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The full tweet is actually easier to read: https://twitter.com/nntaleb/status/1382446478539550727 https://twitter.com/nntaleb/status/1382446478539550727 WHAT

The full tweet is actually easier to read: https://twitter.com/nntaleb/status/1382446478539550727 https://twitter.com/nntaleb/status/1382446478539550727 WHAT WE WANT CRYPTO & CURRENCY FOR: 1) Currency w/o a government 2) Stable/reliable for contracts 3) Inflation indexed store of value -- basket of items representative for me. 4) Rapid transactions Can we do it? #BTC failed to be currency, open-Ponzi speculative game. A currency must earn interest: currencies weren't born from govt design but from commercial credit. A deflationary currency blocks borrowing. #BTC is just an open Ponzi scheme: money made by someone is taken from someone else. Stephen Diehl explains it better: Because on top of the zero-sum mechanics, if it siphons wealth off to insiders then the pool to pay out returns shrinks. What @nntaleb said is right, it's economically equivalent to an open Ponzi scheme.

throwaway4good 6y ago
It is the idea that money is credit / debt. https://en.wikipedia.org/wiki/Credit_theory_of_money https://en.wikipedia.org/wiki/Credit_theory_of_money As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People are stuck at home and cannot go to the cinema. Investing in Bitcoin and watching Elon's twitter is an ok replacement for now.
- matkoniecz 6y ago
  OK I will bite. > As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People who want to use it as a currency and people preferring to avoid losing their investment in a dumb bubbles. (it is more OK if it is a dumb gambling with what someone is considering as entertainment funds, but nearly noone is doing that)
  - McScroogy 6y ago
    Could you point me to an alternative investment that can not lose its value, please?
    - dmichulke 6y ago
      Gold maybe. But gold is not a currency either, so hmmm. In all earnest, I wonder when the mainstream will realize that in a digital world the store of value and a currency can be different because they are easily interchangeable. Just like bonds or gold for long term investment (store of value) and dollar (currency).
      - petre 6y ago
        Good luck transporting and securing larger quantities of gold and also exchanging it for money. One basically has to declare any quantity in excess of six ounces / 170 grams of gold because it exceeds 10k US dollars / euros.
        chii 6y ago
        what's wrong with declaring? It's not like it'd be taken from you...unless you illegitimately obtained it.
        faffe 6y ago
        It can via tax...
        McScroogy 6y ago
        If there is a wealth tax, as is being discussed in many places, it could be taken from you.
        iso1631 6y ago
        If you carry your bitcoin wallet with you do you need to declare that?
      - baq 6y ago
        paper gold trades like a currency, bitcoin trades like a commodity. gold - the real thing - i guess you should have some, but this is more like insurance than asset, don't ever sell unless the world is ending stuff.
  - throwaway4good 6y ago
    There are a number of Bitcoin variations out there (Bitcoin Cash and BSV) which are tuned in manner that gives faster and cheaper transactions. None of them seem to have caught the eye of investors. My interpretation is that investors like their ponzi and don't really care about whether the technology is useful. I could try and scold them but I don't think it works, therefore I choose just to accept them as they are and see their beauty in their own right. In the money as credit model, the money supply expands and subtracts with economic activity. And the best suited money have price stability so the market of credit can focus "pricing" risk correctly. This model of money could be supported by some kind of cryptocurrency, however right now the investors don't seem to have an appetite for sponsoring that sort of thing.
    - grey-area 6y ago
      You are describing speculation, not investment, and yes there is a difference, though people often lose sight of that during bubbles when the price is all that matters.
      - throwaway4good 6y ago
        Speculator, investor ... I don't want to pass judgement. I listen what ARK Invest says, I think they are smart people, but I also think they overshoot.
        grey-area 6y ago
        Speculator, investor ... I don't want to pass judgement QED
    - rualca 6y ago
      > None of them seem to have caught the eye of investors. That's the problem with this doublespeak, where people intentionally fool themselves into cognitive dissonance. The whole point of currency is not investment. It's the exact opposite of investment. Currency is intended to have stable value over time, because it's whole point is to serve as a unit of account, store value, and serve as a medium to exchange value in an economy. By it's very definition "investing" implies the expectation of profit. Think about it for a second: how can something intended to have a stable value be considered apt for speculation?
  - PicassoCTs 6y ago
    Honest, successor crypto-currencies, who work for their money will have to fight the fallout once the scheme collapses and people who lost everything demand government to regulate "rogue" currencies? Distrust will also prevent a whole generation of investors to invest again?
    - iso1631 6y ago
      > Distrust will also prevent a whole generation of investors to invest again My parents lost a lot in the 2000 crash, so were spared from the 2008 crash. Between those two I decided buying shares was a mugs game (Nasdaq was 4000-5000 before crashing to 1300 back in 2000. It recovered to 2500 by 2008 before crashing back to 1500. It's now 14,000 - massive gains in the last 10 years I've missed out on because of not trusting. If you'd have bought $1k of Nasdaq and 1k of Bitcoin 5 years ago, you'd have $3k from nasdaq - an amazing return. I can sort of see why the nasdaq is so high though. Crypto though? That same $1k would mean you'd have $137k from bitcoin. If that's sustainable I don't know what unsustainable is. DOGE? You'd be a millionaire. But the political decisions of the economy seem to be built around driving these things up. It makes the UK house price boom of the 90s and 00s look tame - 500% in 25 years? A measly 6% roi? 25% per year gains on stocks, 170% per year on bitcoin? 300% per year on DOGE? In 2018 people were saying about tulipmania with bitcoin and how the price would collapse. It did. $1k invested at the height of the bubble in 2017/18 when it reached $20k - 20 times what it was earlier in the year, was soon worth just $150. It would now be worth $3k, 45% per year roi from investing at the worst possible time Putting a measly $10 a month into bitcoin every month for the last 5 years would have cost $600 and left you with $14,620 today. The market can remain retarded longer than I can remain solvent. The only thing I've learnt waiting for things to crash is that I'm an idiot, and people who fall for hype are rich.
  - serial_dev 6y ago
    I often hear: investment is good, gambling is dumb, speculation is risky. In my opinion, in most people's dictionary, these things describe the same things and when we use these words, there is no good, measurable way to classify them, we just act on our instincts, yet when we use words like investment, we feel safe and clever. Good point about the currency part, I don't think BTC is going to be a good currency, it's expensive, slow, traceable, public.
tim333 6y ago
Economically it's much more like gold than a ponzi scheme: Gold: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as jewelry though we could get by without that. Massive dollar and environmental cost from mining the stuff. Ponzi scheme: Fraud where insiders take money from investors and use it to pay other investors. Collapses and the fraudsters run off or go to jail. No mining no utility. Bitcoin: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as a payments system though we could get by without that. Massive dollar and environmental cost from mining the stuff. Gold has a certain permanence as the only element in the periodic table that has properties that has made it the #1 jewellery metal for the last few thousand years and probably the next few thousand though while Bitcoin was invented ten years ago and may well get outcompeted by a better invention/currency.
- ABeeSea 6y ago
  It’s a decentralized Ponzi scheme. It’s why Bitcoin owners are so aggressive in convincing others to buy Bitcoin.
  - deleted 6y ago
    [deleted]
  - herbst 6y ago
    I honestly never experienced that. Its not like any crypto investor is running around converting others.
    - tim333 6y ago
      There are people promoting it on youtube - I was watching some last night (What Bitcoin Did https://youtu.be/Pw6tfNh8DAk https://youtu.be/Pw6tfNh8DAk) but most seem to be recommending it sincerely rather than trying to sucker some fools in so they can cash out. It's an interesting time in the history of bitcoin as we are starting to see a move from small speculators (number go up) to institutions buying in (it's sensible to diversify 5% of your portfolio into crypoassets as they have historically high returns and low correlations).
cblconfederate 6y ago
points 1 & 2 are contradictory. 3 is easily gamed. 4 can be worked on. The idea of a permanently-inflationary cryptocurrency with a stable inflation rate doesn't sound bad However, bitcoin as digital gold will still survive. I 'm pretty sure what he describes it the current banking system as well: banks loan the plebs who pay back interest, who then the capitalists convert to gold,art,real estate, permanently enriching themselves. Even the data from piketty etc shows it's true. Bitcoin ecosystem is just the digital version of this.
jariel 6y ago
No, we cannot 'do it'. 1) a) There can only be 1 currency for an economic area - this is because we need price stability. The 'second currency' with the promise of 'less dilution' wouldn't be useful for transactions - people are not going to accept it widely, therefore it becomes more of a potential 'store of value' (but most cryptos are not good at that either). b) A currency or any store of value is as good as the entity backing it. There is no avoiding that. You cannot have magic numbers represent value. Currency is a contract between you, and the people that use that currency. 2) Stable/Reliable for contracts. Contracts are agreements that are only valid in a legal regime. They are completely pointless without a legal framework to judge them in - and where there is enforcement. They always require interpretation. An 'independent document' doe nothing to help. 3) 'Storage' - you can't 'store' value in a bunch of numbers. You can buy land, commodities, stocks, bonds, commodities with some underlying value. We could feasibly use Gold as a kind of 'historical agreement' about what we value and do not (which has incumbency) - but the volatility of crypto makes it poor for 'store of value'. 4) Rapid transactions. We already have those. Finally - we lose monetary policy and hand it over to an algorithm. No thanks. The crypto world fail to understand what currency is, why it is used, and why we do the things we do but most fundamentally that money is a contract ultimately. When China stores $1T in USD as excess reserves, surely, it would like to not have to depend on the US Government but there is no other way. A USD is a contractual IOU from the economy of America - there is no way around that, no way to just magically extract the value of those trade surpluses into something that has intrinsic value. A kind of Crypto that is backed by real assets, to replace VISA - merely to make transactions easier, might work. But any crypto backed by assets has centralized trust (fine for most people) and it would be hard to promote because it would need price stability and with price stability means you don't have millions of GenZ on their iPhone buying in. Crypto might have a legit future but nothing on the horizon seems to fit just yet.
- imaginenore 6y ago
  > There can only be 1 currency for an economic area - this is because we need price stability Nonsense. We have computers now, we can recalculate the price of anything in real time in any currency. Tons of stores are now accepting Bitcoin Cash along with the traditional fiat currency of their country. Nothing stops a seller from accepting 100 different cryptocurrencies. And then convert them into 10 that they personally like. It might be annoying from the accounting perspective, but again, we have computers.
monkeydreams 6y ago
> A currency must earn interest Taleb at it again. He's decided on his definition of a currency and, lo and behold, Bitcoin doesn't make the cut, much to the chagrin of the coin bros who will flock to its defense. Normal currency is zero-sum from certain contexts. If I have a dollar and I give it to you then you won and I lost. The only reason that fiat currency earns interest is that the promise of payment tomorrow is almost as easily tradeable as the product itself which, given BC's volatility, is difficult. Bitcoin is a currency in that it is a medium of transaction, no matter what Nicholas Taleb has to say about it. It is not failed at being a currency but it has failed at being a stable currency so far.

throwaway4good 6y ago

It is the idea that money is credit / debt. https://en.wikipedia.org/wiki/Credit_theory_of_money https://en.wikipedia.org/wiki/Credit_theory_of_money As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People are stuck at home and cannot go to the cinema. Investing in Bitcoin and watching Elon's twitter is an ok replacement for now.

matkoniecz 6y ago
OK I will bite. > As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People who want to use it as a currency and people preferring to avoid losing their investment in a dumb bubbles. (it is more OK if it is a dumb gambling with what someone is considering as entertainment funds, but nearly noone is doing that)
- McScroogy 6y ago
  Could you point me to an alternative investment that can not lose its value, please?
  - dmichulke 6y ago
    Gold maybe. But gold is not a currency either, so hmmm. In all earnest, I wonder when the mainstream will realize that in a digital world the store of value and a currency can be different because they are easily interchangeable. Just like bonds or gold for long term investment (store of value) and dollar (currency).
    - petre 6y ago
      Good luck transporting and securing larger quantities of gold and also exchanging it for money. One basically has to declare any quantity in excess of six ounces / 170 grams of gold because it exceeds 10k US dollars / euros.
      - chii 6y ago
        what's wrong with declaring? It's not like it'd be taken from you...unless you illegitimately obtained it.
        faffe 6y ago
        It can via tax...
        McScroogy 6y ago
        If there is a wealth tax, as is being discussed in many places, it could be taken from you.
      - iso1631 6y ago
        If you carry your bitcoin wallet with you do you need to declare that?
    - baq 6y ago
      paper gold trades like a currency, bitcoin trades like a commodity. gold - the real thing - i guess you should have some, but this is more like insurance than asset, don't ever sell unless the world is ending stuff.
- throwaway4good 6y ago
  There are a number of Bitcoin variations out there (Bitcoin Cash and BSV) which are tuned in manner that gives faster and cheaper transactions. None of them seem to have caught the eye of investors. My interpretation is that investors like their ponzi and don't really care about whether the technology is useful. I could try and scold them but I don't think it works, therefore I choose just to accept them as they are and see their beauty in their own right. In the money as credit model, the money supply expands and subtracts with economic activity. And the best suited money have price stability so the market of credit can focus "pricing" risk correctly. This model of money could be supported by some kind of cryptocurrency, however right now the investors don't seem to have an appetite for sponsoring that sort of thing.
  - grey-area 6y ago
    You are describing speculation, not investment, and yes there is a difference, though people often lose sight of that during bubbles when the price is all that matters.
    - throwaway4good 6y ago
      Speculator, investor ... I don't want to pass judgement. I listen what ARK Invest says, I think they are smart people, but I also think they overshoot.
      - grey-area 6y ago
        Speculator, investor ... I don't want to pass judgement QED
  - rualca 6y ago
    > None of them seem to have caught the eye of investors. That's the problem with this doublespeak, where people intentionally fool themselves into cognitive dissonance. The whole point of currency is not investment. It's the exact opposite of investment. Currency is intended to have stable value over time, because it's whole point is to serve as a unit of account, store value, and serve as a medium to exchange value in an economy. By it's very definition "investing" implies the expectation of profit. Think about it for a second: how can something intended to have a stable value be considered apt for speculation?
- PicassoCTs 6y ago
  Honest, successor crypto-currencies, who work for their money will have to fight the fallout once the scheme collapses and people who lost everything demand government to regulate "rogue" currencies? Distrust will also prevent a whole generation of investors to invest again?
  - iso1631 6y ago
    > Distrust will also prevent a whole generation of investors to invest again My parents lost a lot in the 2000 crash, so were spared from the 2008 crash. Between those two I decided buying shares was a mugs game (Nasdaq was 4000-5000 before crashing to 1300 back in 2000. It recovered to 2500 by 2008 before crashing back to 1500. It's now 14,000 - massive gains in the last 10 years I've missed out on because of not trusting. If you'd have bought $1k of Nasdaq and 1k of Bitcoin 5 years ago, you'd have $3k from nasdaq - an amazing return. I can sort of see why the nasdaq is so high though. Crypto though? That same $1k would mean you'd have $137k from bitcoin. If that's sustainable I don't know what unsustainable is. DOGE? You'd be a millionaire. But the political decisions of the economy seem to be built around driving these things up. It makes the UK house price boom of the 90s and 00s look tame - 500% in 25 years? A measly 6% roi? 25% per year gains on stocks, 170% per year on bitcoin? 300% per year on DOGE? In 2018 people were saying about tulipmania with bitcoin and how the price would collapse. It did. $1k invested at the height of the bubble in 2017/18 when it reached $20k - 20 times what it was earlier in the year, was soon worth just $150. It would now be worth $3k, 45% per year roi from investing at the worst possible time Putting a measly $10 a month into bitcoin every month for the last 5 years would have cost $600 and left you with $14,620 today. The market can remain retarded longer than I can remain solvent. The only thing I've learnt waiting for things to crash is that I'm an idiot, and people who fall for hype are rich.
- serial_dev 6y ago
  I often hear: investment is good, gambling is dumb, speculation is risky. In my opinion, in most people's dictionary, these things describe the same things and when we use these words, there is no good, measurable way to classify them, we just act on our instincts, yet when we use words like investment, we feel safe and clever. Good point about the currency part, I don't think BTC is going to be a good currency, it's expensive, slow, traceable, public.

tim333 6y ago

Economically it's much more like gold than a ponzi scheme: Gold: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as jewelry though we could get by without that. Massive dollar and environmental cost from mining the stuff. Ponzi scheme: Fraud where insiders take money from investors and use it to pay other investors. Collapses and the fraudsters run off or go to jail. No mining no utility. Bitcoin: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as a payments system though we could get by without that. Massive dollar and environmental cost from mining the stuff. Gold has a certain permanence as the only element in the periodic table that has properties that has made it the #1 jewellery metal for the last few thousand years and probably the next few thousand though while Bitcoin was invented ten years ago and may well get outcompeted by a better invention/currency.

ABeeSea 6y ago
It’s a decentralized Ponzi scheme. It’s why Bitcoin owners are so aggressive in convincing others to buy Bitcoin.
- deleted 6y ago
  [deleted]
- herbst 6y ago
  I honestly never experienced that. Its not like any crypto investor is running around converting others.
  - tim333 6y ago
    There are people promoting it on youtube - I was watching some last night (What Bitcoin Did https://youtu.be/Pw6tfNh8DAk https://youtu.be/Pw6tfNh8DAk) but most seem to be recommending it sincerely rather than trying to sucker some fools in so they can cash out. It's an interesting time in the history of bitcoin as we are starting to see a move from small speculators (number go up) to institutions buying in (it's sensible to diversify 5% of your portfolio into crypoassets as they have historically high returns and low correlations).

cblconfederate 6y ago

points 1 & 2 are contradictory. 3 is easily gamed. 4 can be worked on. The idea of a permanently-inflationary cryptocurrency with a stable inflation rate doesn't sound bad However, bitcoin as digital gold will still survive. I 'm pretty sure what he describes it the current banking system as well: banks loan the plebs who pay back interest, who then the capitalists convert to gold,art,real estate, permanently enriching themselves. Even the data from piketty etc shows it's true. Bitcoin ecosystem is just the digital version of this.

jariel 6y ago

No, we cannot 'do it'. 1) a) There can only be 1 currency for an economic area - this is because we need price stability. The 'second currency' with the promise of 'less dilution' wouldn't be useful for transactions - people are not going to accept it widely, therefore it becomes more of a potential 'store of value' (but most cryptos are not good at that either). b) A currency or any store of value is as good as the entity backing it. There is no avoiding that. You cannot have magic numbers represent value. Currency is a contract between you, and the people that use that currency. 2) Stable/Reliable for contracts. Contracts are agreements that are only valid in a legal regime. They are completely pointless without a legal framework to judge them in - and where there is enforcement. They always require interpretation. An 'independent document' doe nothing to help. 3) 'Storage' - you can't 'store' value in a bunch of numbers. You can buy land, commodities, stocks, bonds, commodities with some underlying value. We could feasibly use Gold as a kind of 'historical agreement' about what we value and do not (which has incumbency) - but the volatility of crypto makes it poor for 'store of value'. 4) Rapid transactions. We already have those. Finally - we lose monetary policy and hand it over to an algorithm. No thanks. The crypto world fail to understand what currency is, why it is used, and why we do the things we do but most fundamentally that money is a contract ultimately. When China stores $1T in USD as excess reserves, surely, it would like to not have to depend on the US Government but there is no other way. A USD is a contractual IOU from the economy of America - there is no way around that, no way to just magically extract the value of those trade surpluses into something that has intrinsic value. A kind of Crypto that is backed by real assets, to replace VISA - merely to make transactions easier, might work. But any crypto backed by assets has centralized trust (fine for most people) and it would be hard to promote because it would need price stability and with price stability means you don't have millions of GenZ on their iPhone buying in. Crypto might have a legit future but nothing on the horizon seems to fit just yet.

imaginenore 6y ago
> There can only be 1 currency for an economic area - this is because we need price stability Nonsense. We have computers now, we can recalculate the price of anything in real time in any currency. Tons of stores are now accepting Bitcoin Cash along with the traditional fiat currency of their country. Nothing stops a seller from accepting 100 different cryptocurrencies. And then convert them into 10 that they personally like. It might be annoying from the accounting perspective, but again, we have computers.

monkeydreams 6y ago

> A currency must earn interest Taleb at it again. He's decided on his definition of a currency and, lo and behold, Bitcoin doesn't make the cut, much to the chagrin of the coin bros who will flock to its defense. Normal currency is zero-sum from certain contexts. If I have a dollar and I give it to you then you won and I lost. The only reason that fiat currency earns interest is that the promise of payment tomorrow is almost as easily tradeable as the product itself which, given BC's volatility, is difficult. Bitcoin is a currency in that it is a medium of transaction, no matter what Nicholas Taleb has to say about it. It is not failed at being a currency but it has failed at being a stable currency so far.