8 ms·

Nassim Nicholas Taleb, Author of Black Swan, on Bitcoin

135 points by tejasmanohar 9y ago

the_gastropod 9y ago
> But it is the first organic currency I'm guessing Taleb hasn't heard of Cowry shells [1]... [1] https://en.wikipedia.org/wiki/Cowry#Human_use https://en.wikipedia.org/wiki/Cowry#Human_use
- conanbatt 9y ago
  Im pretty sure he means there is a central design with a distributed behavior on monetary policy. That is actually a very interesting thing as an economist. I would have loved to see Hayek and bitcoin in the same era..
  - ballenarosada 9y ago
    Cowry shells are also at least as organic as Bitcoin in this sense.
    - conanbatt 9y ago
      No central design! (God doesn't count)
  - dragonwriter 9y ago
    > Im pretty sure he means there is a central design with a distributed behavior on monetary policy. Classic standardized commodity (e.g. metallic) currency has central design and distributed behavior. Given that the name for the distributed actors key to Bitcoin and other cryptocurrency comes from that for a key set of those responsible for supply of metallic currency, I’m kind of surprised that this could be overlooked.
    - conanbatt 9y ago
      The gold has to be minted, which goes through centralization. Old time gold that was traded without minting or governments had Eureka related issues.
      - dragonwriter 9y ago
        > The gold has to be minted, which goes through centralization Both gold and silver frequently traded based on weight and crude physical test of purity; while it was minted, this was at many times and places not centralized in any real sense, and no special position being given to coins of the local mint. > Old time gold that was traded without minting or governments had Eureka related issues. So did gold that was traded with minting and governments; the existence of those issues does not mean the currencies did not exist.
- B1FF_PSUVM 9y ago
  Sheesh, anyone schooled by Scrooge McDuck comics - Taleb's demographic is a pretty sure bet - would hit that bit of money history before puberty.
MrHetzner 9y ago
"Which is why Bitcoin is an excellent idea. [...] not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate." Another one not grasping Bitcoin. Bitcoin is owned by the miners as evidenced by spec changes.
focom 9y ago
A pretty correct analysis imo > [Bitcoin] not good enough to buy your decaffeinated expresso macchiato at your local virtue-signaling coffee chain. Plus he has some humor.
- zengid 9y ago
  His books are also quite funny, particularly Antifragile.
  - deleted 9y ago
    [deleted]
  - huphelmeyer 9y ago
    Was Antifragile supposed to be funny? I thought Taleb just came off as stuck-up.
    - Pent 9y ago
      It's obvious that he writes for a specific audience
    - zengid 9y ago
      It's not really 'laugh-out-loud' funny, but he has a humorous dry wit interspersed throughout his essays.
- josu 9y ago
  Actually, you can indeed buy an expresso with bitcoin: https://twitter.com/alexbosworth/status/955870434230132736 https://twitter.com/alexbosworth/status/955870434230132736
prepend 9y ago
I like his expression of opinion. It’s probably closest to my own that BitCoin is neat and a good technology, but not the investment hype that currently exists.
ABCLAW 9y ago
I always feel bad when I read some of Taleb's work and come away empty. The guy is clearly smart, but I feel like he skips too many steps in his mental algebra and then misses his own mistakes altogether too often. >This gives us, the crowd, an insurance policy against an Orwellian future. Here's a great example. Does it really, Nassim?
- coffeeacc 9y ago
  Is the preceding sentence not useful? > But its mere existence is an insurance policy that will remind governments that the last object establishment could control, namely, the currency, is no longer their monopoly.
  - tantalor 9y ago
    Bitcoin is no more a currency than gold.
    - splouk 9y ago
      But he talked about that too...
  - at-fates-hands 9y ago
    The only problem is what we're currently seeing. That yes, the government will do everything within its power to insert itself into the crypto currency market in order to control it. Look at how the SEC is not only keeping tabs on crypto currencies, but are monitoring ICO's and bringing charges against people they feel are committing fraud. It's been pointed out before that although the SEC can't stop CC's, then can effectively sideline them as a niche offering to investors. I guess this is the beauty and beast of CC's right now. Yeah, it's totally unregulated, but it's also rife with fraud. It's like people want it both to be safe and regulated while still outside the control of any government.
  - ABCLAW 9y ago
    No? In that statement, Taleb uses his conclusion as a premise. That doesn't make his reasoning stronger.
ordinaryradical 9y ago
This utopian streak running through the crypto community is what convinces me most that it’s going to be a heartbreaker. > But Hayek used the notion of distributed knowledge. Well, it looks like we do not even need that thing called knowledge for things to work well. Nor do we need individual rationality. All we need is structure. Irrational exuberance is a good thing! And while these ideologues are busy demonizing the central banks a handful of individuals manipulate bitcoin to levels a central bank could never even attempt...
- matthewbauer 9y ago
  Yes definitely. If you replace "Bitcoin" in this essay with "blockchain based assets", Taleb would have a fairly good point. But "Bitcoin" has been manipulated so much that I think most people recognize that a crash is inevitable. There is nothing special about Bitcoin-anyone can start their own blockchain. Bitcoin is just an overpriced version of the infinite possible blockchains.
  - soneca 9y ago
    But he indeed is mostly talking about the idea/concept behind Bitcoin (that could be translated as "blockchain based assets") rather than necessarily Bitcoin itself. He doesn't discard Bitcoin as not having these qualities, but he also doesn't state that only Bitcoin is capable of it.
  - jebeng 9y ago
    I think you have it backwards here for the most part. What problems do you see infinite blockchains solving? No comment on whether or not a crash is inevitable, who knows where the price is going. That's not really too important to me. But the fact that Bitcoin is for now the most secure and technologically sound blockchain is what makes it interesting. And actually having those unique characteristics is what makes it special. I definitely don't see much special with 'blockchain the data structure' on its own.
    - matthewbauer 9y ago
eggy 9y ago
I hope Bitcoin perseveres. I missed the boat on buying it when it was valued at ~$200 USD. I am more into the decentralization of currency. I don't buy the fear-mongering. And today, I am even more resolved. Bank of America rejected my father trying to deposit $250 USD cash into my account at a local branch while I was out of town. They made him go home to get his checkbook to write a check (money order was an option). They no longer take cash deposits since December 2017 from non-account holders. Any talk of preventing money laundering and the customer's best interest is just a lame excuse to rid staff at branches. The banks know it too, since they are rushing to develop cryptocurrency instruments to ensure they insert themselves into the payment chain to collect percentages. I remember being at the first HOPE NYC in August 1994 [1], and listening to a talk about crypto and currencies. I can't remmber the guys name, but he had a cowboy hat on, long hair and beard. Jeez, I wish I were more visionary then. It woke a spark of potential, and then I went on with other things. [1] https://en.wikipedia.org/wiki/Hackers_on_Planet_Earth
- simias 9y ago
  I see many people complaining about the banking system (often for a good reason) and mention cryptocurrencies as an alternative but I'm not sure I see it. Take your anecdote for instance, what would be the equivalent in the crypto world? If you actually need to deposit fiat you'll have to use an exchange and it's basically the same problem (good luck getting an exchange to accept $250 in cash). Of course the whole thing is that if everything switches to some cryptocurrency then everybody will be able to manage their own money directly without needing an institution. Well, in theory at least, in practice it seems as likely as expecting everybody to host their own email servers instead of relying on gmail & friends. In practice people won't want to risk losing their funds because they made a mistake, lost their hardware token or got a virus on their computer. In practice people will still want loans and insurance. So I think crypto or no crypto banks won't go away.
  - kbutler 9y ago
    There are already more than 2000 bitcoin ATMs https://coinatmradar.com/ https://coinatmradar.com/
fra 9y ago
Sadly, NNT gets a key detail wrong: Bitcoin isn't controlled by its users, it's controlled by the miners.
- yasp 9y ago
  And yet ultimately the users can move to a fork if they are unhappy. To wit: Bitcoin Cash, which is the true bitcoin. (With Bitcoin Cash, Nassim's coffeeshop transaction would indeed be possible, and without needing to wait for 10+ minutes, contrary to popular belief.)
  - matthewbauer 9y ago
    No the miners are the ones that can fork if they are unhappy. Users are held hostage by the miners for any PoW cryptocurrency. If they want their holdings to be worth anything, they have to endlessly shill for their currency or else they'll go broke.
  - sergiosgc 9y ago
    Read this as a comment from a cryptocurrency lurker. > Bitcoin Cash, which is the true bitcoin. I see this statement repeated often, to the point of sounding like a strategy of "if you repeat a lie enough, people will believe it". Isn't Bitcoin Cash the minority result of a Bitcoin fork? Isn't the majority result by definition the true Bitcoin?
    - 16th_hop 9y ago
      Bitcoin cash is much closer to the original implementation by Satoshi Nakamoto. It's simply a much smaller, and IMO, cleaner codebase that just increased one parameter to achieve scaling. Bitcoin core (what we call BTC) has many more lines of non-Satoshi code that was added to facilitate off-chain scaling.
      - josu 9y ago
        The thing is that Satoshi never left a roadmap, and indefinitely increasing the block size to meet demand isn't plausible. So even if bcash were to become the "real bitcoin" it would have to come up with an off-chain solution. SegWit and Lightning are such elegant solutions that I can't really see a person as brilliant as Satoshi rejecting it.
htormey 9y ago
"When you trade gold, you trade “loco” Hong Kong and end up receiving a claim on a stock there, which you might need to move to New Jersey. Banks control the custodian game and governments control banks (or, rather, bankers and government officials are, to be polite, tight together). So Bitcoin has a huge advantage over gold in transactions: clearance does not require a specific custodian. No government can control what code you have in your head." Regardless of what you think of BTC and its ilk, I think this is a pretty good point about investing in gold.
- rwmj 9y ago
  Really though? Unless you're a millionaire you can store gold yourself - in a cheap bank deposit box or (if you're daring) even at home.
  - htormey 9y ago
    True, but if you are going to be that paranoid how easy is it for you to take your gold across the border? “According to the Transportation Security Administration (TSA), it is legal to travel with any amount of cash or other monetary instruments in and out of the United States. However, you must declare your cash to customs if the amount exceeds $10,000 or its foreign equivalent.” http://traveltips.usatoday.com/travel-airline-cash-9937.html http://traveltips.usatoday.com/travel-airline-cash-9937.html Traveling with more than 10k of gold or cash is much more noticeable than 10k plus of BTC, aka a piece of paper Wirh some words scribbled on it.
    - rwmj 9y ago
      If I had a need to do such things I'd probably hire a yacht or a light aircraft. Borders are very porous when you're not travelling in a "mainstream" mode of transport.
      - lrns_ 9y ago
        Well, with bitcoin you can transport 1 trillion with 24 words in your head lol. Good luck transporting that amount in gold.
Changu 9y ago
I was hoping to read his thoughts on Bitcoins market cap of about 200 Billion Dollar. I have the theory, that the value of a cryptocurrency is equal to the sum of transaction fees people will spend in the future, discounted for inflation. Currently Bitcoin users pay about $5m per day on transaction fees. That is $1.82B per year. At this rate, it would take 109 years to reach those $200B. So by that logic, the market predicts a strong future for BTC. Either it will be around for very long or its usage will grow. Personally, I am skeptical. I think there will be too much competition. It might be hard to replicate the BTC ecosystem but I don't think it is $200B hard. Especially since there will be rapid changes to the whole crypto space in the coming years (offchain transactions, alternative mining forms etc). I expect we will end up with a currency that does not need mining at all. I think we will end up with a currency that uses signed transactions that are simply broadcasted. The receiver asks a bunch of trusted nodes "Is this a double spend?" and if they reply "no" then the payment is accepted. That is simple, instantaneous and free. And has almost no real life downsides compared to Bitcoin.
- digi_owl 9y ago
  That sounds oddly similar to the notion that a national currency gets its value from having to pay taxes with it.
- matthewbauer 9y ago
  Interesting thoughts but I think "the sum of transaction fees people will spend in the future" is better as a value for mining (after rewards go to 0). "Holders" really aren't wanting anything to do with transactions. My Bitcoin valuation: Bitcoin is worth as much as it costs to move to another blockchain. That's the "first-mover advantage" basically and I'm afraid it's much closer to $200 million than $200 billion.
  - Changu 9y ago
    That seems to imply that the BTC market cap is the result of speculation. Of people holding BTC because they think some greater fool will buy them later. Personally I believe in efficient markets. I think the $200B is the best guess the market came up for the intrinsic value of BTC. Independent of speculation. My feeling is similar to yours though. That BTCs value is closer to $200m then to $200B.
rdlecler1 9y ago
Governments could ban crypto sites, crypto trading, and conversion to currency. While this won’t completely kill it, it marginalizes it to such an extent that it won’t be an attractive medium for most folks because most people are lazy and don’t want the hassle.
- ethbro 9y ago
  Hell, China could reprice electricity rates for mining. That alone would almost do it.
  - conanbatt 9y ago
    China can also block exports to the US and bring it down, for that matter.
- runeks 9y ago
  Your conclusion very much depends on the prevailing rate of inflation for national currencies. The higher the rate, the greater the incentive to move your savings to somewhere safe. In other words, the incentive may not be that great right now (since the inflation rate is relatively low), but this is something that can change.
georgeecollins 9y ago
> one can macroBS longer than microBS, which is why we need to be careful on who to endow with centralized macro decisions. Taleb goes overboard sometimes, but he has been so great for calling BS on finance pseudo-science.
- davidw 9y ago
  I guess when you call everything 'BS', you're bound to be right some of the time.
  - georgeecollins 9y ago
    I don't want to defend everything Nassim Taleb says because I don't agree with it. But its facile and wrong to say that he calls everything BS. And his earlier books were very much a clear attack on a poor use of statistics in finance. Antifragile is the work of a crank. Fooled by Randomness is just good.
jerkstate 9y ago
Wow, I expected Mr. "I don't eat or drink anything that hasn't been around for 1000 years" to write a lot more negative on this. I completely agree with the statement that even if bitcoin itself fails, cryptocurrencies will ultimately succeed.
- huphelmeyer 9y ago
  >"I don't eat or drink anything that hasn't been around for 1000 years" He'd love our office fridge.
zeesh 9y ago
Don’t you all think insider trading will be significantly easier with crypto? Why is there little talk about this?
- lucozade 9y ago
  Not sure why insider trading would be a thing. What information would affect the price? Most aren't based on anything substantive. Front running and pump & dump are pretty easy currently. That's not a fundamental thing though. More of a fact that the cryptocurrency environments, especially exchanges, tend to be exceptionally opaque. Somewhat ironically.
  - jstandard 9y ago
    Employees at major exchanges can trade on insider information about whether a major exchange will support a new coin. Employees at token-funded companies can insider trade on that same information. There's already some evidence these schemes are happening at major exchanges. Coinbase's launches of Litecoin and Bitcoin Cash come to mind. https://medium.com/@bitfinexed/coinbase-insider-trading-litecoin-edition-be64ead3facc https://medium.com/@bitfinexed/coinbase-insider-trading-lite...
deevolution 9y ago
Two things are constant in this world: tax and death.
rargulati 9y ago
Payment processing and banking in the United States is woefully behind the rest of the world. Globally, the system is complex, obtuse, and fragmented enough to result in a shanty town of technological solutions that are just lipstick on a pig. The hope here is that the introduction of blockchains and cryptocurrencies into public discourse, and public excitement regarding a digital mechanism to store and receive value might be the kick in the pants that the banks need to roll-out better banking tools and systems. Furthermore, the first bank to run a publicly auditable ledger which can be validated externally will set a precedent for transparency. I'm not sure what the future of cryptocurrencies will be (though I'm bullish), but those would be huge wins for society.

135 points by tejasmanohar 9y ago

> But it is the first organic currency I'm guessing Taleb hasn't heard of Cowry shells [1]... [1] https://en.wikipedia.org/wiki/Cowry#Human_use https://en.wikipedia.org/wiki/Cowry#Human_use

conanbatt 9y ago
Im pretty sure he means there is a central design with a distributed behavior on monetary policy. That is actually a very interesting thing as an economist. I would have loved to see Hayek and bitcoin in the same era..
- ballenarosada 9y ago
  Cowry shells are also at least as organic as Bitcoin in this sense.
  - conanbatt 9y ago
    No central design! (God doesn't count)
- dragonwriter 9y ago
  > Im pretty sure he means there is a central design with a distributed behavior on monetary policy. Classic standardized commodity (e.g. metallic) currency has central design and distributed behavior. Given that the name for the distributed actors key to Bitcoin and other cryptocurrency comes from that for a key set of those responsible for supply of metallic currency, I’m kind of surprised that this could be overlooked.
  - conanbatt 9y ago
    The gold has to be minted, which goes through centralization. Old time gold that was traded without minting or governments had Eureka related issues.
    - dragonwriter 9y ago
      > The gold has to be minted, which goes through centralization Both gold and silver frequently traded based on weight and crude physical test of purity; while it was minted, this was at many times and places not centralized in any real sense, and no special position being given to coins of the local mint. > Old time gold that was traded without minting or governments had Eureka related issues. So did gold that was traded with minting and governments; the existence of those issues does not mean the currencies did not exist.
B1FF_PSUVM 9y ago
Sheesh, anyone schooled by Scrooge McDuck comics - Taleb's demographic is a pretty sure bet - would hit that bit of money history before puberty.

MrHetzner 9y ago

"Which is why Bitcoin is an excellent idea. [...] not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate." Another one not grasping Bitcoin. Bitcoin is owned by the miners as evidenced by spec changes.

focom 9y ago

A pretty correct analysis imo > [Bitcoin] not good enough to buy your decaffeinated expresso macchiato at your local virtue-signaling coffee chain. Plus he has some humor.

zengid 9y ago
His books are also quite funny, particularly Antifragile.
- deleted 9y ago
  [deleted]
- huphelmeyer 9y ago
  Was Antifragile supposed to be funny? I thought Taleb just came off as stuck-up.
  - Pent 9y ago
    It's obvious that he writes for a specific audience
  - zengid 9y ago
    It's not really 'laugh-out-loud' funny, but he has a humorous dry wit interspersed throughout his essays.
josu 9y ago
Actually, you can indeed buy an expresso with bitcoin: https://twitter.com/alexbosworth/status/955870434230132736 https://twitter.com/alexbosworth/status/955870434230132736

prepend 9y ago

I like his expression of opinion. It’s probably closest to my own that BitCoin is neat and a good technology, but not the investment hype that currently exists.

ABCLAW 9y ago

I always feel bad when I read some of Taleb's work and come away empty. The guy is clearly smart, but I feel like he skips too many steps in his mental algebra and then misses his own mistakes altogether too often. >This gives us, the crowd, an insurance policy against an Orwellian future. Here's a great example. Does it really, Nassim?

coffeeacc 9y ago
Is the preceding sentence not useful? > But its mere existence is an insurance policy that will remind governments that the last object establishment could control, namely, the currency, is no longer their monopoly.
- tantalor 9y ago
  Bitcoin is no more a currency than gold.
  - splouk 9y ago
    But he talked about that too...
- at-fates-hands 9y ago
  The only problem is what we're currently seeing. That yes, the government will do everything within its power to insert itself into the crypto currency market in order to control it. Look at how the SEC is not only keeping tabs on crypto currencies, but are monitoring ICO's and bringing charges against people they feel are committing fraud. It's been pointed out before that although the SEC can't stop CC's, then can effectively sideline them as a niche offering to investors. I guess this is the beauty and beast of CC's right now. Yeah, it's totally unregulated, but it's also rife with fraud. It's like people want it both to be safe and regulated while still outside the control of any government.
- ABCLAW 9y ago
  No? In that statement, Taleb uses his conclusion as a premise. That doesn't make his reasoning stronger.

ordinaryradical 9y ago

This utopian streak running through the crypto community is what convinces me most that it’s going to be a heartbreaker. > But Hayek used the notion of distributed knowledge. Well, it looks like we do not even need that thing called knowledge for things to work well. Nor do we need individual rationality. All we need is structure. Irrational exuberance is a good thing! And while these ideologues are busy demonizing the central banks a handful of individuals manipulate bitcoin to levels a central bank could never even attempt...

matthewbauer 9y ago
Yes definitely. If you replace "Bitcoin" in this essay with "blockchain based assets", Taleb would have a fairly good point. But "Bitcoin" has been manipulated so much that I think most people recognize that a crash is inevitable. There is nothing special about Bitcoin-anyone can start their own blockchain. Bitcoin is just an overpriced version of the infinite possible blockchains.
- soneca 9y ago
  But he indeed is mostly talking about the idea/concept behind Bitcoin (that could be translated as "blockchain based assets") rather than necessarily Bitcoin itself. He doesn't discard Bitcoin as not having these qualities, but he also doesn't state that only Bitcoin is capable of it.
- jebeng 9y ago
  I think you have it backwards here for the most part. What problems do you see infinite blockchains solving? No comment on whether or not a crash is inevitable, who knows where the price is going. That's not really too important to me. But the fact that Bitcoin is for now the most secure and technologically sound blockchain is what makes it interesting. And actually having those unique characteristics is what makes it special. I definitely don't see much special with 'blockchain the data structure' on its own.
  - matthewbauer 9y ago

eggy 9y ago

I hope Bitcoin perseveres. I missed the boat on buying it when it was valued at ~$200 USD. I am more into the decentralization of currency. I don't buy the fear-mongering. And today, I am even more resolved. Bank of America rejected my father trying to deposit $250 USD cash into my account at a local branch while I was out of town. They made him go home to get his checkbook to write a check (money order was an option). They no longer take cash deposits since December 2017 from non-account holders. Any talk of preventing money laundering and the customer's best interest is just a lame excuse to rid staff at branches. The banks know it too, since they are rushing to develop cryptocurrency instruments to ensure they insert themselves into the payment chain to collect percentages. I remember being at the first HOPE NYC in August 1994 [1], and listening to a talk about crypto and currencies. I can't remmber the guys name, but he had a cowboy hat on, long hair and beard. Jeez, I wish I were more visionary then. It woke a spark of potential, and then I went on with other things. [1] https://en.wikipedia.org/wiki/Hackers_on_Planet_Earth

simias 9y ago
I see many people complaining about the banking system (often for a good reason) and mention cryptocurrencies as an alternative but I'm not sure I see it. Take your anecdote for instance, what would be the equivalent in the crypto world? If you actually need to deposit fiat you'll have to use an exchange and it's basically the same problem (good luck getting an exchange to accept $250 in cash). Of course the whole thing is that if everything switches to some cryptocurrency then everybody will be able to manage their own money directly without needing an institution. Well, in theory at least, in practice it seems as likely as expecting everybody to host their own email servers instead of relying on gmail & friends. In practice people won't want to risk losing their funds because they made a mistake, lost their hardware token or got a virus on their computer. In practice people will still want loans and insurance. So I think crypto or no crypto banks won't go away.
- kbutler 9y ago
  There are already more than 2000 bitcoin ATMs https://coinatmradar.com/ https://coinatmradar.com/

fra 9y ago

Sadly, NNT gets a key detail wrong: Bitcoin isn't controlled by its users, it's controlled by the miners.

yasp 9y ago
And yet ultimately the users can move to a fork if they are unhappy. To wit: Bitcoin Cash, which is the true bitcoin. (With Bitcoin Cash, Nassim's coffeeshop transaction would indeed be possible, and without needing to wait for 10+ minutes, contrary to popular belief.)
- matthewbauer 9y ago
  No the miners are the ones that can fork if they are unhappy. Users are held hostage by the miners for any PoW cryptocurrency. If they want their holdings to be worth anything, they have to endlessly shill for their currency or else they'll go broke.
- sergiosgc 9y ago
  Read this as a comment from a cryptocurrency lurker. > Bitcoin Cash, which is the true bitcoin. I see this statement repeated often, to the point of sounding like a strategy of "if you repeat a lie enough, people will believe it". Isn't Bitcoin Cash the minority result of a Bitcoin fork? Isn't the majority result by definition the true Bitcoin?
  - 16th_hop 9y ago
    Bitcoin cash is much closer to the original implementation by Satoshi Nakamoto. It's simply a much smaller, and IMO, cleaner codebase that just increased one parameter to achieve scaling. Bitcoin core (what we call BTC) has many more lines of non-Satoshi code that was added to facilitate off-chain scaling.
    - josu 9y ago
      The thing is that Satoshi never left a roadmap, and indefinitely increasing the block size to meet demand isn't plausible. So even if bcash were to become the "real bitcoin" it would have to come up with an off-chain solution. SegWit and Lightning are such elegant solutions that I can't really see a person as brilliant as Satoshi rejecting it.

htormey 9y ago

"When you trade gold, you trade “loco” Hong Kong and end up receiving a claim on a stock there, which you might need to move to New Jersey. Banks control the custodian game and governments control banks (or, rather, bankers and government officials are, to be polite, tight together). So Bitcoin has a huge advantage over gold in transactions: clearance does not require a specific custodian. No government can control what code you have in your head." Regardless of what you think of BTC and its ilk, I think this is a pretty good point about investing in gold.

rwmj 9y ago
Really though? Unless you're a millionaire you can store gold yourself - in a cheap bank deposit box or (if you're daring) even at home.
- htormey 9y ago
  True, but if you are going to be that paranoid how easy is it for you to take your gold across the border? “According to the Transportation Security Administration (TSA), it is legal to travel with any amount of cash or other monetary instruments in and out of the United States. However, you must declare your cash to customs if the amount exceeds $10,000 or its foreign equivalent.” http://traveltips.usatoday.com/travel-airline-cash-9937.html http://traveltips.usatoday.com/travel-airline-cash-9937.html Traveling with more than 10k of gold or cash is much more noticeable than 10k plus of BTC, aka a piece of paper Wirh some words scribbled on it.
  - rwmj 9y ago
    If I had a need to do such things I'd probably hire a yacht or a light aircraft. Borders are very porous when you're not travelling in a "mainstream" mode of transport.
    - lrns_ 9y ago
      Well, with bitcoin you can transport 1 trillion with 24 words in your head lol. Good luck transporting that amount in gold.

Changu 9y ago

I was hoping to read his thoughts on Bitcoins market cap of about 200 Billion Dollar. I have the theory, that the value of a cryptocurrency is equal to the sum of transaction fees people will spend in the future, discounted for inflation. Currently Bitcoin users pay about $5m per day on transaction fees. That is $1.82B per year. At this rate, it would take 109 years to reach those $200B. So by that logic, the market predicts a strong future for BTC. Either it will be around for very long or its usage will grow. Personally, I am skeptical. I think there will be too much competition. It might be hard to replicate the BTC ecosystem but I don't think it is $200B hard. Especially since there will be rapid changes to the whole crypto space in the coming years (offchain transactions, alternative mining forms etc). I expect we will end up with a currency that does not need mining at all. I think we will end up with a currency that uses signed transactions that are simply broadcasted. The receiver asks a bunch of trusted nodes "Is this a double spend?" and if they reply "no" then the payment is accepted. That is simple, instantaneous and free. And has almost no real life downsides compared to Bitcoin.

digi_owl 9y ago
That sounds oddly similar to the notion that a national currency gets its value from having to pay taxes with it.
matthewbauer 9y ago
Interesting thoughts but I think "the sum of transaction fees people will spend in the future" is better as a value for mining (after rewards go to 0). "Holders" really aren't wanting anything to do with transactions. My Bitcoin valuation: Bitcoin is worth as much as it costs to move to another blockchain. That's the "first-mover advantage" basically and I'm afraid it's much closer to $200 million than $200 billion.
- Changu 9y ago
  That seems to imply that the BTC market cap is the result of speculation. Of people holding BTC because they think some greater fool will buy them later. Personally I believe in efficient markets. I think the $200B is the best guess the market came up for the intrinsic value of BTC. Independent of speculation. My feeling is similar to yours though. That BTCs value is closer to $200m then to $200B.

rdlecler1 9y ago

Governments could ban crypto sites, crypto trading, and conversion to currency. While this won’t completely kill it, it marginalizes it to such an extent that it won’t be an attractive medium for most folks because most people are lazy and don’t want the hassle.

ethbro 9y ago
Hell, China could reprice electricity rates for mining. That alone would almost do it.
- conanbatt 9y ago
  China can also block exports to the US and bring it down, for that matter.
runeks 9y ago
Your conclusion very much depends on the prevailing rate of inflation for national currencies. The higher the rate, the greater the incentive to move your savings to somewhere safe. In other words, the incentive may not be that great right now (since the inflation rate is relatively low), but this is something that can change.

georgeecollins 9y ago

> one can macroBS longer than microBS, which is why we need to be careful on who to endow with centralized macro decisions. Taleb goes overboard sometimes, but he has been so great for calling BS on finance pseudo-science.

davidw 9y ago
I guess when you call everything 'BS', you're bound to be right some of the time.
- georgeecollins 9y ago
  I don't want to defend everything Nassim Taleb says because I don't agree with it. But its facile and wrong to say that he calls everything BS. And his earlier books were very much a clear attack on a poor use of statistics in finance. Antifragile is the work of a crank. Fooled by Randomness is just good.

jerkstate 9y ago

Wow, I expected Mr. "I don't eat or drink anything that hasn't been around for 1000 years" to write a lot more negative on this. I completely agree with the statement that even if bitcoin itself fails, cryptocurrencies will ultimately succeed.

huphelmeyer 9y ago
>"I don't eat or drink anything that hasn't been around for 1000 years" He'd love our office fridge.

zeesh 9y ago

Don’t you all think insider trading will be significantly easier with crypto? Why is there little talk about this?

lucozade 9y ago
Not sure why insider trading would be a thing. What information would affect the price? Most aren't based on anything substantive. Front running and pump & dump are pretty easy currently. That's not a fundamental thing though. More of a fact that the cryptocurrency environments, especially exchanges, tend to be exceptionally opaque. Somewhat ironically.
- jstandard 9y ago
  Employees at major exchanges can trade on insider information about whether a major exchange will support a new coin. Employees at token-funded companies can insider trade on that same information. There's already some evidence these schemes are happening at major exchanges. Coinbase's launches of Litecoin and Bitcoin Cash come to mind. https://medium.com/@bitfinexed/coinbase-insider-trading-litecoin-edition-be64ead3facc https://medium.com/@bitfinexed/coinbase-insider-trading-lite...

deevolution 9y ago

Two things are constant in this world: tax and death.

rargulati 9y ago

Payment processing and banking in the United States is woefully behind the rest of the world. Globally, the system is complex, obtuse, and fragmented enough to result in a shanty town of technological solutions that are just lipstick on a pig. The hope here is that the introduction of blockchains and cryptocurrencies into public discourse, and public excitement regarding a digital mechanism to store and receive value might be the kick in the pants that the banks need to roll-out better banking tools and systems. Furthermore, the first bank to run a publicly auditable ledger which can be validated externally will set a precedent for transparency. I'm not sure what the future of cryptocurrencies will be (though I'm bullish), but those would be huge wins for society.