Bitcoin is a “trick” and looks like a Ponzi scheme: author of “Black Swan”
‘Black Swan’ author Nassim Nicholas Taleb slammed bitcoin as a ‘trick’ on Friday, telling CNBC he thinks it’s too volatile to be an effective currency and that it’s not a secure hedge against inflation.
“Basically, there’s no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and bitcoin drop to zero. There’s no connection between them,” said Taleb in a statement. “Scream Box” interview.
“It’s a beautifully put together cryptosystem. It’s well designed but there’s absolutely no reason for it to be tied to anything economic,” added Taleb, whose bestselling book 2007 examined highly unlikely events and their potential to lead to serious consequences. He said bitcoin has the characteristics of what he calls an overdraft Ponzi scheme.
A Ponzi scheme is a type of fraud in which scam artists steal money from investors and conceal the theft by funneling returns to customers from funds brought in by new investors.
Taleb had once held favorable opinions towards bitcoins, which was created in 2009 and is the largest cryptocurrency in the world by market value. However, he told CNBC he was “fooled by it initially” because he thought it might become a currency used in transactions.
“Something that moves 5% a day, 20% in a month – up or down – can’t be a currency. That’s something else,” said Taleb, a former derivatives trader who serves as scientific advisor to the hedge fund. Universa Investments.
“I bought into it…I didn’t want to have capital appreciation, as much as I wanted to have an alternative to central bank-issued fiat money: money without government,” Taleb said. “I realized it wasn’t a currency without a government. It was just pure speculation. It’s like a game… I mean, you can create another game and call it a currency .”
While some businesses accept bitcoin as payment for goods and services, including the electric vehicle maker You’re here, some in the crypto community believe that it is actually an asset and a store of value. Bitcoin, whose supply is capped at 21 million tokens, has been described as “digital gold”.
“It’s easily transportable and can be sent anywhere in the world if you have a smartphone, so it’s a much better version, as a store of value, than gold,” the famed gold investor said. Bill Miller value. told CNBC earlier this week.
“With bitcoin, volatility is the price you pay for performance,” added Miller, who has also previously backed bitcoin. becomes less risky as adoption and its price increases.
Indeed, the price of bitcoin has skyrocketed in recent months – from less than $11,000 per unit as recently as October to an all-time high of nearly $65,000 last week. Increased institutional adoption has been cited as one of the factors in his rise.
In line with its propensity for wild price swings, bitcoin has been falling these days, eventually breaking below $50,000 per token earlier Friday, a 23% drop in just over a week. However, the price has still increased by more than 70% since the beginning of the year, according to Coindesk.
Bitcoin received long-term price targets between $400,000 and $600,000 by token from certain people in the investment community, including Guggenheim Partners’ Scott Minerd; others have projected even higher than that.
Taleb suggested that bitcoin’s price isn’t what informs his now critical view, saying “bitcoin could hit $1 million” and that wouldn’t change his argument. “These gadgets, you have bitcoin today. You might have another one tomorrow. They come and go, and there’s no systematic connection between them and the claims they make,” a- he added.
Investors worried about inflation would be better off buying property than investing in bitcoin, Taleb said. “If you want to hedge against inflation, buy some land. Grow, I don’t know, olives on it. You’ll have olive oil. If the price crashes, you’ll have something.”
“But bitcoin, there is no connection and of course the best strategy for investors is to own things that produce returns in the future. In other words, you can fall back on real dollars going out of business,” he said.