Nassim Taleb, the well-known author of highly regarded books such as Black Swan and Skin in the Game, who once thought bitcoin was a promising new currency because it was not controlled by a government, has slammed the digital asset, claiming that “it can be neither a long or short term store of value”.
In a blog post labeled “Bitcoin, Currencies, and Bubbles,” Taleb stated that “In its current version, in spite of the hype, bitcoin failed to satisfy the notion of “currency without government” (it proved to not even be a currency at all), can neither be a short- nor long-term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes.”
This isn’t the first time Taleb has slammed bitcoin; in April, he said bitcoin cannot be used as a long-term or short-term store of value and also bitcoin was a scam and was too volatile to be an useful currency.
“Cryptocurrencies require a sustained amount of interest in them,”
To briefly explain his point, he said gold and other precious metals require no upkeep and neither do they degrade over time, nor do they require any maintenance to refresh their physical characteristics.
“Earnings-free assets are problematic. The implication is that, owing to the absence of any dividend yield benefitting the holder of bitcoin, if we expect that, at any point in the future, the value will be zero when miners are extinct, the technology becomes obsolete, future generations get into other such “assets” and bitcoin loses its appeal to them, then the value must be zero now,” Taleb quoted in his article.
In response to bitcoin’s failure as a currency, Taleb stated that, twelve years into its existence, despite the hype, there are now no charges placed on bitcoin.
The cryptocurrency’s price increase over the last 14 months has been primarily driven by new institutional investors such as Tesla and MicroStrategy.
Taleb’s opinion is likely to rekindle a debate in the international investing community over the actual significance of Bitcoin and other cryptocurrencies. In India, crypto fans usually regard Bitcoin as a commodity rather than a currency.