Select Page

Taleb Vs. Taleb: A Question Of Time, Lindy And Portfolios

Taleb Vs. Taleb: A Question Of Time, Lindy And Portfolios
Loading...
This article is added for educational purpose only. All credit goes to the respected author of this article. All In One Crypto App do not hold any liabilities of this article. You can get the source link at the end of the article content.

The famous economist often acts contradictory and has denounced Bitcoin despite examples of previous understanding.

I joined Nassim Nicholas Taleb’s very extensive block list about two years ago. It’s not a very exclusive crowd and many more erudite people than me have received the patented “Imbecile” tweet that signals an imminent Taleb block. My crime? I had quoted “Antifragile” back at him in an argument over something I can no longer remember. (I proudly cherish the screenshot of the last tweet I ever saw of his).

For his Bitcoin nonsense released in June 2021 — the paper ‘Bitcoin, Currencies, and Fragility’ (an earlier version used “Bubbles” in the title instead of “Fragility”) — we might repeat the exercise of quoting his own words back at him.

Mr. Taleb, prone to making extravagant claims and denouncing everyone from journalists and politicians to economists and foreign policy experts, now seems to have joined the ranks of other well-known Bitcoin skeptics: Robert Shiller, Paul Krugman, Nouriel Roubini, and — somewhat puzzlingly — the world’s foremost expert on hyperinflations, Steve Hanke. Worse is that Taleb might be one of the first vocal supporters to unlearn what he once knew, or perhaps pretended to know; in 2018 Taleb wrote the preface to Saifedean Ammous’ “The Bitcoin Standard”.

Many people further down the rabbit hole than Taleb took apart his impressive-sounding but surprisingly fragile paper (I can highly recommend Louis Rossouw’s take or Sevexity’s piece). A brief summary of the paper’s argument is:

  • Bitcoin failed to be a currency because currencies need stable prices and price fixing.
  • It’s a lousy store of value.
  • It lacks the properties of an inflation hedge.
  • And because of a non-zero probability of hitting the absorbing barrier of worthlessness, its present value is therefore zero.

These are, as Robert Solow once said in an Ely Lecture fifty years ago: “words, all words.” 

Which, by Taleb’s own admissions, do not matter. All that matters is what’s in somebody’s portfolio, per his own rule in his book, “Skin in the Game”: “Don’t tell me what you ‘think,’ just tell me what’s in your portfolio” (p. 4). Or, “Those who talk should do and only those who do should talk.” (p. 28).

One of several areas where I think Taleb’s ideas approach Austrian economics is the “Action Axiom” – that actions speak louder than words; that talk is cheap and therefore unreliable; and that valuation comes from doing, not saying. When was the last time Taleb transacted using bitcoin, I wonder? Has he ever tried buying his macchiato using the Lightning Network? Did he ever write code or build something that uses Bitcoin?

A few chapters into this otherwise great book (published around the same time as his infamous preface to “The Bitcoin Standard”) we get a personal anecdote. Taleb tells of once having to comment on stocks in a TV roundtable discussion:

“The topic of the day was Microsoft, a company that was in existence at the time. Everyone, including the anchor, chipped in. My turn came: ‘I own no Microsoft stock, I am short on Microsoft stock, hence I can’t talk about it.’ I repeated my dictum of Prologue 1: Don’t tell me what you think, tell me what you have in your portfolio.’” (p. 63)

So, do we trust the man’s twenty-odd years of writing and living according to the ethics and arguments explored in his books, “Fooled by Randomness,” “Antifragile,” or Skin in the Game”? Or do we throw that seriously-contemplated and well-argued body of work overboard in favor of some brief Twitter anger and the intellectual acceptance of his fellow Bitcoin critics? Though perhaps he is staying true to his skin-in-the-game argument and is actually short a lot of BTC. But then, per his own rules, he would have to say so publicly.

In the preface to Saifedean’s book, Taleb wrote:

“Bitcoin will go through hick-ups. It may fail; but then it will be easily reinvented as we now know how it works. In its present state, it may not be convenient for transactions, not good enough to buy your decaffeinated espresso macchiato at your local virtue-signaling coffee chain. It may be too volatile to be a currency, for now. But it is the first organic currency.”

He saw then the very same problems that he now echoes in his new paper to establish bitcoin’s long-term value at zero. But in 2018 he didn’t think those same problems were problems. He didn’t see them as insurmountable challenges, but rather technical issues that could and would be overcome. Cue growing widespread adoption since then, 400% price increase, a functional Lightning Network and a multisig revolution in the makings. But Taleb, the king of contrarians, does a one-eighty just when the rest of the world is catching on.

An Expert Called Lindy

Another argument that pervades Taleb’s writing is that time is the ultimate test of everything. Short term, you can fool your accountant or your regulators. For a surprisingly long time you can even fool large political audiences. But you cannot fool reality. If you plant fragilities, given enough time, they blow up. Reality is the ultimate arbiter.

The only thing that matters, Taleb repeatedly taught me, is time. So far, Bitcoin has survived everything thrown at it and the industry surrounding it is thriving.

Twelve years from inception to a $1 trillion market cap is ludicrously fast. We’ve used money on and off for about 5,000 years, commodity money with a layer-2 banking system for some 500, and floating fiat currencies run by megalomaniac central bankers for about 50. Taleb is at his most persuasive when he chants the Lindy effect – the tendency of things that have already endured the test of time to last even longer. Again from “Skin in the Game,” an awfully convenient Taleb-busting book, we get “time is the expert” (p. 140) and “the only effective judge of things is time” (p. 142).

It seems odd, then, to denounce Bitcoin as untested and insufficiently proven in 2021, when in 2018 the very same Lindy-wielding probability theorist wrote:

“Which is why Bitcoin is an excellent idea. It fulfills the needs of the complex system, not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate. It is owned by the crowd, its users. And it has now a track record of several years, enough for it to be an animal in its own right.”

You publicly denounced Bitcoin, Nassim, as is your prerogative. But it’s all okay. Your contributions are your great books, not your poorly argued paper or the occasional pompous TV appearance. “Impeccable work,” writes Scott Raines, “does not imply personal infallibility.”

For those achievements — and despite your human flaws — we, the Bitcoin community, thank you.

This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

 

Source: Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides

 


All In One Crypto App presents a unique dynamic crypto course that allows you to become a profitable and successful trader. Download Now
Loading...

Don't forget to share your review/suggestions for android app.

All In One Crypto App is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by All In One Crypto App or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.es here
Loading...

Categories

Select Sub Category
category
6146b816d156d
1
1
Loading....

Reviews

All In One Crypto App

Made $234 profit with Free Signals from $50

This is the best useful app on my phone. Started trading with $50 and in 5 weeks I was up to $234 just with the free signals. I will recommend it to any new person that wants to try trading crypto. Link to Review

Asoluka Chimdindu

Free User
All In One Crypto App

Good Support

This app is one of the best for crypto currency trading signal for experts and beginal with free and premier with auto follow trading bot all the signal is excellent with accurate technical analysis and fundamental I really like the way they guide and support. Link to Review

olaplus olaplus

Premium User
All In One Crypto App

Accurate Trading Signals

I was premium member of this channel back in 2018 when there was no app. Thr signals were too good, more than 90% accuracy. Now with this app and newly introduced auto trading bot, it will be awesome. Too the moon. Link to Review

Yogesh Patil

Premium member
All In One Crypto App

Awesome and Accurate Signals

Very glad to use this app. The crypto signals was awesome and accurate with detailed explanation and visual information. The admin also helpful and nice. Link to Review

soon cheong

Free User
All In One Crypto App

User Friendly App

Signals are great. I love it. App also friendly to use… Nice job guys Link to Review

Olawunmi Dilureni

Premium Subscriber

Recent Comments