Nassim Taleb thrashes bitcoin, says it is worth exactly zero

“Black Swan” author Nassim Nicholas Taleb, who once believed bitcoin was a promising new currency as it was not controlled by a government, has thrashed the digital asset, saying that “it can be neither a long or short term store of value”.

In a paper titled, “Bitcoin, Currencies, and Bubbles”, Taleb opined: “In its current version, in spite of the hype, bitcoin failed to satisfy the notion of “currency without government” (it proved to not even be a currency at all), can be neither a short or long term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes.”

Explaining his view that why bitcoin is worth exactly zero, Taleb said that gold and other precious metals are largely maintenance-free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time. “Cryptocurrencies require a sustained amount of interest in them,” the author of several well-regarded books on finance wrote in the paper, which was published on his blog on Sunday.

This is not the first time when Taleb has criticized bitcoin, in April he said that the cryptocurrency was a gimmick, and it was too volatile to be an effective currency. In his new paper, the former options trader said that if any non-yielding asset has the tiniest probability of hitting an absorbing barrier, then its present value must be zero.

“Earnings-free assets are problematic. The implication is that, owing to the absence of any dividend yield benefitting the holder of bitcoin, if we expect that, at any point in the future, the value will be zero when miners are extinct, the technology becomes obsolete, future generations get into other such “assets” and bitcoin loses its appeal to them, then the value must be zero now,” Taleb wrote.

On bitcoin’s failure as a currency, Taleb said, 12 years into its life, in spite of the fanfare, there are currently no prices fixed in bitcoin, floating in fiat in currencies in the economy.