8 ms·

Taleb: Bitcoin, Currencies, and Bubbles

52 points by tims457 5y ago

QuadrupleA 5y ago
Heartened to see Taleb taking a skeptical stance on Bitcoin and crypto - last time I looked into it he was a proponent due to its decentralization and existence outside the monoculture of mainstream finance. The sooner we can move past these staggeringly inefficient environment-destroying pump-and-dump schemes the better off we'll all be.
- deleted 5y ago
  [deleted]
- errantmind 5y ago
  Something can be overvalued without being worthless. Also, the environment argument is inconclusive. Using a lot of power isn't the problem, it is how the power was generated and whether or not it was excess capacity
  - nivertech 5y ago
    > Something can be overvalued without being worthless. Nothing is worthless[1]. Everything worth something to someone at some time. But some things will be worth much less to everyone at another time. -- [1] that includes negative prices also, but that because of the externalities, i.e. deflation, storage costs, or pre-existing contractual obligations
  - sadness3 5y ago
    It's also about the systems it's replacing, which all the careful studies I've seen have rated as even less efficient. It also doesn't take into account future improvements in energy efficiency, which in the case of Ethereum are near and profound.
    - tsimionescu 5y ago
      Bitcoin and all proof of work systems can barely replace the transaction processing of a small bank, nevermind all of the other operations, while consuming more energy than many entire countries.
      - lowkey 5y ago
        El Salvador is the example that proves you wrong. They are using Lightning Network on top of Bitcoin to scale to enormous transaction volume - enough to run an entire country with plenty of room to spare. Proof of work pays for network security, not Tx volume - the most secure super-computer ever invented. Transaction processing is a free side-benefit. With Lightning, TX Processing scales to meet any arbitrary needs.
        acdha 5y ago
        El Salvador could be the example but it’s far from proven. It definitely shows that Bitcoin really doesn’t scale: getting remotely competitive speed and cost requires giving up the decentralization vision and using Lightning network companies which are banks in all but name.
        tsimionescu 5y ago
        How many people are actually using Lightning network in El Salvador at the moment? Also, isn't using Lightning Network over Bitcoin essentially equivalent to using Visa's payment network over the traditional banking system - i.e. a completely separate system, with entriely different trust characteristics and entriely different trusted entities? People using LN are not transacting using Bitcoin. They are denominating their transactions in Bitcoin, and trusting LN to eventually convert to Bitcoin (at the huge bitcoin transaction cost) if/when they eventually need it. Even worse, most people will not use LN directly, they will use yet another third party, one that will operate a bitcoin wallet and LN channel for them (likely the same wallet and channel for many, many different people).
        lowkey 5y ago
  - IfOnlyYouKnew 5y ago
    > it is how the power was generated and whether or not it was excess capacity Coal and no, because that's the marginal production mode in China.
  - prepend 5y ago
    And everything that is worthless is overvalued. Arguing that some hyped things don’t suck is not very helpful. I think it’s better to focus on particular qualities and try to move to the right price. The best analysis I read years ago was predicting present value based on expected future transaction fees. That’s the only basis I saw that made sense and were like 1000000x past that valuation.
  - QuadrupleA 5y ago
    Even if the electricity were 100% generated by wind farms and solar panels, what a colossal waste of it - rather than helping humanity it goes to feed racks of millions of red hot machines to solve useless hash puzzles all day. It's like feeding vast amounts of wood into an ever growing fleet of steam engines that just travel in circles all day, and once every 10 minutes one of the trains throws off a piece of gravel or a paint chip that humanity has decided has incredible value due to how hard it was to obtain.
    - ephbit 5y ago
      Some whataboutism .. individual people expend energy for countless things that are useless or even harmful to many others. Most people in the west are totally egoistic when it comes to the sheer amount of energy/resources they use/consume. > "... what a colossal waste." Compared to all this, the energy/environmental footprint of bitcoin is laughably tiny. IMO bitcoin does indeed have the potential of solving a global problem (not easily manipulatable reserve currency) .. that'd be a political/economic benefit that would justify a non trivial expenditure of resources. We'll see in the future whether it can come true. The experiment itself appears already useful to me. More useful than many other things humans have done. Yeah, totally subjective.
  - root_axis 5y ago
    In this case using a lot of power is the problem since the network's power consumption does not increase the performance or capacity of the network - using excess capacity to mine bitcoin is actually worse than doing nothing with it because it contributes to a difficulty increase which makes the entire network more expensive.
VMG 5y ago
Taleb has absolutely destroyed his credibility by speaking at the "Coingeek" conference and sharing a stage with "Craig Wright" https://www.urbandictionary.com/define.php?term=Taleb%27ed%20his%20own%20reputation https://www.urbandictionary.com/define.php?term=Taleb%27ed%2...
- Phaedor 5y ago
  And so what? I haven't watched his talk, but by the summary of it it seems like his talk was consistent with his previous statements. Did Snowden destroy his credibility when he "shared the stage" with the scammer in this video? https://www.youtube.com/watch?v=Hv3UC4lz3oQ https://www.youtube.com/watch?v=Hv3UC4lz3oQ It seems to me that the only thing that matters in most of the "crypto community" is that you are contributing to the price going up. When Musk took away the ability to pay with bitcoins the hate for him in every crypto subreddit went through the roof. No one gave a shit about his reasoning. I have a feeling the hate for Taleb is the same, he is not contributing to the price of bitcoin going up, so he is hated by those who have invested in crypto. Could you be more specific on how he has "destroyed his credibility", is it simply because he is negative towards crypto?
  - VMG 5y ago
    I could be more specific, but I would risk getting sued by Craig Wright and his friends I want to leave you with this quote though > “First ethical rule: If you see fraud and do not say fraud, you are a fraud.” > ― Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder
    - Phaedor 5y ago
      So you are actually saying that the reason that Taleb has "destroyed his credibility" is that he shared a stage with Craig Wright, it has nothing to do with anything he has said?
    - Tycho 5y ago
      Presumably Taleb wasn't showing up at the conference to promote and profit from whatever Craig Wright is doing these days, rather he was there to throw cold water on the entire crypto industry, so I don't think the indictment you mention really applies.
JohnJamesRambo 5y ago
You should look into Ethereum 2.0. And probably buy some.
- mads 5y ago
  Never miss a chance to peddle your coin
- prepend 5y ago
  It’s such strange advice to buy a currency early. Just the utterance of such a thing shows how these aren’t good currencies. Imaging how stupid someone would be to generally give advice to “buy some Euro” or “buy some Dollar.”
  - JohnJamesRambo 5y ago
    Buy some dollar would have been awesome advice after Bretton Woods and pretty much up until now. Now we will have a new world currency. The dollar had a good run but it has pumped as far as it can go now on money printing. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL https://marketcap.com.au/wp-content/uploads/2018/11/WRCurrency.gif https://marketcap.com.au/wp-content/uploads/2018/11/WRCurren... We are in the buildup period for the next currency. What is it we can't be sure, but a world cryptocurrency seems likely.
    - iamben 5y ago
      It's a very utopian idea though, isn't it? What government is going to settle for a currency that's out of their control, that doesn't allow them to collect taxes efficiently? I'm not really for or against crypto in general. But I do like my bins being collected, and my roads without holes in them - it kind of requires some kind of central governing for this to happen.
      - ephbit 5y ago
        It'll take another 10-20 years or so, until we likely have sound evidence, whether the conclusion drawn from modern monetary theory - that forever growing national debt is not in itself a problem - is reasonable or not. Either we'll see that there's no problematic level of inflation or we'll see that there is too much inflation causing instability. If somehow the evidence suggests that growing national debt is indeed a fundamental problem, then maybe some governments will be forced (by voters' will or by peer pressure) to ... > ... settle for a currency that's out of their control ... ... because it'd remove the ever present temptation for politicians to promise short term gifts to voters that are paid for by devaluation of the currency and by shifting payback into the future.
johnnycerberus 5y ago
I totally agree with Taleb, as any reasonable technical guy around here that is not interested in making a quick buck through a Ponzi scheme. Sorry, for some of them is more than a quick buck, but a day job.
xiphias2 5y ago
I’m pleased that Taleb doesn’t want to own bitcoin. He’s a millionaire already, and he already has a bank account for a long time, and enjoyed US dominance for all his life. Meanwhile finally El Salvadorian US immigrants will able to pay the rent and food for their parents stuck in El Salvador without a 20% markup 3 months for now.
- esens 5y ago
  I understand the money transfer problem. Cryptocurrency seems like a good idea in that case. I question though why choose Bitcoin? I guess a lot of people support it. But it is far from stable, so no one in the right mind, especially poor people should hold significant Bitcoins because it is speculative rather than stable. I guess stable coins do not have the wide acceptance that bitcoin has? Why not USDC or similar to solve the money transfer problem? Your respond suggest that Bitcoin is going to the moon, but that suggests you want it to stay the speculative instrument it is now. But if it is going to work in El Salvador you want it to be stable no?
  - sadness3 5y ago
    Network effects. No better option which is universally agreed as the _next_ best option. It will get easier and faster to send. Email used to need a C compiler and 2 days to send.
  - x4e 5y ago
    Bitcoin is more just used to refer to cryptocurrency in general. I think most people seriously using cryptocurrency these days do not use bitcoin.
    - xiphias2 5y ago
      No it isn't. When I'm sending money to Colombia and WorldRemit app takes 10% of my money, it means 10% less food to cook for my girlfriend and her family. She can't get a job since the pandemic, and I have other friends in Colombia with the same problem, they are desperate... some times I just send $40, and they say that it saves their life, it's so bad there right now.
sadness3 5y ago
There seems to be a real under-appreciation by the Hacker News crowd of how profound the use case of cryptocurrencies as simple money is. Perhaps because we have a sample bias towards people who are served adequately by traditional financial infrastructure, and people who are disproportionately preoccupied with blockchain as a potential component of software systems. As an example, most kids in starting school today will probably have years of experience being their own banker, using apps on their phones, before they ever step foot in place which employs bankers. At that point they may not bother, since the cryptocurrency ecosystem will already provide all the same facilities. This is profoundly disruptive.
- sadness3 5y ago
  Here's a contemporary example: We can, right now, hold USD equivalents in kava.io . It operates on a system which is analogous to fractional reserve banking, except with no middlemen, so your effective interest rate is better by an order of magnitude. It's relatively simple to use. Giving a bank your trust a and a big cut of your returns is going to be a hard sell when that's your normal as a kid.
  - mempko 5y ago
    Fractional reserve banking isn't a real thing though...
  - tsimionescu 5y ago
    Sure, you say that now. Let's see what will happen to kava.io during the next financial crisis, or simply 20 years from now. Banking is by no means a simple or safe operation.
  - byzantinegene 5y ago
    Terrible comparison, you do know that banks are regulated and insured by the FDIC right? If a bank goes insolvent, your savings will be insured up to USD100,000, but if kava.io goes down (and trust me it will), there goes all your savings.
- acdha 5y ago

52 points by tims457 5y ago

Heartened to see Taleb taking a skeptical stance on Bitcoin and crypto - last time I looked into it he was a proponent due to its decentralization and existence outside the monoculture of mainstream finance. The sooner we can move past these staggeringly inefficient environment-destroying pump-and-dump schemes the better off we'll all be.

deleted 5y ago
[deleted]
errantmind 5y ago
Something can be overvalued without being worthless. Also, the environment argument is inconclusive. Using a lot of power isn't the problem, it is how the power was generated and whether or not it was excess capacity
- nivertech 5y ago
  > Something can be overvalued without being worthless. Nothing is worthless[1]. Everything worth something to someone at some time. But some things will be worth much less to everyone at another time. -- [1] that includes negative prices also, but that because of the externalities, i.e. deflation, storage costs, or pre-existing contractual obligations
- sadness3 5y ago
  It's also about the systems it's replacing, which all the careful studies I've seen have rated as even less efficient. It also doesn't take into account future improvements in energy efficiency, which in the case of Ethereum are near and profound.
  - tsimionescu 5y ago
    Bitcoin and all proof of work systems can barely replace the transaction processing of a small bank, nevermind all of the other operations, while consuming more energy than many entire countries.
    - lowkey 5y ago
      El Salvador is the example that proves you wrong. They are using Lightning Network on top of Bitcoin to scale to enormous transaction volume - enough to run an entire country with plenty of room to spare. Proof of work pays for network security, not Tx volume - the most secure super-computer ever invented. Transaction processing is a free side-benefit. With Lightning, TX Processing scales to meet any arbitrary needs.
      - acdha 5y ago
        El Salvador could be the example but it’s far from proven. It definitely shows that Bitcoin really doesn’t scale: getting remotely competitive speed and cost requires giving up the decentralization vision and using Lightning network companies which are banks in all but name.
      - tsimionescu 5y ago
        How many people are actually using Lightning network in El Salvador at the moment? Also, isn't using Lightning Network over Bitcoin essentially equivalent to using Visa's payment network over the traditional banking system - i.e. a completely separate system, with entriely different trust characteristics and entriely different trusted entities? People using LN are not transacting using Bitcoin. They are denominating their transactions in Bitcoin, and trusting LN to eventually convert to Bitcoin (at the huge bitcoin transaction cost) if/when they eventually need it. Even worse, most people will not use LN directly, they will use yet another third party, one that will operate a bitcoin wallet and LN channel for them (likely the same wallet and channel for many, many different people).
        lowkey 5y ago
- IfOnlyYouKnew 5y ago
  > it is how the power was generated and whether or not it was excess capacity Coal and no, because that's the marginal production mode in China.
- prepend 5y ago
  And everything that is worthless is overvalued. Arguing that some hyped things don’t suck is not very helpful. I think it’s better to focus on particular qualities and try to move to the right price. The best analysis I read years ago was predicting present value based on expected future transaction fees. That’s the only basis I saw that made sense and were like 1000000x past that valuation.
- QuadrupleA 5y ago
  Even if the electricity were 100% generated by wind farms and solar panels, what a colossal waste of it - rather than helping humanity it goes to feed racks of millions of red hot machines to solve useless hash puzzles all day. It's like feeding vast amounts of wood into an ever growing fleet of steam engines that just travel in circles all day, and once every 10 minutes one of the trains throws off a piece of gravel or a paint chip that humanity has decided has incredible value due to how hard it was to obtain.
  - ephbit 5y ago
    Some whataboutism .. individual people expend energy for countless things that are useless or even harmful to many others. Most people in the west are totally egoistic when it comes to the sheer amount of energy/resources they use/consume. > "... what a colossal waste." Compared to all this, the energy/environmental footprint of bitcoin is laughably tiny. IMO bitcoin does indeed have the potential of solving a global problem (not easily manipulatable reserve currency) .. that'd be a political/economic benefit that would justify a non trivial expenditure of resources. We'll see in the future whether it can come true. The experiment itself appears already useful to me. More useful than many other things humans have done. Yeah, totally subjective.
- root_axis 5y ago
  In this case using a lot of power is the problem since the network's power consumption does not increase the performance or capacity of the network - using excess capacity to mine bitcoin is actually worse than doing nothing with it because it contributes to a difficulty increase which makes the entire network more expensive.

VMG 5y ago

Taleb has absolutely destroyed his credibility by speaking at the "Coingeek" conference and sharing a stage with "Craig Wright" https://www.urbandictionary.com/define.php?term=Taleb%27ed%20his%20own%20reputation https://www.urbandictionary.com/define.php?term=Taleb%27ed%2...

Phaedor 5y ago
And so what? I haven't watched his talk, but by the summary of it it seems like his talk was consistent with his previous statements. Did Snowden destroy his credibility when he "shared the stage" with the scammer in this video? https://www.youtube.com/watch?v=Hv3UC4lz3oQ https://www.youtube.com/watch?v=Hv3UC4lz3oQ It seems to me that the only thing that matters in most of the "crypto community" is that you are contributing to the price going up. When Musk took away the ability to pay with bitcoins the hate for him in every crypto subreddit went through the roof. No one gave a shit about his reasoning. I have a feeling the hate for Taleb is the same, he is not contributing to the price of bitcoin going up, so he is hated by those who have invested in crypto. Could you be more specific on how he has "destroyed his credibility", is it simply because he is negative towards crypto?
- VMG 5y ago
  I could be more specific, but I would risk getting sued by Craig Wright and his friends I want to leave you with this quote though > “First ethical rule: If you see fraud and do not say fraud, you are a fraud.” > ― Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder
  - Phaedor 5y ago
    So you are actually saying that the reason that Taleb has "destroyed his credibility" is that he shared a stage with Craig Wright, it has nothing to do with anything he has said?
  - Tycho 5y ago
    Presumably Taleb wasn't showing up at the conference to promote and profit from whatever Craig Wright is doing these days, rather he was there to throw cold water on the entire crypto industry, so I don't think the indictment you mention really applies.

JohnJamesRambo 5y ago

You should look into Ethereum 2.0. And probably buy some.

mads 5y ago
Never miss a chance to peddle your coin
prepend 5y ago
It’s such strange advice to buy a currency early. Just the utterance of such a thing shows how these aren’t good currencies. Imaging how stupid someone would be to generally give advice to “buy some Euro” or “buy some Dollar.”
- JohnJamesRambo 5y ago
  Buy some dollar would have been awesome advice after Bretton Woods and pretty much up until now. Now we will have a new world currency. The dollar had a good run but it has pumped as far as it can go now on money printing. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL https://marketcap.com.au/wp-content/uploads/2018/11/WRCurrency.gif https://marketcap.com.au/wp-content/uploads/2018/11/WRCurren... We are in the buildup period for the next currency. What is it we can't be sure, but a world cryptocurrency seems likely.
  - iamben 5y ago
    It's a very utopian idea though, isn't it? What government is going to settle for a currency that's out of their control, that doesn't allow them to collect taxes efficiently? I'm not really for or against crypto in general. But I do like my bins being collected, and my roads without holes in them - it kind of requires some kind of central governing for this to happen.
    - ephbit 5y ago
      It'll take another 10-20 years or so, until we likely have sound evidence, whether the conclusion drawn from modern monetary theory - that forever growing national debt is not in itself a problem - is reasonable or not. Either we'll see that there's no problematic level of inflation or we'll see that there is too much inflation causing instability. If somehow the evidence suggests that growing national debt is indeed a fundamental problem, then maybe some governments will be forced (by voters' will or by peer pressure) to ... > ... settle for a currency that's out of their control ... ... because it'd remove the ever present temptation for politicians to promise short term gifts to voters that are paid for by devaluation of the currency and by shifting payback into the future.

johnnycerberus 5y ago

I totally agree with Taleb, as any reasonable technical guy around here that is not interested in making a quick buck through a Ponzi scheme. Sorry, for some of them is more than a quick buck, but a day job.

xiphias2 5y ago

I’m pleased that Taleb doesn’t want to own bitcoin. He’s a millionaire already, and he already has a bank account for a long time, and enjoyed US dominance for all his life. Meanwhile finally El Salvadorian US immigrants will able to pay the rent and food for their parents stuck in El Salvador without a 20% markup 3 months for now.

esens 5y ago
I understand the money transfer problem. Cryptocurrency seems like a good idea in that case. I question though why choose Bitcoin? I guess a lot of people support it. But it is far from stable, so no one in the right mind, especially poor people should hold significant Bitcoins because it is speculative rather than stable. I guess stable coins do not have the wide acceptance that bitcoin has? Why not USDC or similar to solve the money transfer problem? Your respond suggest that Bitcoin is going to the moon, but that suggests you want it to stay the speculative instrument it is now. But if it is going to work in El Salvador you want it to be stable no?
- sadness3 5y ago
  Network effects. No better option which is universally agreed as the _next_ best option. It will get easier and faster to send. Email used to need a C compiler and 2 days to send.
- x4e 5y ago
  Bitcoin is more just used to refer to cryptocurrency in general. I think most people seriously using cryptocurrency these days do not use bitcoin.
  - xiphias2 5y ago
    No it isn't. When I'm sending money to Colombia and WorldRemit app takes 10% of my money, it means 10% less food to cook for my girlfriend and her family. She can't get a job since the pandemic, and I have other friends in Colombia with the same problem, they are desperate... some times I just send $40, and they say that it saves their life, it's so bad there right now.

sadness3 5y ago

There seems to be a real under-appreciation by the Hacker News crowd of how profound the use case of cryptocurrencies as simple money is. Perhaps because we have a sample bias towards people who are served adequately by traditional financial infrastructure, and people who are disproportionately preoccupied with blockchain as a potential component of software systems. As an example, most kids in starting school today will probably have years of experience being their own banker, using apps on their phones, before they ever step foot in place which employs bankers. At that point they may not bother, since the cryptocurrency ecosystem will already provide all the same facilities. This is profoundly disruptive.

sadness3 5y ago
Here's a contemporary example: We can, right now, hold USD equivalents in kava.io . It operates on a system which is analogous to fractional reserve banking, except with no middlemen, so your effective interest rate is better by an order of magnitude. It's relatively simple to use. Giving a bank your trust a and a big cut of your returns is going to be a hard sell when that's your normal as a kid.
- mempko 5y ago
  Fractional reserve banking isn't a real thing though...
- tsimionescu 5y ago
  Sure, you say that now. Let's see what will happen to kava.io during the next financial crisis, or simply 20 years from now. Banking is by no means a simple or safe operation.
- byzantinegene 5y ago
  Terrible comparison, you do know that banks are regulated and insured by the FDIC right? If a bank goes insolvent, your savings will be insured up to USD100,000, but if kava.io goes down (and trust me it will), there goes all your savings.
acdha 5y ago