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February 13, 2024

Nassim Nicholas Taleb's Critique of Bitcoin: Volatility, Transparency, and Failed Hedge

Liam O'Sullivan
Written byLiam O'SullivanWriter
Researched byNikos PapadopoulosResearcher

Nassim Nicholas Taleb, a scholar and risk managing expert, who is known for his bestselling books such as "Black Swan" and "Antifragile", was once a pro-Bitcoin advocate. However, three years ago, he suddenly changed his stance and became a critic of BTC.

Nassim Nicholas Taleb's Critique of Bitcoin: Volatility, Transparency, and Failed Hedge

Taleb's Arguments Against Bitcoin

Taleb's criticism of Bitcoin revolves around several key points. Firstly, he argues that a currency should not be more volatile than the goods and services it is used to buy and sell. According to Taleb, Bitcoin fails in this regard as its volatility surpasses that of the items it is meant to transact.

Secondly, Taleb highlights the lack of transparency in Bitcoin and its potential for facilitating tax evasion and money laundering. He believes that the appeal of a cryptocurrency lies in its ability to provide some level of opacity, which Bitcoin lacks. Taleb contrasts this with physical assets like gold, which can be made anonymous through remelting or reworking.

Furthermore, Taleb asserts that Bitcoin's volatility does not decrease over time, even as its price increases. This challenges the notion that Bitcoin can serve as a hedge against central bank irresponsibility and banking crises.

Bitcoin's Failures

Taleb also argues that Bitcoin has failed as a hedge against banks. He points to a banking crisis in early 2023, where several major banks were bailed out by the US government. Despite this crisis, Bitcoin's price surged, indicating that it did not provide the expected protection.

Additionally, Taleb does not comment on the approval of spot Bitcoin ETFs, which have gained significant popularity on Wall Street. This suggests that he may not view these ETFs as a positive development for Bitcoin.

In conclusion, Nassim Nicholas Taleb's criticism of Bitcoin stems from its volatility, lack of transparency, and failure to serve as a hedge against banks. While Bitcoin has gained traction in the financial world, Taleb's perspective offers a cautionary viewpoint that challenges the prevailing narrative around the cryptocurrency.

About the author
Liam O'Sullivan
Liam O'Sullivan
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Liam O'Sullivan, an Irish digital maestro, seamlessly fuses his impeccable command of English with an enthusiastic penchant for online gaming. Highly regarded for his localization expertise, Liam fine-tunes online casino guides, ensuring they resonate profoundly with the diverse English-speaking populace.

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