Nassim Nicholas Taleb, Author of Black Swan, on Bitcoin
medium.com
medium.com
> 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...
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.
I think forks are definitely the biggest concern for Bitcoin. I think most longterm holders arent realizing how big of a threat it is.
Bitcoin Cash is still around and can probably stay around for a long time reusing Cores work. Other forks will be less friendly and won’t preserve Bitcoins transaction history.
At that point, the people who are interested in building something worthwhile will be the only ones who remain, and we can work in peace.
But no one would get rich quick, so it would probably never take off in the first place.
Right now we're seeing the tip of the iceberg of potential cryptocurrencies. Pretty much only token-based (ie. non-ledger) based currencies, where we need global BFT consensus to track the current position of every single coin. This is crazy. And, as it turns out, unnecessary (see: Holochain).
When the iceberg capsizes (as Git capsized the CASE industry), globally consistent ledger-based value-stable currencies based on peer-to-peer co-signed personal blockchains will supplant these unnecessary globally consistent token based ... things. (Do I really care that you just slid a nickel across the table to someone? Nope). Same with crazy Turing-complete globally consistent VMs implementing Smart Contract languages. Not necessary.
You are correct -- value-stable currencies won't have anyone getting rich quick. But, when every sub-saharan goat herder and neighbourhood kid with a collection of trading cards can independently monetize his/her wealth into a value-stable currency, we'll see the face ripped off of the global Fiat monetary systems...
Because this has already happened in 2014-2016. It happened before that too. Each time the speculative bubble rises, it is being driven at first by improvements to the tech and/or ecosystem. Then it gets a life of its own, goes crazy, and runs out of gas. But along the way, more people learn about it and decide they care enough to continue the project.
Even if you are only in it for the money, the tech matters. Because the closer you are to the tech, the better you understand where the long term value will be, and when the price has outrun that value.
Maybe I'm overthinking it, but it seems inescapable.
This is perhaps what separates libertarians from liberals, conservatives, socialists, etc.: we simply do not deny others the liberty we claim for ourselves.
If a monetary system that cannot be debased/controlled by government is available, does that not allow you to elect to create and/or join a community of similar beliefs? Or, would you prefer that I (or someone else) be able to gain control of your government, and then choose to make it (financially) impossible for you to choose your associations and/or behaviors?
Or, perhaps: does your "utopia" require others to fund it, in order for it to work? This is, unfortunately, the case with most people's personal beliefs. They require the non-consensual forced effort of others to succeed...
In the unlikely situation where this happens and I'm alive to experience it, I'll be the most extremist libertarian you've ever seen. "You don't like this? Just create your own community on some planet a few light years from there and do your thing." Communists colonize their own little solar system, anarchists cohabitate in an other, fascists create the Germania consortium.
But that's not the world we live in currently. We're all stuck on the same speck of dust in the middle of an absurdly large ocean of empty space. So yeah, for now unfortunately it means we have to play nice with each other and compromise. Whether you like it or not you're part of a society.
Please keep generic ideological bickering off HN. It's always the same, therefore never interesting in the local sense of the word.
Which political views? I read the article and only saw a view on money, not politics.
What’s being criticized is the very idea that money should involve politics.
The argument is that we should be as free to choose which kind of money we use as we are to choose which kind of car we use. There should be no law giving competitive advantage — in the form of legal tender law, and the absence of choosing which numeraire to use as the basis for calculating capital gains tax — to currencies issued by central banks with whom the government has an account.
It’s entirely possible to deliver an argument for the separation of government and money without criticizing either in and of itself. It’s very much like arguing for the separation of church and state without saying anything negative about either of the two in isolation.
I obviously don't think anything is wrong with using alternative currencies, but I'm not sure that separation of currency and state can happen the same way separation of church and state has. Even if the government doesn't control the issuance of currency they will undoubtedly have an outsized influence on whatever currency they choose to support.
I honestly don’t see the big difference: the people, by voting on representatives, choose both which religions and means of payment the government accepts (assuming a democracy, of course).
Also relevant, there are no functioning democracies in the world today. There are a bunch of republics and parliaments and representative democracies and such, but without exception they empower some relatively small central institution to make broad, sweeping decisions on behalf of the nation.
This is not really accurate. There are of course many ways both fiscal and monetary for policymakers to "tighten the screws", as it were. They just haven't chosen to do so in recent years.
Perhaps a better way to describe it is that a pump and dump strategy has a transient effect on the value of the asset in question, whereas a central bank increasing the money supply has a persistent effect on the value of the currency in question.
In all possible worlds, individuals will fork Bitcoin and the competition for economically and technically sound digital monies will only increase. And in all possible worlds, individuals will manipulate markets with very low volume, ie. Bitcoin for most/all of its existence.
This is all deterministic. It could not be otherwise.
Good thing no one suggested that.
What baffles me is the obsession over price. Nobody obsesses over USD/JPY, unless you’re a forex trader.
Rather than focusing on price, the focus should be on building new ideas with blockchain technology. Dapps are easier than ever to deploy with Truffle/web3.js[0] for example. You can come up with cool alternative governance models like Dash[1] has.
I’ve been following Bitcoin since 2010. It’s never been about price for me. It’s been about what cool things you can build with the technology.
Thank you for putting words to an idea I've had for a while.
I agree that central banks are imperfect and that they sometimes abuse or just misuse their power. When they abuse the trust we place in them it creates real, specific problems. Cryptocurrencies have no trust, but they have even worse versions of the same specific problems.
This shouldn't be surprising. The entire reason we created central banks in the first place was precisely to attempt to manage these specific problems. The implicit argument is that centrally managing a currency isn't just imperfect and corrupt, but that it's so incredibly imperfect and corrupt as to be worse than nothing.
>This gives us, the crowd, an insurance policy against an Orwellian future.
Here's a great example. Does it really, Nassim?
> 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.
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.
In that statement, Taleb uses his conclusion as a premise. That doesn't make his reasoning stronger.
Took the words right out of my mouth. His recent thoughts/tweets on Deep Learning were even more confusing.
Like all the smart kids in school who rushed through math problems and wrote out the final answer rather than all the work to get there, he often skips key steps in his chain of reasoning. Since he skips them, he doesn't notice when those key steps are demonstrably wrong.
I feel he's gotten worse in this respect over time.
He is one of my favorite authors, but I am unconvinced by nearly everything he has to say. He has this cult-leader style of "everyone else is wrong, but here, you can be part of the enlightened group" that I find somewhat grating, but more importantly, he simply does not provide "extraordinary evidence for extraordinary claims."
Almost nothing he asserts is empirically testable due to his reliance on fat tails and Knightian uncertainty, and when it is, it either has not been empirically tested or the entire "traditional" industry is built around the empirical results. His response to this is generally of the form "systemic failures can dominate normal effects." [1]
In the cases where he leans on statistical modelling, especially modelling with fat tails, his writing breaks down. I find his approach at that point to feel sort of "baffle them with bullshit" in the sense that he is indifferent to whether it is even possible for the reader to understand what he is saying, once he has convinced himself.
[1] e.g., https://www.facebook.com/nntaleb/posts/10155509264828375
I don't think is arrogance or anything, it is just a skill that he doesn't have naturally and also doesn't care enough to practice and improve.
I think his ideas are strong enough to find an audience even without this skill. Contrasting him with a Malcolm Gladwell who, imo, reaches a large audience much more from his communication skills than from the power of this ideas, I think I prefer Taleb's style.
Malcolm Gladwell and Daniel Kahneman (author of Thinking, Fast and Slow) both credit Nassim Taleb for a lot of inspiration in their books.
Someone mentioned to me that Benoit Mandelbrot (author of (Mis)behavior of Markets) inspired Nassim Taleb for a lot of his thoughts.
So there... read Mandelbrot, Gladwell and Kahneman to understand Nassim Taleb.
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_EarthTake 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.
One big difference with crypto is that if you actually own your coins on an address you control then you could have several third party services competing instead of having your money "stuck" in a bank, but again I don't expect most people to do that.
> 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?
Bitcoin core (what we call BTC) has many more lines of non-Satoshi code that was added to facilitate off-chain scaling.
SegWit and Lightning are such elegant solutions that I can't really see a person as brilliant as Satoshi rejecting it.
The lightning network is still in beta, but it's certainly a much more scalable solution than bcash or any other fork.
> [Bitcoin] not good enough to buy your decaffeinated expresso macchiato at your local virtue-signaling coffee chain.
Plus he has some humor.
He'd love our office fridge.
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.
I'm guessing Taleb hasn't heard of Cowry shells [1]...
That is actually a very interesting thing as an economist. I would have loved to see Hayek and bitcoin in the same era..
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.
Old time gold that was traded without minting or governments had Eureka related issues.
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.
Regardless of what you think of BTC and its ilk, I think this is a pretty good point about investing in gold.
“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
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.
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.
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.
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.
How does that follow, at all?
Is the total value of all the USD in the world equivalent to the total transaction fees paid on USD in the future, discounted for inflation?
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.
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.
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-lite...
Taleb goes overboard sometimes, but he has been so great for calling BS on finance pseudo-science.