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This paper has been out for quite a while now. The argument that any digital assets whose value can drop to zero at any point in the future has a current value

by jcfrei 5y ago

This paper has been out for quite a while now. The argument that any digital assets whose value can drop to zero at any point in the future has a current value of zero is flawed. People can maintain the ledger even when they are losing money doing so (which is little in the case of bitcoin because running a ledger is quite cheap). So even at a price of zero there would be people running nodes. The more pertinent question would be: What is the probability that at any point in the future nobody will run a node? I'd argue that probability is pretty low, therefore there will always be some value > 0 for the asset. In the real world work is not immediately abandoned when the payoff is temporarily negative. If for example a company misses a payment workers usually continue working for it. They know that if they stopped right away then bankruptcy of the company would be a near certainty, so continuing despite the missed payment makes sense.

cm277 5y ago
I think that's a perfectly valid argument. And of you have any Miami beachfront property you may as well just gift it to me now as its value is $0, so why pay any taxes on it?
- civilized 5y ago
  Taleb responds to this. If you're getting utility out of something today - financial or nonfinancial, tangible or intangible - then it has worth today, regardless of whether it may be worthless in the future. Only goods that both never provide any utility and will eventually be worthless are subject to his argument. BTC seems to have value as a religious talisman if nothing else.
syntheweave 5y ago
The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! What is really not present in the paper is arguments that accommodate demographic change. Generational shifts - in population and asset distributions - are what mark corresponding shifts in currency, acting as an economic reset button. Taleb is looking just to the recent past to make arguments, while Bitcoiners would insist that one has to "zoom out" to see the potential longevity. In this respect they talk past each other. Currencies come and go throughout history. Nobody is particularly interested in the 1000-year outlook, or even the 100-year. Taleb made a "in the long run, we're all dead" argument. Given the pace of the current trend, the market could irrationally center on Bitcoin for longer than anyone outside it stays solvent, in which case, it's game over: that's a win for Bitcoin even if it does get displaced later and falls to 0.
- civilized 5y ago
  > The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! This isn't quite the whole argument. The argument is that BTC provides no utility and never will. Given this premise, and the fact that it will eventually die, its value today must be zero. Whether BTC fails to provide any value and will never do so is debatable, but it is certainly untrue of fiat.
- throw0101a 5y ago
  > The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! Fiat is backed by the/a government. The main scenario that I can think of in which something replaces fiat currency is if something replaces government. If an event occurs in which government is no longer around, there will probably be bigger problems to worry about, e.g., when the Imperial ruble was replaced by the Soviet ruble (and then the Russian ruble): * https://en.wikipedia.org/wiki/Ruble https://en.wikipedia.org/wiki/Ruble * https://en.wikipedia.org/wiki/Russian_ruble https://en.wikipedia.org/wiki/Russian_ruble
  - lostmsu 5y ago
    Or government can decide to drop fiat.
kqr 5y ago
> The more pertinent question would be: What is the probability that at any point in the future nobody will run a node? I'd argue that probability is pretty low, therefore there will always be some value > 0 for the asset. I thought Taleb argued that if there's any probability that nobody will run a node in the future -- no matter how low -- the present value ought to be zero. I'm probably missing some nuance in this argument, though.

by jcfrei 5y ago

cm277 5y ago

I think that's a perfectly valid argument. And of you have any Miami beachfront property you may as well just gift it to me now as its value is $0, so why pay any taxes on it?

civilized 5y ago
Taleb responds to this. If you're getting utility out of something today - financial or nonfinancial, tangible or intangible - then it has worth today, regardless of whether it may be worthless in the future. Only goods that both never provide any utility and will eventually be worthless are subject to his argument. BTC seems to have value as a religious talisman if nothing else.

syntheweave 5y ago

The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! What is really not present in the paper is arguments that accommodate demographic change. Generational shifts - in population and asset distributions - are what mark corresponding shifts in currency, acting as an economic reset button. Taleb is looking just to the recent past to make arguments, while Bitcoiners would insist that one has to "zoom out" to see the potential longevity. In this respect they talk past each other. Currencies come and go throughout history. Nobody is particularly interested in the 1000-year outlook, or even the 100-year. Taleb made a "in the long run, we're all dead" argument. Given the pace of the current trend, the market could irrationally center on Bitcoin for longer than anyone outside it stays solvent, in which case, it's game over: that's a win for Bitcoin even if it does get displaced later and falls to 0.

civilized 5y ago
> The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! This isn't quite the whole argument. The argument is that BTC provides no utility and never will. Given this premise, and the fact that it will eventually die, its value today must be zero. Whether BTC fails to provide any value and will never do so is debatable, but it is certainly untrue of fiat.
throw0101a 5y ago
> The premise given is that some other technology will displace Bitcoin. This is not implausible, but it also applies to fiat! Fiat is backed by the/a government. The main scenario that I can think of in which something replaces fiat currency is if something replaces government. If an event occurs in which government is no longer around, there will probably be bigger problems to worry about, e.g., when the Imperial ruble was replaced by the Soviet ruble (and then the Russian ruble): * https://en.wikipedia.org/wiki/Ruble https://en.wikipedia.org/wiki/Ruble * https://en.wikipedia.org/wiki/Russian_ruble https://en.wikipedia.org/wiki/Russian_ruble
- lostmsu 5y ago
  Or government can decide to drop fiat.

kqr 5y ago

> The more pertinent question would be: What is the probability that at any point in the future nobody will run a node? I'd argue that probability is pretty low, therefore there will always be some value > 0 for the asset. I thought Taleb argued that if there's any probability that nobody will run a node in the future -- no matter how low -- the present value ought to be zero. I'm probably missing some nuance in this argument, though.