‘It’s not even good for money laundering’: Nassim Taleb lashes out at Bitcoin
fortune.com
fortune.com
Not sure if Bitcoin will be that, but after the events of last years, nobody can pretend that fiat currency doesn't need competition.
And it’s another good demonstration of the top-to-bottom uselessness of a deflationary currency.
The thing about competition is that no one needs to pretend or believe anything. If Bitcoin were competitive then it’d be competitive. It’s not, because it’s not.
These levels of irrationality caught me and many others off guard. I did not at all expect the central bank to wait an entire year in what seemed like no brainer rate hike. I'm not sure what they were stalling for, but I already lost my trust in fiat then. Inflation isn't going back down until people are sure that central banks aren't going to be weak again. By the way, just look at the markets. They are all calling the Fed's bluff right now. The markets are screaming "the Fed is weak, he'll pivot".
Nobody believes the current Fed has the stomach to fight stagflation. Everybody knows he has to, but everyone already saw him chickening out of raising rates for a full year with "transitory inflation" narrative.
EDIT: A full year isn't "few months". It's a whole year. A whole year during which the Fed has completely eroded the trust in the central bank. Inflation was already 4.1% at April 2021, continuing to climb, up to 7% in December 2021, yet only in April 2022 the rate hikes started. That's not rounding error. It's a full year during which the problem transformed from somewhat manageable to full blown economic disaster and this train wreck isn't even close to stopping.
I would be very careful of ascribing a motive or singular opinion to “the market.” It’s way too easy to just project your own theses onto it.
Edit: Replying to your edit in an edit of my own... I'm very curious to hear what you think is the "full blown economic disaster" that we're in right now?
Not OP, but I think to crypto people who got in at the peak, they are in the midst of a full blown economic disaster. Trillions in “value” distorted from garbage coins and exchanges crashing.
If it's meant to be a tool for control and manipule society, then yes it's a marvel that an entire shutdown resulted in asset valuations to grow by around 30% in 2021.
Trying to control the economy by manipulating money supply is like trying to control climate change by manipulating thermometers
Also, in response to the GP, we actually had a direct comparison between the “inflationary” economics the US followed and a more conservative approach right after the 2007-2009 financial crisis.
The Fed “printed money”. The EU didn’t. And the U.S. economy grew faster with lower inflation and a stronger dollar than the EU. Several EU countries are still suffering from the non printing austerity policies the EU followed.
Also I’m really struggling to understand the claim that “printing money” has caused massive inflation. I think we can all agree that no entity has “printed” as much money as the US and the Fed have. And still inflation in the U.S. is lower than inflation in the EU or pretty much any other country in the world.
It’s almost as if “money printing” isn’t the primary driver of inflation in the world right now.
Thus you hear among crypto zealots how if 21 million units is not enough they could simply start referring to the unit of currency by successive powers of 1/10.
Imagine what these people would say if the government answer to inflation was to start gradually pressuring citizens to accept ten-thousandths of pennies as legal tender, the way that coiners advocate switching the bitcoin reference unit to satoshis. Infuriating to hear people advocate this nonsense, as if they think no one is clever enough to realize that expecting later adopters of their scheme to use microscopic shards of the tokens they themselves hold entire, isn't a shameless admission that they're only in this to grossy enrich themselves at everyone else's expense.
in what world is the economy pulling through 'relatively unscathed'? It's quite literally teetering between hyperinflation and deflationary collapse monthly
FWIW I agree, the v i b e s are extremely weird right now. But it’s pretty hard to say what’s wrong exactly?
No it's actually a less alarming way to say "we're at a point where the economy could collapse overnight (not exaggerating here, I quite literally mean it would take one night where very feasible events occur) and almost has on multiple occasions in the past 3 years"
>But it’s pretty hard to say what’s wrong exactly?
No it's not hard actually. Real inflation is still extremely high despite very high interest rates and despite job losses, consumer debt is insanely high, several banks have collapsed, the economies of several countries have collapsed, there is a growing anti-US economic block and monetary velocity is running off a cliff in an uncontrolled manner.
Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.”
[0] SVB’s risk model flashed red. So executives changed it. https://www.washingtonpost.com/business/2023/04/02/svb-colla...
The inflation _rate_ has been coming down, inflation is still high.
>Interest rates are not “very high” by any historical measure
They're at 2008 levels and the situation is still not under control.
>The labor market is ridiculously strong
The labor market is not strong, the numbers don't include people who've dropped out of the market, and the people who are working are being pushed to breaking point and cannot afford their lifestyles (hence why we look at consumer debt, and the polling that shows people are putting groceries on credit cards).
>The “several banks” that collapsed should have collapsed due to their own poor risk management
I'm not discussing whether they should or shouldn't have. I'm discussing the fact that they did.
>and the systemic risk was mitigated effectively and quickly.
This was recent enough that the systemic risk is still in play. The FDIC isn't infinite.
>Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.”
Interest rates hike to control inflation -> nobody wants to lend to consumers because of interest rates -> [money stops moving -> consumer mass default (this is the 'oh shit' overnight moment) -> mass business bankrupcy -> nobody to hire said consumers] (loop) -> risk of uncontrollable deflation -> fed needs to starts money printing again to meet obligations to paper over the fact real productivity is annihilated -> erratic hyperinflation
Employment rates: You can find this data and it doesn't really seem all that alarming to me. In 2013 there were ~2.5MM marginally attached and 800k discouraged workers. Today there are 1.5MM marginally attached and 400k discouraged workers. https://www.bls.gov/webapps/legacy/cpsatab16.htm (I picked 2013 only since it was the earliest data shown on the chart.)
That scenario is plausible at any point in time, no? We have to do what we have to do and yes, it could definitely turn out poorly, but so far there's been a whole lot more talk of doom and gloom (for years) than actual doom and gloom.
It's not clear there's another path of action anyway. If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it.
Long term yes.
>but I suppose you'd still be worried that it's high relative to some other arbitrary point in history
Ideally the inflation rate should be around 0.1% and stay consistent with real economic output, instead of going towards feeding a parasitic financial sector.
>Employment rates
I think you might be right on this point.
>That scenario is plausible at any point in time, no?
No, recent stresses have made it much more likely.
>If you know of a "slow inflation but don't risk spooking lenders" button, I'd love to hear about it.
In an ideal world I would spook the lenders more aggressively, and cause the immediate systemic failure of the banking system, and just accept the fallout, but unfortunately such things are relegated to the realm of fiction for now.
But interesting that someone still remembers what BTC was supposed to be. Everyone's denying the Satoshi white paper ever happened these days.
* Anything reliable about crypto adoption in Vietnam from a more recent time than March of this year in English (or accessible with Google translate).
* Anything comparing different cryptocurrency proof formats by Vietnamese popularity, including differentiation of non-mineable proof of work cryptocurrencies like Monero.
* A convincing argument that the Vietnamese cryptocurrency market won't vanish in less than a year when their government caves to the State Department and IMF's lobbying and liberalises their banking and payments laws.
For daily commerce, people still used Dong or Venmo-esque services like ZaloPay, Momo, or Mocha.
Ik they were investigating a Blockchain based Virtual Dong back in 2021, but idk if the people affiliated with that are still relevant or not in prison due to the graft crackdown.
For daily commerce, we have instant, free, cross-bank transfer. All popular banks provide e-banking apps with fast transaction to all the other popular banks. Polymer money are still used for very small amount (and oddly, buying gasoline), but I have been going 90% cashless for a year.
All Blockchain related stuffs are still more or less unsupported by law, not recognizable as assets. So if you get crypto-scammed in Vietnam, which happens a lot, you are more or less fucked
Part of it is invested interests. These parties want it to succeed so they profit and many have show themselves to be bad actors. The other part is it got partially entangled with the US culture war, which bleeds into other countries, so support or rejection of cryptocurrencies shows which side you are on (it's not 100% true but I think there are trends).
Equally I don't actually think Crypto will cure cancer any time soon...
Many do. But those don't even come close to BTC for the benefit/energy waste ratio...
Because not everything is about you. Or me. People get angry because BTC has (or they view that it has) wider bad influence in society (for shady stuff it's often used for, for its energy use, for the way it's promoted as a pyramid scheme/cult with people who don't know better losing their savings doing BTC speculation, and so on), which don't stop being problems when someone personally doesn't use it.
Novel concept for many still, it appears.
I wouldn’t say I’m “punching people” angry, more like I’m “shaking my head in disgust and regret” angry.
I would like to use a digital currency with micro transactions that is decentralized and censorship resistant. But speculators are ruining bitcoin, and others, making it not useful for these purposes.
And I’ve been waiting almost 15 years for it to die down and be useful as a currency. So I’m frustrated that idiots are stopping me from having a nice thing.
This is one of the few situations where stopping the bad people from “just let people enjoy things” is the only way to make it actually useful.
You just described Nano.
It's secondary (to scamming) use case appears to be enabling criminal behavior. While personally I am grateful to be able to buy weed over the internets I am cognizant of the harm it causes.
Plus the environmental issues.
There's lots of reasons to dislike Bitcoin. And pretty objectively the harm thus far outweighs the benefits.
Also, if we start dictating what acceptable and what's not acceptable, where do we stop? U okay with me banning something you use?
Because it won't stop at my front door in case it goes bust. Like any mass mania.
It kept expanding and shrinking as I tried to reject stuff so I just closed the page.
Not that I think much of Taleb after reading his first book, but I agreed with the summary this time…
It had one idea repeated 2500 times. He could have written it on a napkin.
Plus maybe I didn't read it carefully enough but I found no suggestions on how to deal with randomness...
I'll pick this as the most absurd use-case. Every party in an electricity grid already has to trust all the other parties in the network. What advantage does a trustless distributed ledger have that a more conventional distributed DB and messaging solution doesn't?
Just a thought: You could also store the energy or use it to do actually useful calculations.
They run a small hydro power plant and needed a bench to manage the excess energy load. They instead went for bitcoin miner containers. It’s a net positive for them as:
- They can manage the load of the hydro power plant
- They can sell back the bitcoin and finance other activities in the park
- They use heat generated by miners to dry fruits and experiment with creating a small economy with excess fruit resources in the park.
Some of the largest stations by output are in northern Quebec (one of the most "middle of nowhere" regions in the world) and their power gets sold as far away as NYC.
Similarly for Chile and Argentina which have quite a few huge dams in Patagonia, which is also extremely remote.
Plus most of humanity lives within the same 100 mile range of water, esp. oceans, and the bulk of humanity live in areas with lots of sun.
Electricity acts like a medicine. What they ought to be doing is wiring transmission lines to the hydro plant to organic demand for power.
Now if the real purpose of the dam was flood control and water buffering, and the notional hydro gen facility is tertiary and irrelevant, OK fine. Mine your Bitcoin if they have all the electricity they need regionally already. But this is no proof of nothing for the crypto bros.
Well, why aren't you doing it?
Let me guess. You don't have enough money to waste to just build a "giant tesla coil .. to make some pretty arcs", just for the sake of it.
Let me guess further. If you actually were to build such a coil, you'd want a return on your investment, you'd want to make money. As do many (which is a huge understatement here) people who invest in some material stuff.
Some investments are simply not financially feasible, because not enough people are willing to pay enough money for the resulting product/service.
That's the reasons you're not building your tesla coil.
And it's also the reason why we don't see people stacking so many massive batteries at the GWh scale (and try to make profit), so that grid operators can put a check mark on that "balance the grid at all times" task.
It's not happening because it doesn't pay for itself.
"Store the energy" sounds easy but is everything but that.
So when Bitcoin miners come along and set up their gear in some grid where the price of electricity regularly goes low/negative .. which happens because noone else is able to use the amount of electricity available at that moment to do something useful with it .. then they're actually doing something useful.
They're preventing the price from going even lower, they're making the power generation more profitable.
If you can come up with some process to make use of the fluctuating excess electricity and at the same time, make money from it, congrats, you have an excellent business case and only need some investors to throw money at it to get filthy rich.
Until then, you could try to acknowledge that somehow through means of money/prices, (parts of) society has attributed some value to running sha256 perpetually, enough so that the process can use quite a bit of electricity and move money to electriticy producers.
And then people are acting surprised about commenters here arguing against tokens for seemingly no reason or monetary gain. How about people are simply pissed off about reading lies for a decade now?
This is like saying cyanide pills have a great feature in nutrition.