Bitcoin Is Worth Zero: 'Black Swan' Author Nassim Taleb

Nassim Nicholas Taleb, former options trader, risk analyst, and author of the bestseller about high-impact unpredictable events “The Black Swan,” returned to one of his favorite activities as of lately –– bashing Bitcoin BTC/USD.

What Happened: In a recent paper published on his website, Taleb said that Bitcoin failed both as a currency and a hedge and that "few assets in financial history have been more fragile than Bitcoin." He also stated that Bitcoin is worth “exactly 0,” among other reasons because — as other cryptocurrencies — it requires " a sustained amount of interest" to continue to exist, as opposed to gold and other precious metals, which are largely maintenance-free.

Taleb noted that in March 2020, Bitcoin dropped more than the stock market and recovered after a "massive injection of liquidity."

This, according to him, is "sufficient evidence that it cannot remotely be used as a tail hedge against systemic risk."

Why It Matters: Taleb also claimed that Bitcoin responds to liquidity and that it is not entirely clear how its system would react if the internet experienced an outage, even a regional one, especially if it took place during a financial collapse.

Taleb admitted that it is desirable to have at least one currency without government control, but he believes that such a currency would need to be a better store of value than Bitcoin, with its "extremely high volatility." 

Read also: 'Every Address Metric For Bitcoin Looks Awful,' Says Crypto Fund Manager

This could be achieved, according to Taleb, "by tracking a weighted basket of goods and services with minimum error.”

What Else: In April, Taleb also said during a CNBC interview that Bitcoin "has the characteristics of an open Ponzi, and everyone knows that it’s a Ponzi."

While he admitted that it is “a beautifully setup cryptographic system” and that it is “well made,” he claimed that "there’s absolutely no reason why it should be linked to anything in the economy.”

Price Action: According to CoinMarketCap data, Bitcoin is currently worth $31,741 after losing 3.24% of its value over the last 24 hours. It is also currently over 48% down from its mid-April high of $64,234.