Comments on the "Bitcoin Black Paper" (Why Bitcoin is Worth Exactly 0)

The main paper and the supplementary equations are at
arxiv.org/pdf/2106.14204.pdf
and
fooledbyrandomness.com/blog/i...
Erratum: the equation min 3:4 must include the discounting inside the summation (1/1+r)^i

[@nntalebproba]

If you comment here without having bothered to read the paper, the comment will be removed and you will be permanently banned from posting on the site. I am tired of arguments "what about gold? what about fiat?". THEY ARE ANSWERED IN THE PAPER.

[@SlobberySlob]

It cannot be valued as a security as it has no cash flow. Unlike Amazon who one day is expected to pay a dividend, but never has and may not ever. But it does have earnings.

[@John-Brown]

@@michaelestrinone2111 In common parlance, a security is any type of tradable financial asset. However, the precise definition of a security is a legal definition and thus varies by jurisdiction.

[@RedShiftedDollar]

@@SlobberySlob He provided a formula for the value of a security. There is a cash flow term and another one. Bitcoin’s cash flow term is zero but this is also true for many other securities. He wasn’t stating this as a negative, it is simply a fact but this fact alone does not mean Bitcoin has zero value. This fact coupled with the other fact that it has no utility are combined to result in zero. To resolve any confusion over the definition of a security, just assume that anything that can be valued according to the formula provided counts as a security. In a way, that formula is the definition.

[@SlobberySlob]

@@RedShiftedDollar You missed the absorption barrier. The whole BTC ecosystem takes huge amounts of energy to keep it alive, fractional costs, sentiment, nodes etc.... and has many terminal vulnerabilites, thats mainly why its heading to 0 unlike Gold.

[@alwadud9243]

Coward, although it takes some integrity to admit defeat (repeatedly deleting my legitimate comments), except if it's the easier way to be a coward and you're actually trying to hide truth

[@Daisyworld234_]

Which is better 1. Early buyers of a currency gain value 2. Miners can only create value by spending energy equivalent to the price of the currency 3. Fixed supply. Absolute scarcity. Or 1. Early buyers of a currency lose value 2. Owner of a currency gets to steal value from the early buyers 3. The supply of the currency is unlimited and inflation rates can be manipulated by greedy politicians

[@asmaghani766]

Nicely put. Bitcoin is a Digital Commodity, not a currency. In terms of your first point, not all early buyers of bitcoin have gained value relative to USD unless they held for at least 3~ years, but that aside, your 1st point actually it actually links to your 3rd point (1 Bitcoin is always 1 Bitcoin).

[@haldanesghost]

Being able to manipulate the currency, if the agent is competent, can also help stabilize it. #3 is a double edged sword

[@nilskp]

@@asmaghani766 why are people unable to grasp that as an entirely new asset/technology, Bitcoin can be viewed as both a commodity AND a currency? And other things too. It simply escapes the boxes. It's all things to all people.

[@jgons]

@@haldanesghost ha. How idealistic. They’re always playing catch attempting to correct their own mistakes.

[@RougeDeBlah]

i ownder why no currencies around the world are backed by anything....interesting...hmmmmm.

[@Mattieinko]

Thank You for changing the set up. Now the with the white board is more readable.

[@saraf9081]

I own Bitcoin but I have to listen to both sides to be educated

[@ammandotcom]

rarely do people think like that( i own bitcoin aswell) always listen to both sides you are a gem!

[@vandogtrailer6701]

@@t.555 Correct. I have failed to find anyone under the age of 50 that makes a full throated defense against Bitcoin. No one under 30 makes *any* defense. It's not hard to see where this is going.

[@rutvikrs]

I have been a Nassim Taleb fan before I owned bitcoin( a few thousandth of it to be precise). Always wondered if a day would come when Taleb's Levantine philosophy of "old things retain design because they have function" runs to its limits. I think that day has arrived.

[@cantatanoir6850]

Nassim owns some bitcoin too.

[@Eng_Simoes]

@@cantatanoir6850 that's a very underrated comment, if not factual shows a great understanding of his philosophy

[@ticalculator830]

I love you man! Hope you are having a wonderful day!

[@jungjunk1662]

Thank you for doing these Sir. Many thanks my friends in India. Thanks to the Internet too.

[@cesaralves2303]

"it's going to get a little technical" I was barely following along already, I need to polish my math skills 😅

[@KarimTraderFutures]

Bonjour Monsieur TALEB, je vous remercie pour ces explications. Je suis en train de relire pour la seconde fois d'Incerto. Bien amicalement et encore une fois merci.

[@pedog]

Interesting talk. Big flaw in the premise though. “If it’s not a currency, it must be a security. It’s not a security, it’s worth zero”.

[@vandogtrailer6701]

Right! I have such respect for NNT, for all the obvious reasons. I'm addition to "what" I've learned, he's also taught me "how" to think critically. The purposely limited thinking on this topic is disappointing. It's all motivated reasoning. How can he not see that Bitcoin itself is a black swan, or at least an emergent phenomenon of internet technology. Very sad.

[@TheMongolianWay]

If its not a currency then its useless so then its Value to society is zero

[@vandogtrailer6701]

@@TheMongolianWay So with that logic gold also has no value to society. Got it.

[@polymathfreeman224]

@@vandogtrailer6701 Perhaps he changed his mind (look at the preface of The Bitcoin Standard) to bet on ETH. A lot of people are thinking that ETH will become the crypto dominant. So maybe NNT is warning discretely people to stop being maximalist.

[@miraclemaxicl]

what is the flaw?

[@jmyers112]

Well said, N N Taleb. Best wishes from Iowa.

[@nntalebproba]

We are not disabling comments. We will let the trolls spend some time and effort forming sentences, then block them in a nanosecond directly or via bot.

[@sabinmanimala7003]

Where is CRP's comment?

[@roarrman]

@@sabinmanimala7003 switch from "top comments" to "newest first" it worked for me 👍

[@karozagorus]

I gonna have you kneeling at 1m dollar/bitcoin, have you begging for sorry as you gonna be fully humiliated by the fact you did this ORBITAL mistake of turning every bitcoiner against you.

[@paul1der]

Nassim you are very special. I would love to meet you someday. I feel like we are related. From childhood I felt something wrong with our world and sensed fake experts with degrees and fake assets but never knew how to express it until you popped up on my KZbin feed. Thank God!

[@vintagemotorcyclerepair4052]

Please do a video demonstrating the math on where the value of a hard earned dollar ends up with negative interest rates.

[@russellfernandez57]

You don't need math to understand that

[@patrickbateman1660]

Literally just demand and supply. When supply is greater than demand you have negative interest rates. Really that simple.

[@ramatloka2551]

Thank you for the explanation and also the paper. I think I agree with your position regarding bitcoin.

[@programahepintersg3745]

So helpful, thank you Dr. Taleb.

[@geedoubleu641]

Thanks, that was fun.

[@benedictdamoskinos2680]

The one thing that strikes me in the arguments of both sides (pro or anti-BTC) is that there is most certainly a paradigm shift in things that we designate as "assets, currencies, or otherwise" and how we value them. As much as this transition may be underway, it certainly will take time. Hélas, nous devons garder un esprit ouvert!

[@ivangoran4461]

Yeah safety and freedom shifted also, WHO changed the definition of herd immunity, and definition of va((ines also changed. I recommend "General Semantics" of Alfred Korzybski and "The Tyranny Of Words" by Stuart Chase.

[@Achrononmaster]

@@ivangoran4461 Shifting your "freedom" to an unregulated private anonymous unelected group really sounds like a good idea huh.

[@ivangoran4461]

@@Achrononmaster Changing definitions of words does not sound alarm in your head? Getting vaxxed every six months suddenly became normal. Well, is it? If you are from the states and you talk about unelected group of people, than you are a joke.

[@OM-el6oy]

@@ivangoran4461 your comment has nothing to do with the video or what the original commentator said and yet you want to give book recommendations? The nerve.

[@ivangoran4461]

@@OM-el6oy So you read these books and came up with that conclusion? Wow. You`re really talented. Did someone help you or you did it all by yourself?

[@mauric440]

El esfuerzo que hago pero no te entiendo una garcha hermano! abrazo! excelente paper querido! sos un capo!

[@lesliethomson2441]

Che ¿Where's he from?

[@mauric440]

@@lesliethomson2441 don´t know

[@fminc]

I haven't seen this upload yet. Bin on the internet since the beginning of time and never knew he had a channel on youtube, what the fuck is wrong with me????. Eitherways, the King has spoken on this contentious topic. I look forward to watching it.

[@juliandiaz9367]

If your conclusion is that “it must be worth zero” but the market is procing it at 40K then a wise man would realize (or at least consider the possibility) that his logic is flawed or his premises are wrong.

[@L123Alpha]

In effect, a DCF valuation for BTC ignores cash flows because there are none, and the terminal value has a non-zero probability of falling to zero given no cash flows and no inherent value. Assuming you hold BTC, you’re banking on the greater fool theory for the market value to be non-zero tomorrow. I agree, but question whether there is any option value in holding BTC for the future potential? IMHO the option value would be deminimus compared to current market value, but it is something.

[@vladav313]

Meastro, appreciate you taking the time out to do this for us.

[@paulb6338]

@NNT Presumably, you are short? Otherwise, why should I believe someone without skin in the game?

[@depressedessendonfan5702]

Whether or not it makes sense to bet against this would be the price of holding the short. In Talebs books he disxusses i believe holding exotic binary options that had huge potential pay offs despite being unlikely, but they also were'nt expensive because no one thought those events could happen. Crypto is the opposite - from the second it has hit the publics attention it has divided opinion, so the options tools have from the get go had a big demand and thus would be very costly to invest time in guessing the or 'a' (could still not happen) fall.

[@depressedessendonfan5702]

@@panaccoman the price of holding matters a lot. It eats into other capital, there's sunk costs and you are speculating on a win. Why dont you ask him if hes currently funding options i guarantee you the answer is no

[@depressedessendonfan5702]

@@panaccoman are you going to cry bro?

[@MsMrshanks]

Touche Zer!

[@Isacc143]

the value is that it is not corruptible. Its funny for me how such a genius is not able to see that as valueable.

[@vitorgrohs.7424]

Teacher! Could you leave the automatic subtitles option enabled on the videos? My English is not one of the best. I bet you have a lot of deaf fans too.

[@kabitshon535]

The link for the paper in the video description is broken

[@eliascamacho]

Things have the value that one wants to give to it. A collector pays millions for things that some find useless.

[@SteveSmith-jc7pc]

And what value do you want to give Bitcoin? If no-one else gives it a value, would it still have a value to you? Maybe a Picasso would ... but all the people I know who have Bitcoin have been buying purely with the hope that it will go up, up, up. Not because they think it's really worth the money they paid.

[@therealestmc85]

@@vladimirkazakov3033 it's worth more than it did last year? I don't think you understand what you are saying.

[@therealestmc85]

@NRG not a guarantee but the trend seem to suggest btc will rebound.

[@bautistabaiocchi-lora1339]

@@SteveSmith-jc7pc You should try looking at BTC and cripto currencies alike through the lens of 3rd world countries who live under enslaving financial oppression. It may be refreshing.

[@chinogambino9375]

@@bautistabaiocchi-lora1339 The poor people in those nations use USD, BTC is useless as a currency and oppressive governments regularly block internet traffic entirely. BTC is stupid and horrendously expensive as a network.

[@DengueBurger]

Any chance you can permanently use the second mic you use? The first one doesn’t sound very clear

[@AeoJx]

Hi Nassem (or whoever runs this channel). The link to the paper in the description is broken. Thanks.

[@HassanWorld]

The price of Bitcoin is infinity indeed.

[@pikaso6586]

For your infinity money you need to buy 1/BTC

[@pikaso6586]

Hilarious

[@HassanWorld]

@@pikaso6586 you know I am right ultimately.

[@pikaso6586]

@@HassanWorld of course, so I presume that all your money is in bitcoin?

[@HassanWorld]

@@bradynields9783 Wouldn't you say the same for most, if not all, assets?

[@Alex_Plante]

I'm been trying to figure out if bitcoins have any use other than as money. Gold has some uses in electronics, but it's main use is for jewelry and art because it's pretty and doesn't corrode. Maybe one day bitcoins can be used for something, but I cannot figure out what. I know the same is true for paper money, but most people tend to hold very little paper money. And at least you can make wallpaper out of paper money.

[@joaosilva-ji1ve]

BTC Dont have smart contracts. Smart contracts would be the utility BSV is the only currencie that wants to be a currencie and have smart contracts. Ethereum is a platform of smart contracts. BTC i dont have a clue what they are trying to do makes no sense is slow and dont have smart contracts..

[@RedShiftedDollar]

Bitcoin can be used for many things. The problem is that it is not good enough at any of those things to displace the alternatives that people actually use. For instance, it really could be used as a currency but it is slow, the fees are high, it has counterparty risk, it is less accessible than alternatives, all account balances and transactions are exposed publicly, etc. So what do most people actually use as currency? Visa or MasterCard credit denominated in dollars. This credit is digital, it can be transacted in seconds, fees are relatively high, but still lower than bitcoin’s in most cases, Visa provides fraud protection services, transactions can be reversed, users get rewards and perks like points and rental car insurance, Visa is accepted by millions of merchants around the world, etc. By denominating in USD, users of Visa credit gain the benefit of short term price stability and the ability to pay your credit bill using the same currency most people receive as wages and pay their taxes in. Yes that is a fiat with its own problems, but inflation is a non issue for a one month credit cycle. Visa could also change their denomination very easily or provide currency conversion services. Visa credit is significantly better than Bitcoin for most uses which leaves fringe uses as the potential market scope. However these uses are better served by alternatives as well.

[@joaosilva-ji1ve]

@@RedShiftedDollar Also now money Will be digital with cbdc's

[@RedShiftedDollar]

@@joaosilva-ji1ve Money already is digital. CBDCs will add digital serialization and centralized transaction processing. These things don't change money, they only change the ability to track and control the flow, creation, and destruction of money.

[@joaosilva-ji1ve]

@@RedShiftedDollar you Will stop havibg physical money

[@TacticalTruth]

Agree with all what you said. But is it possible Bitcoin is a new class of assets? It may not have residual intrinsic value, but there is limited supply. Like collectable stamps. It is worth what it's worth because enough people say it is.

[@harrissimo]

There is a limited supply of my turds. How much will give me for them? I have a hot fresh batch coming up in a few minutes.

[@SolarPlayer]

​@@harrissimo Shit, we could petrify them and use them as a currency! There would be a manageable inflation whenever you take a dump, and government could slightly control the turd supply by feeding you more tacos. If we conservatively estimate a market cap of $600 billion, which is of course totally reasonable for an imaginary currency that nobody uses, paying $1,000,000 for one of your turds is the steal of a lifetime.

[@ominousparallel3854]

@@harrissimo hahah what an actually great answer

[@skwalka6372]

@@harrissimo The fact your turds are "yours" doesn't grant them value. Turds can be very valuable with the right characteristics, for example, fossilized dinosaur turds are collected by museums and have significant value, the turds of beautiful women are very valuable to a segment of the cropophagic community, etc.

[@redrustyhill2]

There is no limited supply when those 21 million "coins" can be broken down into infinitly smaller units. That 21 million soon becomes 21 quadrillion

[@custinpham2959]

Thanks great video

[@fullstack5461]

Excellent work

[@ff-jt8un]

Do you have any thoughts on crypto currencies that try to be more "currency" like, such as monero (not necessarily on monero itself)? Monero is actively used for transactions today, without the insane transaction fees that bitcoin has. Still has huge volatility problems though that might preclude it from being used as a "real" curreny. It's clear bitcoin cannot be used as a a currency and as a store of value is much too susceptible to black swan events. Thank you for fighting the bitcoin psychos out there.

[@chinogambino9375]

@@yeetdeets No one uses it as a currency because it has none of the characteristics of a currency. You disagree with reality.

[@derosepuan]

Thanks Professor, this is very clear. I am no sure this is a reasonable question, but here it goes: there is any probability for it become currency in the future? Is that part of the expectation of value (in addition to selling to the next idiot)? Thanks in advance.

[@andromaxbse6459]

The future will be that each country have their own legitimate stable crypto currency.

[@austin4you262]

It can’t be a widely adopted currency with such fluctuation in price like right now.

[@gersonadr2]

Which is bigger: the risks associated with owning BTC or number of idiots in the universe?

[@TacticalTruth]

Both numbers are unknowable

[@phatster88]

A guy loses his lotto ticket.. a guy loses his password to his e-wallet: same difference. Imagine if Ponzi had access to a computer back in the days.. oh wait.. that was Madoff.

[@bigeteum]

Number of existing idiots is limited, the risk might be infinite.

[@jerryware1970]

The greatest risk for an investor is missing an opportunity.

[@ConorChepenik]

Few.

[@Eng_Simoes]

A brief look into comment section shows that most "critics" didn't even understand the point made in the video (anime avatar is a big red flag).

[@liangli-wei9316]

rofl. Then why don't you simplify it? You talk liked the math he "used" really captures all the nuances with bitcoin.

[@jimaylan6140]

He's reducing everything to a very simple crude model and then shows that the model means the price should be zero. The model is wrong, but he's claiming reality is wrong.

[@jimaylan6140]

@@SciloMendez What I'm saying is bitcoin can't be compared to gold, or a bakery or anything else, because it has an innate ability to skirt government laws and regulations, and can be verified 100% very quickly. Ex. a gold bar can be faked by containing lead, a share certificate can be forged. And neither of these can be transferred to someone from the USA to Nigeria, without a large amount of cost and red tape, if it's even possible at all. This friction between most goods and securities not being present with BTC is not captured by the model.

[@jimaylan6140]

I'm having trouble following this. You do realize that miner reward is a combination of fees paid by the sender plus a subsidy of minted new coins, right? When 21 million coins have all been issued, that subsidy goes to zero, but the fees paid by the sender still will be present.

[@jimaylan6140]

@@SciloMendez Also, here is a chart of the difficuly chart, which is another name for the complexity. As you can see, it goes down many times over the years: www.coinwarz.com/mining/bitcoin/difficulty-chart

[@aahansapra9572]

You say the cash flow & discounting are 0 for Bitcoin? but what about transaction fees (like a payments network) and mining rewards. It makes the asset salable across time, scale and space.

[@nunoalexandre6408]

Love it!!!!!!!!!!!!!!!!

[@robbyr9286]

I actually like the old school audio EQ, it reminds me of old instructional films from the 1960s- kind of comforting.

[@sageinit]

The paper you're writing there is actually a physics paper @ NNT, you just haven't realized it yet

[@Del_987]

I wonder if he’ll do the same for Ethereum

[@nilskp]

Why would he? Ethereum is no threat and is unlikely to survive long term. It simply doesn't have censorship resistant properties necessary.

[@vuducphuvn]

@Opressa Era I don't think no one knows what the code does. You don't know doesn't mean no one knows 🤔🤔🤔

[@marktube5732]

@@nilskp We'll see about that one, cupcake.

[@Yomama4536]

Why would it be any different??

[@Yomama4536]

@@AltumNovo Enlighten me please.

[@xdotli]

So at the end of the comment one part, Nassim meant that for the limit not to be zero, the expectation of the price of bitcoin over t+n should be \infinity to cancel out the exponential term before it. Am I getting that right?

[@sillymesilly]

If he is getting infinity ♾ and is canceling it out, then he’s math utter trash

[@adityamodi2361]

Can this formula value gold?

[@dziugas6795]

What earphones are these?

[@blueshoesrcool]

Forgive my stupidity, but couldn't the same argument said of anything that has no cash flow? i.e. Gold? Is Bitcoin speculative in the same way as Gold then?

[@doko2nd]

No, they are not the same. Gold is a commodity that has uses and there is more hidden demand lower the price gets which makes zero price unreachable. On the other hand in long time frames the interest/demand in Bitcoin grows with its price increase and falls with its price decrease (within the pool of all potential buyers and with the exception of some pool of hardcore bitcoiners. However from the historical price move it seems that the hard core is not enough to stabilize the price at anything higher than couple of thousand per bitcoin. At couple of thousand per coin it is also likely that there is an attrition rate of the hardcore group.) This means that at zero price bitcoin will have zero demand, while gold will have “infinity” (anything that can be made in gold will be made in gold, which will push the price back up, provided there is no infinite availability of gold) demand. Therefore, bitcoin has an absorptive lower boundary while gold hasn’t and the math follows as in the paper.

[@doko2nd]

@@lynch8888 The mainstream economists and investors believe that currently there is no monetary pricing of gold. According to those who understand, If I remember correctly, the median estimate of equilibrium pricing of production and industrial consumption is around 1100USD per ounce of gold (jewelry and coins stockpiles excluded). But even if the monetary pricing was as big as you say I do not see how this invalidates the argument about the difference between gold and bitcoin as the price itself is irrelevant, the difference is in the derivatives.

[@martinlit9736]

Thanks Nassim

[@Lahdyn]

👍 Thanks for the video. Nice intro too.

[@Shadow1986]

The underlying assumption is seemingly that currency is "stable". in what sense? If we compare it to other currencies it is in fluctuation minute by minute

[@andromaxbse6459]

Stable to buy goods and services on their particular country.

[@Shadow1986]

@@andromaxbse6459 cheers

[@Shadow1986]

@@andromaxbse6459 is it really a good base to form a thesis off in a globalised world?

[@andromaxbse6459]

@@Shadow1986 Honestly can't answer for now. But surely it has pros and cons. Just to mention that any currency starting from that basis, it's by necessity.

[@Faylasuf57]

Very well explained istez. It makes sense that it isn't a currency forsure. We must define it differently so we don't confuse the people. Salute from your fellow Lebanese brother by the way!

[@ingonito1729]

Dear Professor Taleb. I have been largely a fan of your work since I read your book on dynamic hedging as an equity derivatives trader in the late 90s! Thank you very much for sharing your detailed explanation and your paper as well. I definitely appreciate and encourage logical debate on this issue. I just have one question, surely based on your logic, all fragile art would be worth zero? Because there is some non-0 probability, that a piece of art (such as a painting by Picasso or van Gogh), could be destroyed in the future? And also using the argument of gold not being able to be destroyed, the same doesn’t hold for art. So does that mean Art is also irrationally priced? Keen to hear your thoughts on this, especially as I know you are fond of art as well! Thanks & Regards

[@vandogtrailer6701]

Yep. His "either currency or security" premise is flawed. And that makes the rest of his logic train silly. Fine art is an excellent counterpoint. He'd try to say that it has aesthetic appeal. Gold does too, as well as industrial use. But this does not explain the high costs of these things. It is their scarcity.

[@vandogtrailer6701]

@@SMoore-vj7bt Agree on all. His framing is really weird af. The "gold isn't either of those either" response is perfect. Also, there's a non-zero probably that Bitcoin becomes a currency.

[@ivovo6023]

This has no meaning without action. If it goes to zero and your thinking is right; buy a billion short.

[@christianmaurer96]

false

[@simonlesorcier]

I agree!

[@andromaxbse6459]

Can you short bitcoin?

[@christianmaurer96]

@@andromaxbse6459 yes

[@andromaxbse6459]

@@christianmaurer96 Taleb has said fundamentally you can't sort bitcoin on some his lecture since long ago.. I research it, but it's only available in form of derivative product, even in reality it's very constricted trade or the broker are not that trusted. I've just tried yesterday, only back to square one. Definitely can't sort millions, let alone billions.

[@vladakymov2123]

Thank you a lot!

[@marktube5732]

For what? For missing 60% of gains since you wrote this comment?

[@Chris-on5bt]

I was quite good at math when I was younger, but I have put it away for several years and studied other analytical pursuits (computer programming). If I wanted to get back up to speed so that I can understand technically Taleb's "Elementary Analysis" put forth at the beginning of this video could someone recommend me some books to start reading? EDIT: Doing some quick wikipedia research, to make my question more precise: The Expectation term seems to come from probability theory so I guess first I would want a solid book on that subject and then other supporting books that could help me understand how probability theory specifically applies to rational markets and related quantitative analysis. Yes I understand this is probably a very broad research task, I just want a starting point.

[@jonf6509]

kzbin.info/aero/PLUl4u3cNGP60hI9ATjSFgLZpbNJ7myAg6

[@ajstexas]

Read up on capital asset pricing model

[@eannaohara9082]

Just watch the Probability Theory and Stochastic Processes video playlists from MIT or Harvard on KZbin.

[@SlobberySlob]

In Summary ; BTCs utility value as a currency is 0 due to volatility. If its not a currency what is it? It is not an asset of no cash flow with a rational future expected sale price as it has an absorption barrier (fractional costs, decaying network nodes, eventually too big a block chain, hash rate decay, sentiment and interest die off etc..etc..) where it will disappear one day and die unlike gold. So it has only greater irrational fools as it's model sustaining it's price. Rationally, it's sale price is ultimately 0 as time goes on. Only the bit about the rational bubble I didn't quite get. Excellent overall. Enjoyed it very much. A great model.

[@SlobberySlob]

But plug in a negative discount rate into the model and BTC goes to infinity....;)

[@Avengerie]

Is Venezuelan bolivar a currency, even though it is very volatile (hyperinflation)? The reason bitcoin is volatile is because it is a relatively new paradigm and every day you wake up thinking "is China going to ban it?", "are 50 million Brazilians going to start using it?" etc. If it was universal, it's price would be a stable 1m. There needs to be another 1-2 significant economic crashes to fully decouple people's minds from legacy concepts such as fiat. One very painful one is coming in the next 5-10 years, and it will be worse that the one in 2008, because the government has ran out of tools to mitigate its effects (which only goes on to prove the death of fiat).

[@davidburns7045]

Bitcoin's present day volatility is a feature, not a bug. It's growth has closely followed Power Law mathematics, with ever decreasing volatility over time marked by ever slowing price growth rates. It's value as a currency is definitely not 0. That's plainly idiotic.

[@markd964]

As usual, some insightful thinking and brilliantly (but deceptively!) profound one liners from Nik Taleb...Bravo...

[@BB-ok1jt]

Yield farming?

[@zarathustravideo]

Interesting point, but I did not understand the not a currency argument. It might be be volatile and new, but I still can see that it satisfy major postulates. Could you elaborate more on why BTC is not a currency?

[@SteveSmith-jc7pc]

Basically, a currency is something that is 'widely accepted' as a means of payment for goods or services. Although some people do accept bitcoin it's probably not 'yet' widely accepted as such. It does have the potential for this as a verifiable digital asset. But it needs to cross such a threshold level first. This may or may not happen for various reasons: 1. Many people would not want to accept something that is highly volatile. It's volatility could reduce over time, although it would probably need wider acceptance to do this. So there's a catch-22 here that bitcoin can't necessarily overcome. 2. The lack of government control has some attractions for value maintenance... e.g not affected by large amounts of QE etc. A counter argument to this is citizens benefit from a local free-floating currency that self-adjusts to compensate for potentially poor economic progress compared with supranational currencies like the Euro (and what Bitcoin aspires to be) that caused major economic difficulties for countries like Greece. 3. The environmental cost of bitcoin may also have a major impact on it's perceived value as a digital asset and ultimately, people's willingness to trade it sufficiently to turn it into a proper currency. In summary, an asset is not a currency just because some people call it a currency. The asset has to be widely accepted. If just 5% of the shops and restaurants I visit accepted it, I would call it a currency, but it's not even a fraction of a percent. I'm not sure that it ever will be and everyone I know that has bought bitcoin has done so purely because they think the value will continue to go up .. no other reason. All the hallmarks of a bubble.

[@zarathustravideo]

@@SteveSmith-jc7pc Thanks for the nice explanation. Term widely sound very arbitrary for me. It is used by a lot of people for transactions, unit of value and store of value. I agree with your points, but seems to me that you guys just asserted that it is not a currency, and you are just moving the goalpost.

[@chrislesner2822]

Not a currency because it is difficult to set prices using Bitcoin units because of volatility. High costs and latencies for real BTC transactions and the Ponzi like crowd dynamics (ever growing recruitment else valuation collapses) and deflationary design do not help.

[@donkeybus]

@@chrislesner2822 the deflationary nature is the counter argument to the ponzi dynamics. It doesn't need exponential recruitment like a ponzi, it just needs stable usage due to the deflationary charecteristics.

[@sai2803]

Taleb: financial system is doomed. Also Taleb: Bitcoin is Worth Exactly 0. What should I do?

[@portal_libertarianismo]

Buy bitcoin. Taleb is dumb.

[@thomasandersen9310]

@@portal_libertarianismo Could you name someone you think is smart? Let's limit it to someone who's still alive and have spoken their mind on the topic.

[@LU1ShEnRiQuE]

Run to the hills…

[@ChristopherNutt]

@@thomasandersen9310 Lyn Alden - she's probably the best brain in the whole financial space.

[@nilskp]

Buy Bitcoin. Taleb is wrong on this. kzbin.info/www/bejne/aYbLYYWZqsaGgKs

[@marcioandreazzi6223]

Mr Taleb, do you see the Chaplain Tower disaster as a Black Swan for Real Estate?

[@brokenbulbs]

Structural problems in real estate? I doubt that is viewed as a low-probability event by those in that field. It's already in insurance contracts etc. Black Swans go way beyond what we can currently even dream to imagine. Maybe Nassim Taleb will offer his opinion on this.

[@cristinaliu1117]

Pof.Taleb, I am a big fan of you. I heard you speak in public that you owned cryptocurrency. So, I wanna know if you've changed your mind about that. Thanks!

[@nilskp]

He rage quit after a personal fallout with the author of The Bitcoin Standard (for which Taleb wrote the foreword).

[@michaelngfinance]

Taleb, could you please let me know what are the price drivers of Bitcoin, and why governments are concern about people using it? Is the free flow of capital and privacy the benefits of using Bitcoin? Also, as price of Bitcoin goes down, would the supply of Bitcoin in circulation decrease due to speculators cornering the market? I just want to get my blind spot checked by a finance professional that I trust. Thanks in advance, Taleb!

[@goutfromfriedokra3936]

he's a banker, and against dollar competition..He believes in FULL CONTROL by the gov, while our useless gov.. debases the dollar..

[@RedShiftedDollar]

There is one huge misinterpretation most people have regarding the original bitcoin white paper. I bring this up because your black paper quotes the phrase. "A purely peer-to-peer version of electronic cash would..." Ironlically, this phrase is not describing Bitcoin. It is an ideological statement that many people misinterpret as a description of the properties of Bitcoin except Bitcoin is not purely peer-to-peer. The network operators are the third parties and they are required in 100% of transactions. Bitcoin transactions require a minimum of 3 participants whereas gold and USD cash only require two and are truly peer-to-peer. An ideal currency should be peer to peer, and since bitcoin is not, the whitepaper itself concedes that it is not an ideal currency.

[@anteeko]

Bitcoin require more than 3 participant to have no TRUSTED third party. the tranfer of value is peer to peer tho. (your fund are not moving from one address to another using someone else fund like in the traditional banking)

[@RedShiftedDollar]

@@anteeko Did you know every Bitcoin transaction involves a third address? Do you know who this third address belongs to and why it is there?

[@RedShiftedDollar]

@@anteeko Tell me, why are trusted third parties within the transaction so bad? Think about all of the bad things they can do. Then I will tell you how the third parties involved in Bitcoin can do the exact same bad things except via different means. Name one adverse third party related scenario you think Bitcoin is immune from.

[@franciscosousa3947]

@@RedShiftedDollar ... Nassim often says ‘most human progress does not come from academics’ ... this entire discussion on ‘bitcoin’ is simply speculation, at best! Obviously, there’s a well organized ‘disinformation’ campaign against ‘bitcoin’ ...cui bono?

[@RedShiftedDollar]

@@franciscosousa3947 What is speculative about the fact that all of Bitcoins transactions are forever logged in an open unencrypted ledger? That’s a fact. What is speculative about the fact that third party network operators are involved in 100% of transactions? A subset of these operators called miners literally siphon a portion of the transaction into their accounts. The amount siphoned has no limit and can be selected arbitrarily by the operators. If you are not willing to pay the amount they chose, you cannot transact. These are all facts. Please reference one specific claim I have made in any of these comments and describe why you think it is speculation.

[@RedShiftedDollar]

This is very good. It really goes to show that a currency must have a use. All currencies that pass the equation with expected value have some form of usefulness or utility. For the USD we have the fact that it is the only currency that must be used to pay all taxes. For gold we have industrial and artistic uses. Even for the cryptocurrency Monero, it is the only form of payment accepted by the dark web. What is the use of Bitcoin? Bitcoin is old, obsolete technology. Name another software where version 1.0 kept being used as the best despite the release of many upgrades? It's only a matter of time before it goes back to it's true value of zero. The real value of bitcoin was to spark innovation in the cryptoasset sector, and all of its usefullness on this front has already been used up. The only use left is the government's use of it to track down tax criminals.

[@RedShiftedDollar]

@Total_Life_Cell No, the Ferrari is art. That’s why it is worth 50 million like a Van Gogh. Even so, nobody drives it. A currency is something to be used by the masses on a daily basis. Please tell me one reason why you think a public open ledger is a good idea? You are really an advocate of this concept? If so please tell me how much is in your bank account and to whom your last 100 transactions were with. This level of transparency is present in Bitcoin. You really think this is the best? It’s like a Ferrari made of glass that you have to drive naked and you have to park it on the street for everyone to see.

[@RedShiftedDollar]

@UCDeDZGsh8Ji9uUz9bjKoiKQ A ledger is an accounting tool which is not the same thing as a currency. The currency is that which is transacted and the ledger is simply the record of that transaction. Bitcoin is the currency and the blockchain is its ledger. If you are going to have a public ledger, at least make it anonymous. This is why Monero if far superior to Bitcoin. You are not bothered by transparency? OK then post an image of you last bank statement on Imgur and share the link here. You really have no concerns about doing this? Interesting. And just because I believe Bitcoin is worth zero, as proven by Mr. Taleb, does not mean I am pro fiat. Fiat is a separate topic but of all alternatives, Bitcoin has got to be one of the absolute worst choices because it’s value is zero among other reasons. Why would you hold any object with an intrinsic value of zero? If the market value is nonzero then that just means you should sell before the intrinsic value is realized.

[@zamiadams4343]

Great comment.

[@donkeybus]

What about Rai Stones or Art? Everything goes to zero eventually, but for bitcoin it could be hundreds or thousands of years (like Rai stones)

[@chrisE815]

How about TSLA?

[@Harshacoach]

Hi Nassim, Makes complete sense. If Bitcoin is not a currency and it has no cash flow it must necessarily be worth zero. I suppose the only question I have is about time: if people believe that Bitcoin is, or will be a currency, I suppose it could be above zero for some time, even years? Perhaps it is as with all fragile things, we can note the fragility but we cannot say when it will break? How do you think about time here? Thank you.

[@nntalebproba]

Reread the paper. By iterated expectations.

[@Harshacoach]

@@nntalebproba Thank you! I should have been more precise. My question is around how soon it could go to zero. Through backward induction we arrive at zero price today using rational expectations, but could the irrationality of the 'religious cult' keep it above zero for a long time? Without falling into the trap of trying to forecast, I guess we could use Lindy principle to form some rough view how long it may stay above zero? PS: I have never owned Bitcoin. Just trying to understand more.

[@ayazpalekar1575]

the probability of miners deciding they want to do something else with their life may not be so tiny, because we can have an event where enough people will lose interest in bitcoin that it will no longer be viable (for anybody) to keep it going (high energy costs, very low valuation). and miners will race each-other to the door.

[@kabitshon535]

The rewards of a single miner is a ratio of the total miners power, so when miners exit they increase the reward of miners who stay

[@carnelyve866]

After watching this, I decided to dump my coins. Crypto-currencies are a scam for me at this point.

[@RedShiftedDollar]

Buy the one thing that the US government treats as so valuable that they would rather borrow any amount of dollars at any interest rate or raise taxes to any level than sell a single pound of this stuff to pay their expenses. It is so valuable that the government has not sold any of it in over 50 years. If you think Bitcoin has hodlers, the US government is the ultimate hodler of this stuff. It is so valuable that it was specifically mentioned in the US constitution as the only thing allowable for performing certain tasks. It is so valuable that Bitcoin itself tried but failed to be a digital emulation of it. It is so valuable that the government stores it at an armed military base as far from borders as possible so that it is as difficult as possible for another country to take it. Today the metal coins you use as money are the least valuable things you have in your pocket, but there was a day when the metal coins were the most valuable. Why has this flip flopped? Seriously try to figure out why the US government has not sold any of their stockpile since 1971. They refuse to sell this stuff under any circumstances. Trade your crypto coins out for gold coins. Nassim has likely come to this same conclusion which is why he shows us the hint around his neck. There will be a day when the government starts selling this stuff again, and on that day you will want to have some gold in your physical possession.

[@zamiadams4343]

Well done, the whole crypto market is fools gold.

[@buckfush187]

5:20 for those who want a summary.

[@RUSLAN757]

With great respect, I am a big fan, but are you teaching birds how to fly?

[@julianmaster]

Would BTC feel more at home in the art market next to a Banksy?

[@MrFlapstick]

Ben Hunt view, BTC = art ~ identity I get that

[@nilskp]

No, it would not. Gold would.

[@izharashrcreation8150]

Sir i want to contact you it's so important

[@Hadi.Najjar]

i resently discovered Nassim Taleb and my life has changed ever since

[@cityad4856]

You are a Brilliant man. Thank you for saving mean the ultimate Financial mistake

[@gemmaweber4115]

So simple but so revealing 😍 thank you Dr Taleb! For this and also because your books/way of thinking inspired me to study stats and probability further :) like I’m getting an MA but I’m taking as many graduate probability courses as my university will allow 🤣🤣 But seriously! So reasonable, and once you add the conditional probability idea, and how it’s also based on a probability of failure, gorgeous and so common sense! Love probability.

[@johnbarrett5229]

He's applying probability to a new computer technology. He's wrong and he sucked you in Gemma Weber. Go here to learn: kzbin.info/www/bejne/aYbLYYWZqsaGgKs

[@user-wf4nl2yy8x]

That's great I'm happy for you! Could you recommend me any books that might help me have deeper understanding on probability study? Other than all Mr. Taleb's books

[@DAIIIVA]

I’d love to see a collaboration with CoachRedPill, and hear your guys’ discussion on this topic and others. Hope something can be arranged.

[@FirstLast-tx3yj]

Coach redpill does not like nassim and thinks he is arrogant although he respects his achievement. Search coach redpill nassim taleb and watch the video

[@user-xo5zu1lw2w]

coach redpill is a joke.

[@DAIIIVA]

@@user-xo5zu1lw2w kinda like u

[@FirstLast-tx3yj]

@@user-xo5zu1lw2w nope

[@xyzmediaandentertainment8313]

@@DAIIIVA ahahahha. Coach moronpilled doesn't know shoes from shit.

[@mischas3672]

Audio quality could be greatly improved. Your mic acts as an extreme low pass filter.

[@angelaramsay1778]

If he was telling you where the pot of gold in the wood was, you would listen with intent and not care about the mic.

[@dt6822]

Bahaha. You're awesome Nassim. The error here comes precisely because the securitization is voluntary through a diversified Trust pool of individuals using Bitcoin who are also invested in it. It's the stupidest error. The US government guarantees its security with a giant military and its ability to force people to do things they don't want to do. That's the essence of power. A cooperative model currency voluntarily adopted to be used as an exchange mechanism amongst those people who then invest in that currency and hope for its increase in value so they make it a product rather than a security, is obviously a Ponzi scheme

[@dt6822]

@@_swagmeister Yes

[@goutfromfriedokra3936]

While your dollar loses values as the FED prints to oblivion..It's called competition of the dollar, and poorer countries will not continue with the dollar holding and trade if it continues the devaluation..

[@dt6822]

@@goutfromfriedokra3936 yes but the dollar competes against the securities of the whole world, reinforced by the ability of the US govt to enforce its will, physically, while the Bitcoin COMPETES AGAINST ITSELF

[@goutfromfriedokra3936]

@@dt6822 Nice try....Enforce physically Yes within it's own borders but .If other countries are using less dollars which is true for India,china, Brazil and Argentina--they will hedge some in the form of a harder currency, say, gold, petro,btc..It doesn't compete with itself...it's a small competitor to other currencies, and in Argentina and turkey , more ppl are using it store their wealth as opposed to the argentinana peso , lira.....PPL are sick of their dollar no longer providing full value, inflated away....

[@dt6822]

@@goutfromfriedokra3936 Bull. It is pointless. Currency is a guarantee by. Government with a monopoly on force that the value of the cash will exist. Bit coin is not backed by a government or even hedged against other currencies. And if you don't think they can enforce the FINTRAC outside of their borders, what happened to Libya? Bitcoin is a scam and is worth nothing

[@depressedessendonfan5702]

The best investment is lego

[@pikaso6586]

The value of BTC is not 0 in that case, it is negative due to the massive amount of energy to create it

[@paulbraga4460]

the main think for me is that if it is neither a currency (heaven help us if we have currency that jumps around like bitcoin does) nor is it an investment tool because it does not create value (other than by speculation which could go the other way and lose value), and yes it takes so much to create it...and i don't the sound of that - as you said - "create"

[@pikaso6586]

@@alejoturcatti6358 at least Wall Street generates far more value than the energy it consumes. BTC generates no value per se.

[@Bigdeadyfps]

Much more power are used to impress money or on gold mining

[@paulbraga4460]

​@@Bigdeadyfps hahahaha and btc has intrinsic value like gold and is government-backed like the dollar or pound, right? so much of the value of btc appears to be coming from the difficulties associated with it, principally the mining part. not arguing or debating people here. this on my part is contemplation and really thinking the basics of this thing... blessings to all

[@donkeybus]

@@paulbraga4460 Look up "Rai stones" to understand why bitcoin has value

[@virtuous8]

if btc is ponzi, then eth is also ponzi?

[@adinghosh917]

I come to comments during the ads

[@Bitstacker]

The most fairly distributed and scarce store of value ever created is bitcoin on 21 million forever every transaction is stored on the blockchain. Be sure to diversify

[@ronyantoun3294]

always spot on 👌🏻 very interesting analysis

[@jirv25]

What's with the sweater? So easy to theow the thing away..

[@Shadow1986]

Hi guys, I'm a complete moron but am very drawn to the paradigm of viewing the world through probabilities that Nassim Taleb presents to us mere mortals. The maths and probability in particular are lost on me. Does anyone have a sort of an idiots pathway of simple resources that can help me to comprehend this on a much higher level?

[@aaronolson]

Please do this without the formulas

[@olemisuria9115]

One question: is it Bitcoin which is unstable or is it the dollars or any other currency used to compare its value with that is/are unstable? I am asking not giving an opinion; so would be great to have suggestions and ideas on this. Thé only opinion I have is that unless I go through all the documentation written on the technicality of the topic, I in essence know nothing.

[@tosvarsan5727]

Thanks my beloved contrarian. I'm going to look in the paper straight.

[@admin-tc3wg]

He's gonna have to disable the comments section...

[@partikbhungal4727]

What if there is no obvious use for Bitcoin. But people value it anyway. Think of it as a Picasso, a piece of human history in the form of technology, that is valued for transaction, store of wealth, and other things that the human mind hasn't conceived of yet. I don't think math as we know it can define a price. Isn't math always evolving as well?

[@stivstivsti]

Your formulae doesn't take into account benefits which BTC owner gets as soon as he can perform tax evasion.

[@Avengerie]

Exactly. People like Paul Le Roux would have never been caught if they weren't stuffing their safehouses with easily traceable fiat and gold. If he used Monero, he'd still be free. Taleb makes it seem like crypto is a mud that has no value. But the fact that it was created in 2009 right after the biggest financial crash in modern history shows that there is systemic mistrust in fiat and government that fuels its rise. The reason it is volatile is because it is not universally accepted. That's like saying Venezuelan bolivar is not a currency because it is volatile. It is decentralized, meaning miners can't ban you from making transactions (like Visa and Mastercard do). The government can't confiscate it. You can memorize 2 keys and would still have access to it. The same question could be asked about Amazon. Would they be priced the same if you had no faith in them ever paying a dividend? And when was last time gold's "inherent value" mattered? It's value has been "a Ponzi" since the Roman times. Complete misunderstanding of the subject on his part.

[@stivstivsti]

Thank u for a reasonable comment, Avengerie. BTC really has security issues, I know it company which makes tool for police helping the to track transactions and IP addresses. And you can see all payments for any wallet on the web. Btc might go to zero if people migrate to monero because of security eventually. Also I'd like to notice that anyone could implement centralised crypto in mid 90ties but as I read, such stuff was prosecuted. Btc is decentralised in theory, but it can't function without group of skilled developers. Value of fiat comes from tax office demand and also central bank and other institutions do hard work to limit inflation.

[@calvinrose18938]

I couldn't agree with you more! "The Emperor's New Clothes"

[@skeksis268]

I feel like there’s a lot hanging on “is it a currency”. What if it’s just a rubbish currency in most (but not quite all) circumstances? Can it have some non-zero value then?

[@substanceandevidence]

Bitcoins existence hinges on people throwing real resources (electricity, storage, processors) at it and those real resources accrue taxes. To fund those taxes the operators of Bitcoin need a steady stream of official currency (currency accepted by the tax authorities). Even as a currency it is a Ponzi scheme on a physical level. When people start to divest, operators go bankrupt/become criminal which causes further divestment, and so forth

[@donkeybus]

Exactly. The term "crypto-currency" is a bad analogue and unfortunately it stuck. It's much more like an asset, but ultimately I think it might be it's own thing,.

[@SejeonK]

Excellent Maestro. Thanks!

[@SejeonK]

@@braj6385 lol BTC won’t save you. Sorry

[@cd7002]

@@braj6385 "I FEEL HURT WHEN SOMEONE QUESTIONS THAT I MIGHT LOSE ALL MY MONEY" sounds

[@500iq6foot8]

Well explained. Thank you Taleb. I wish you many more twitter fights :)

[@zpettigrew]

Entirely agree. However, we don't live in "rational" markets at the moment. We haven't for some time. I formulated an argument based off of the physics and energy limitations involved that is a bit more robust and even gives predicative market moves. Buut... this also shows that BTC is = to zero (actually of negative value - being a vacuum for real physical energy). Metabolically "expensive" ponzi.

[@daniel.agoston]

markets were never rational and they will never be rational

[@marktube5732]

What a joke of a comment. Bitcoin will continue to rise and shine.

[@sachindivakar632]

If Deity of gods Exits there will be GOD .No Deity no GOD .

[@TheZizouGS]

This demo shows that bitcoin cannot just be considered as a currency or a security as the value is irrational and should be equal to zero in the long run. So bitcoin is more than a currency or a security to explain its price, it is indeed a network, a protocol and a immutable and cryptographic ledger with no central authority. So indeed the expected value is zero when considering a security pricing model, but still bitcoin token has a cost to make the network and ledger work. From a cost pricing model, the expected price should represent the costs involved to maintain the network. Now, it may be questionable to involve such energy (so costs) to maintain it. It must exist some existing or future use cases to justify that the long teem expectation is not zero. In all cases, as long as miners continue to work, the price will continue to be driven by powerful market participants (through the derivative or spot market) and also by the scarcity mechanism.

[@zpettigrew]

Good analysis. But unless this network can tap into some kind of independent "free energy" -- it will undoubtedly be worth zero. What happens when energy becomes scarce? The network is starved. Shrinks ---> zero.

[@davidburns7045]

@@zpettigrew Why would energy become "scarce"? That's not a real thing. That's like saying your dishwasher won't work one day because energy will be scarce. That's a problem of energy supply, not the dishwasher. Perpetually increasing energy usage is what makes society advance. Imagine the silliness of living in the 1700s and worrying that the next technology might one day result in an energy shortage. Energy shortages are a reflection of idiotic government policies, not rational actions of humans.

[@zpettigrew]

@@davidburns7045 See also: "Peak Oil". See Also: supply chains. See also: geopolitical instability. All of the EU is rationing energy now due to Nat Gas shortages. Hard to run the ecosystem if you hardly have enough energy to heat your house.

[@davidburns7045]

@@zpettigrew Peak Oil???? Omg lol