Is Bitcoin or gold a better investment? Opinions differ, with billionaire crypto enthusiast Mark Cuban favoring Bitcoin—and slamming gold—and Euro Pacific Capital CEO Peter Schiff going the other way.
Nassim Nicholas Taleb also had some thoughts. This week the 2010 New York Times bestselling author Black Swan– among some who saw the financial crisis of 2007-2008 – weigh in on the debate interview with French weekly L’Express.
It is safe to say that Bitcoin, which has fallen by more than 60% since the beginning of 2022, cannot impress them.
‘Technology comes and goes’
One problem with Bitcoin, he said, is that “we are not sure about the interests, mentality and preferences of future generations. Technology comes and goes, gold remains, at least physically. After being neglected for a short time, Bitcoin will surely collapse.
What’s more, he said, “It cannot be expected that the entries in the register that require active maintenance by interested and motivated people – this is how Bitcoin works – will retain their physical properties, conditions for monetary value, for any period of time. .”
Asked about the origins of the “craze for cryptocurrencies,” he pointed to low interest rates over the past 15 years.
“Lowering rates creates an asset bubble without necessarily helping the economy,” he said. “Capital costs nothing, risk-free investment returns are low, even negative, forcing people to speculate. We’ve lost the sense of what long-term investing is. This is the end of real finance.
One result, he says, is “a malignant tumor like Bitcoin.”
‘all bubbles’
Taleb isn’t just documenting the effects of what he calls a “whole bubble”—created by years of monetary policy by the Fed and other central banks after the Great Financial Crisis. As fortune reported this week, the era of easy money is filled with bulls—from crypto experts to hedge fund managers to economists and investment banks—who believe that the good times will never end.
Interestingly, Taleb supported Bitcoin early on. At the time, as explained to L’Expresshe was critical of Fed chairman Ben Bernanke.
Bernanke, he said, did not see the structural risks of the system before the crisis of 2008, and overreacted afterwards: “Instead of correcting the debt and reducing the hidden risks, they cover it with a monetary policy that is only supposed to be transitory. I mistakenly thought that Bitcoin would be a fortress against the distortion of this monetary policy.
‘Manipulators and scammers’
Taleb also warned that “the crypto universe attracts manipulators and scammers.”
He certainly wasn’t the only one there.
Coinbase CEO Brian Armstrong said at the a16z crypto Founders Summit at the end of November: “We have to kind of come to terms as an industry with the fact that, I think our industry attracts a disproportionate part of fraudsters and scammers. And that’s really unfortunate. This is not representative of the entire industry .
(Armstrong added that it was “puzzling” to him why FTX founder Sam Bankman-Fried had not been arrested – weeks later.)
Taleb tweeted this week he has been trolled and smeared for his criticism of crypto, but such attacks have been offset by “many messages of thanks for saving young people from Bitcoin.”
He shared a message where a Twitter user said he almost bought Bitcoin but then started following Taleb’s thinking, writing, “I understand why crypto doesn’t exist in theory. Then it’s a bust in practice. NNT saved my father’s hard-earned money.”
Meanwhile, many Bitcoin bulls remain bullish. Ark Invest CEO Cathie Wood recently repeated her prediction that Bitcoin will hit $1 million by 2030—it’s currently just under $17,000. He also argued that Bankman-Fried did not like Bitcoin’s “transparency and decentralization” because he could not control it, saying that the failure of FTX was caused by “opaque centralized players.”
As for Cuba, he said in Bill Maher’s Random Club podcast last month, “I want Bitcoin to drop more so I can buy more.”
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