Breaking Down Nassim Taleb’s: ‘Bitcoin, Currencies, and Bubbles’

Is Bitcoin really going to zero?

On June 20, Nassim Nicholas Taleb, a highly successful former ‘quant’ trader and author on topics including the philosophy of probabilities & mathematics in finance; published a 5-page paper effectively condemning bitcoin to certain death.

Taleb provides 3 primary commentaries through which he concludes that bitcoin’s timeline is essentially doomed, and that its price will eventually reflect this in the not-too-distant future.

You can view his paper here.

How is it that Nassim Taleb predicts the gradual descent of bitcoin into digital antiquity? Is it fair to expect that bitcoin will become nothing more than a smouldering ruin, a failed experiment imprisoned in a glass case somewhere in the great museum of cybernated time?

To answer this, I’ll begin with Taleb’s first criticism.

Argument 1: The Vulnerability of Revenue Free Bubbles

Taleb begins his paper with the claim that the real value of bitcoin is exactly 0, investors, to their demise, just don’t know it yet. He argues first that bitcoin offers its holders “no expectation of future earnings” which is a central principle of securities…