Nassim Taleb on BitCoin - 

to 0

@nntaleb

View BTC is as a contagious disease. It will spread, spread & its price will rally until saturation, that is ~every sucker stupid enough to buy the story is invested. When all suckers are in, the prevailing belief will make it an "obvious" investment. That's maximal fragility.

 

Comment 1: Why BTC is worth exactly 0 Gold and other precious metals are largely maintenance free, do not degrade over an historical horizon, and do not require maintenance to refresh their physical properties over time. Cryptocurrencies require a sustained amount of interest in them.

Let us go deeper into how a currency can come about.

No transaction between two persons is analytically pairwise

in an open economy. The root of the confusion lies in the

prevalent naïve-libertarian illusion that a transaction between

two consenting adults, when devoid of coercion, is effectively

just a transaction between two consenting adults and can

be isolated and discussed as such12. But one must consider

the ensemble of transactions and the interactions between

agents: people happen to engage in contractual agreements

with others; for them a specific transaction is just one piece.

To be able to regularly buy goods denominated in bitcoin

(whose prices fixed in bitcoin but floating in U.S.$ or some

other fiat currency), one must have an income that is fixed in

bitcoin. Such an income must come from somewhere, say, an

employer. For an employer to pay a salary fixed in bitcoin, she

or he must be getting revenues fixed in bitcoin. Furthermore,

for the vendor to offer a can of beer in fixed bitcoins, she or

he must be paying for the raw material, and have the overhead

fixed in bitcoin. The same applies to the mismatch of assets

and obligations on a balance sheet. All this requires a parity

in bitcoin-USD of low enough volatility to be tolerable and

for variations to remain inconsequential.