Gold or Bitcoin? Beware of the “malignant tumor,” says the Black Swan guru

This week Nassim Nicholas Taleb, author of the 2010 New York Times bestseller The black swan and one of the few to foresee the 2007–2008 financial crisis strained the debate during one Interview with the French weekly newspaper L’Express.

It’s safe to say that Bitcoin, which is down more than 60% since the beginning of 2022, doesn’t impress him.

“Technology comes and goes”

One problem with Bitcoin, he said, is that “we are unsure of the interests, mentalities and preferences of future generations. Technology comes and goes, gold stays, at least physically. Once neglected for a short time, Bitcoin would inevitably collapse.”

In addition, he said: “An entry in a register that requires active maintenance by interested and motivated people – that is how bitcoin works – cannot be expected to retain its physical properties, a prerequisite for monetary value, for any arbitrary period of time. “

When asked about the origins of the “craze for cryptocurrencies”, he referred to the low interest rates of the past 15 years.

“Falling interest rates create asset bubbles without necessarily helping the economy,” he said. “Capital no longer costs anything, risk-free investment returns are becoming too low, even negative, driving people to speculate. We lose our sense of what a long-term investment is. It is the end of real finance.”

One of the findings, he argued, was “malignant tumors like bitcoin.”

The “Everything Bubble”

Taleb is not alone in noting the impact of what has been dubbed the “everything bubble” — created by years of easy monetary policy by the Fed and other central banks following the Great Financial Crisis. When wealth As reported this week, the easy money era was filled with bulls — from crypto experts to hedge fund managers to economists and investment banks — who believed the good times would never end.

Interestingly, Taleb supported Bitcoin early on. Back then, as he explained L’Expresshe criticized then-Fed Chairman Ben Bernanke.

Bernanke failed to see the system’s structural risks before the 2008 crisis and overreacted afterwards: “Instead of correcting debt and mitigating hidden risks, he covered them with monetary policy that was meant to be temporary. I mistakenly thought Bitcoin was a bulwark against the distortions of this monetary policy.”

“Manipulators and Deceivers”

Taleb also warned that “the crypto universe attracts manipulators and scammers.”

He’s definitely not alone there.

Speaking at the a16z crypto Founder Summit in late November, Coinbase CEO Brian Armstrong said, “We kind of have to come to terms as an industry with the fact that I think our industry attracts a disproportionate amount of scammers and scammers. And that’s really a shame. That doesn’t mean it’s representative of the entire industry.”

(Armstrong added that he was “baffled” why FTX founder Sam Bankman-Fried wasn’t already in prison — a few weeks later he was.)

Taleb tweeted that he was trolled and slandered for his crypto criticism this week, but that such attacks were offset by the “lots of thank you messages for saving young people from bitcoin.”

He shared a message in which a Twitter user said he almost bought Bitcoin, but then started following Taleb’s thoughts on it, writing, “I theoretically understood why crypto sucks. Then things went wrong in practice. NNT saved my father’s hard-earned money.”

Meanwhile, many bitcoin bulls remain optimistic. Ark Invest CEO Cathie Wood recently reiterated her prediction that Bitcoin will hit $1 million by 2030 — it’s now just under $17,000. She also argued that Bankman-Fried disliked “transparent and decentralized” Bitcoin “because he couldn’t control it,” and said the FTX fiasco was caused by “opaque centralized actors.”

As for Cuban, he said to Bill Maher club coincidence Podcast last month: “I want bitcoin to go down a lot more so I can buy more.”

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