Nicholas Taleb Still Ain’t Crazy About Crypto

Bitcoin spent the early parts of January and the new year rising through the ranks and jumping beyond the $17K mark again. Everyone began to get a little excited about the currency’s prospects, but for hardcore critics like Nicholas Taleb – the author of the bestselling book The Black Swan – bitcoin is still a low-end trading tool that should be ignored and avoided at all costs.

Nicholas Taleb Still Hates BTC

While bitcoin may be doing somewhat better at press time, it is still down more than 60 percent from its all-time high of $68,000 per unit, which it achieved in November of 2021. According to Taleb, there are several problems with bitcoin, a big one being the following as he stated in an interview:

We are not sure of the interests, mentalities, and preferences of future generations. Technology comes and goes, gold stays, at least physically. Once neglected for a brief period, bitcoin would necessarily collapse… It cannot be expected that an entry on a register that requires active maintenance by interested and motivated people – this is how bitcoin works – will retain its physical properties, a condition for monetary value, for any period.

When questioned about what began the crypto craze in the first place, Taleb hinted that it’s likely the crypto industry comes from the very low interest rates Americans once enjoyed in the past. He said:

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.

He mentioned that years of financial irresponsibility amongst former or past members of the Federal Reserve ultimately gave rise to bitcoin. He is critical, for example, of Ben Bernanke, who led the Fed during the time of the Great Recession, and he says that Bernanke failed to see the many red flags that were forming. When he did, he was too slow to react.

Taleb explained:

Instead of correcting debt and mitigating hidden risks, he covered them with a monetary policy that was only supposed to be transitory. I wrongly thought bitcoin would be a bulwark against the distortions of this monetary policy.

A Growing Haven for Scammers?

Another big problem with crypto, in his mind, is that it has allegedly become a major haven for criminals and fraudulent activity. This is something that’s becoming harder to argue against given the collapse of FTX, which occurred at the end of 2022.

Long considered the golden boy of the crypto space, it came to light that the company’s head executive Sam Bankman-Fried had purportedly utilized customer funds to engage in luxury Bahamian real estate purchases for himself and several other employees of the exchange.

Tags: bitcoin, FTX, Nicholas Taleb