On Monday, January 22, 2018, essayist and risk analyst, Nassim Nicholas Taleb published a commentary on his Medium page about the value of bitcoin and its role in future markets.
Nassim Taleb believes that right now, we are “witnessing a complete riot against some class of experts, in domains that are too difficult for us to understand, such as macroeconomic reality, and in which not only the expert is not an expert, but he doesn’t know it.” He has often argued against the tyranny of a minority, where just a few people have all the power and influence over what the rest of us do and experience. In this article, he discusses the possibility that every participant within a system can be a player to some degree (even though some individuals can “disproportionately move the needle”). He says, per Friedrich Hayek’s notion of knowledge, that it looks like we do not need knowledge for things to work well, and neither do we need individual rationality. What we need is structure.
The world’s economic system is complex, that is a given. It is controlled by a set of individuals who are endowed with “centralized macro decisions,” meaning they make the decisions that affect the rest of us. But bitcoin is an excellent idea in the sense that “it fulfils the needs of [this] 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.”
He adds: “Bitcoin is a currency without a government. But, one may ask, didn’t we have gold, silver and other metals, another class of currencies without a government? Not quite,” he says. “When you trade gold, you trade ‘loco’ Hong Kong and end up receiving a claim on a stock there, which you might need to move to New Jersey. Banks control the custodian game and governments control banks (or, rather, bankers and government officials are, to be polite, tight together). So Bitcoin has a huge advantage over gold in transactions: clearance does not require a specific custodian. No government can control what code you have in your head.
Nassim Taleb points out bitcoin’s challenges, that it will go through hiccups, that it may fail, but adds that it will be reinvented because we know how it works. “In its present state, he says, “it may not be convenient for transactions, not good enough to buy your decaffeinated espresso macchiato at your local virtue-signalling coffee chain. It may be too volatile to be a currency, for now. But it is the first organic currency.”
“Its mere existence is an insurance policy that will remind governments that the last object establishment could control, namely, the currency, is no longer their monopoly. This gives us, the crowd, an insurance policy against an Orwellian future.”
You can read the entire article here.