet the concept of how to function as an unregulated currency, a hedge against inflation and a safe-haven investment.”

“Historically, there are few assets that are more ‘fragile’ than Bitcoin,” he said.

In the past, Taleb has praised Bitcoin, especially for its potential to help users overcome capital controls. In his book “The Bitcoin Standard” published in 2018, he called Bitcoin “the first organic currency” and a “form of insurance” against government control of the currency.

In his research paper “Bitcoin, Currencies, and Fragility” published at the end of June, the prominent researcher and former quantitative trader ‘old’ said that Bitcoin has a value of “exactly zero”, in part because the coin This money requires a constant interest to maintain.

By contrast, according to Taleb, “gold and other metals largely do not require the same maintenance, do not depreciate over time, and do not require a refresh in physical properties.”

Bitcoin was created in 2008 and has always been known for its high volatility, although 2020 is the first time such a sharp drop has occurred during the global economic downturn.

Taleb noted that, in March 2020, Bitcoin fell deeper than the stock market plunge and then recovered at a time when “liquidity was massively pumped in”. It is “sufficient proof that Bitcoin cannot be viewed as a hedge against systemic risk.”

Bitcoin tends to react quickly to liquidity movements, he said, and it is unclear what would happen if the internet crashes or stops working, especially if this is the case during a time of financial crisis. main.

Bitcoin has “maintained an extremely high level of volatility”, between 60% and 100% since its inception, the expert said. However, this does not mean that cryptocurrencies cannot replace fiat currencies – issued by governments but not backed by physical commodities like gold.

“We all want at least a bunch of real currencies that aren’t subject to government control,” he wrote. “The new currency just needs to become more attractive as a store of value, by tracking,” he wrote. a basket of goods and services with minimal error.”

In addition, people also confuse Bitcoin’s success as a digital currency with success as speculation. “Being a currency, Bitcoin has to have some stability and usability,” Taleb said.

Currently, according to Coindesk, the Bitcoind price is trading around $32,000, having nearly touched $40,000 in mid-June. According to CryptoCompare, Bitcoind trading volume dropped more than 40% in June of this year, at one point. fell to a monthly low of $28,908.

However, Kaiko’s data shows that the trading volume in June is still in the top 5 months of the highest ever.