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Bitcoin Is Worth Zero, Says Analyst Nassim Taleb

Bitcoin Is Worth Zero; Black Swan Author Nassim Taleb Shares His Four-point Argument

How exactly to categorize Bitcoin is a matter of controversy. But, no doubt, it is one of the most successful attempts to create virtual money. As a result, many are optimistic about the coin’s future. But it’s important to listen to the Bitcoin bears as well. Even if you disagree, it’s a good way to temper your crypto enthusiasm.  

Recently “Black Swan” author Nassim Taleb has been a critic of bitcoin that has some very enthusiastic fans. According to him, bitcoin is of zero credibility, and the “Blockchain” protocol is not worthy at all.

To support his claim, Taleb set out four key arguments in a six-page draft paper titled “Bitcoin, Currencies, and Bubbles,” which he advertised to his 743,000 followers on Twitter.

The draft starts criticizing the over-hyped digital currency by saying that bitcoin has not been able to fulfill the idea of “currency without government.” In fact, he said, bitcoin has not even been verified to be a currency at all.

“The total failure of bitcoin in becoming a currency has been masked by the inflation of the currency value, generating (paper) profits for enough people to enter the discourse well ahead of its utility,” he said.

According to him, cryptocurrency tends to depreciate, unlike gold and other precious metals, as its shelf life is not perpetual. And that leads to criticism number two, i.e., bitcoin cannot be a good store of value for both longer and shorter periods. A nation’s currency must be a reasonable store of value for its economy to function smoothly.

“Gold and other precious metals are largely maintenance-free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time,” he said. “Cryptocurrencies require a sustained amount of interest in them.”

His final two points argued that bitcoin is not a trustworthy fence, especially when it comes to inflation, contrary to some analysts’ views and cannot be considered a safe plan for investments. Talib says that this type of currency is unable to protect us from government despotism and other misfortunes that come our way.

Quoting the March 2020 market panic in his draft, he added, “Not even remotely,” when bitcoin descended even lower than the stock market. Also, the recent payoffs at the back of the Colonial Pipeline cyberattack, which authorities could track, are all failures attached to the over-hyped Bitcoin.

“Government structures and computational power will remain stronger than those of distributed operators who, while distrusting one another, can fall prey to simple hoaxes,” he added.

Taleb has been a vocal critic of bitcoin, but the paper also slammed the protocol Bitcoin relies on, i.e., Blockchain technology

“There is no evidence that we are getting a great technology -unless ‘great technology’ doesn’t mean ‘useful.'”

He continued: “And we have done -at the time of writing -inspite of all the fanfare, still close to nothing with the blockchain.”

Taleb’s main concern is that Bitcoin is a speculative asset that doesn’t produce anything without inherent value. In an interview, Taleb told CNBC that bitcoin is an open Ponzi scheme and a failed currency.

The author has not always been a bitcoin critic, though. In 2017, Taleb wrote the introduction to “The Bitcoin Standard,” a book by economist Saifedean Ammous.

Back then, Taleb wrote that bitcoin is “an excellent idea” as it “fulfills the needs of the complex system … because it has no owner, no authority that can decide on its fate.”

But now, there’s no doubt on Taleb’s lack of enthusiasm for Bitcoin as it goes against the conventional investment strategies.

Bitcoin on Tuesday continued to drop, falling as much as 10% to $29,333. It has now slid more than 50% from its all-time high of nearly $65,000 in April.

According to analysts, if the world’s largest cryptocurrency prints daily shut below the support level, it could see further downside to $20,000 – back to its level in December 2020.  

There are hundreds of platforms worldwide that are waiting to give you access to thousands of cryptocurrencies, but ultimately it is your own decision. Even If you decide to invest, sign up with a reliable cryptocurrency exchange so you can do it safely and only invest money you can afford to lose. That way, if the bubble does burst, you won’t be left with anything.