Bitcoin Is Now A Magnet For Idiots, A Fool Detector, Says Nassim Nicholas Taleb

Key Points:

• Taleb argues that Bitcoin has failed to achieve its purpose of being a decentralized currency and store of value.
• Bitcoin is vulnerable to inflation and cannot protect against black swan events.

In a recent interview with L’Express, famed author of Black Swan Nassim Nicholas Taleb discussed his views on Bitcoin and called it the detector of imbeciles.

According to Taleb, Bitcoin‘s ambition to function as a decentralized currency and a store of value has not been realized. He also claims that it is susceptible to inflation and unable to fend off unexpected developments.

Translation of the interview in L'Express

Bitcoin is the Detector of Imbeciles: https://t.co/rjKf93QpIP

— Nassim Nicholas Taleb (@nntaleb) January 4, 2023

The excitement around cryptocurrencies can be related to nearly low-interest rates, which are limiting the options available to investors seeking risk-free investments. As a result, this was encouraging speculation rather than real finance.

Lowering rates creates asset bubbles without necessarily helping the economy. Capital no longer costs anything, risk-free returns on investment become too low, even negative, pushing people into speculation. We lose our sense of what a long-term investment is. It is the end of real finance.

Additionally, he mentioned what may be characterized as a pervasive Ponzi-like attitude that was gaining ground in the computer industry, alluding to businesses with no cash flow and no underlying financial soundness.

Investors get pushed into a Ponzi-like strategies: to invest in the assets of companies whose price was rising. Thus, the majority of technology companies do not produce cash flow but are financed through “funding” which inflates their assets on paper.

Initially, Taleb had a favourable attitude toward cryptocurrencies since he disagreed with the monetary measures taken by former Federal Reserve Chair Ben Bernanke in the wake of the 2008 financial crisis. He now thinks that manipulators and con artists are becoming more attracted to digital currencies, where they may prey on unwary investors who have been duped by claims of quick and exorbitant rewards.

However, it is possible that digital money may replace traditional finance if the system ever manages to become regulated, serious, and honest.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Thana

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