Nassim Taleb claims bitcoin is worthless and fails as a currency

The author of 'Black Swan', Nassim Nicholas Taleb, claimed recently that bitcoin has failed as a currency without government, as a hedge against inflation and as a safe haven investment.

Previously, Taleb had said the cryptocurrency had potential to help people circumvent capital controls in markets that rely on them to manage their exchange rates. In 2018, he also said it was the first “organic currency”.

Now his stance is that there are few assets in financial history that have been “more fragile than bitcoin.”

By contrast, “gold and other precious metals are largely maintenance free, do not degrade over an historical horizon, and do not require maintenance to refresh their physical properties over time,” he said.

Taleb also noted that in March 2020 bitcoin dropped further than the stock market and recovered with it “upon the massive injection of liquidity.” That’s “sufficient evidence that it cannot remotely be used as a tail hedge against systemic risk,” he said.

“It is indeed desirable to have at least one real currency without a government,” he wrote in his paper. “But the new currency just needs to be more appealing as a store of value by tracking a weighted basket of goods and services with minimum error.”

Taleb said that the success of bitcoin depends on the impression it gives to investors of being a speculative investment but to be a currency it needs to have some stability and usability.

The price of bitcoin was about $32,000 on Tuesday morning and has been hovering between $32,000 and $36,000 for about a month.