Gold or Bitcoin? Beware of the “malignant tumor,” says the “Black Swan” guru.

Is Bitcoin or Gold the Better Investment? Opinions vary widely, with billionaire cryptocurrency fan Mark Cuban favoring Bitcoin – and bumping into gold – and Euro Pacific Capital CEO Peter Schiff going the other way.

Nassim Nicholas Taleb also has thoughts. This week the author of the 2010 New York Times bestseller The black Swan— among the few who had foreseen the financial crisis of 2007-2008 — spoke on the debate in a interview with the French weekly The Express.

It’s safe to say that Bitcoin, which has fallen more than 60% since the start of 2022, is failing to impress him.

“Technology comes and goes”

One problem with Bitcoin, he said, is that “we are unsure of the interests, mindsets and preferences of future generations. Technology comes and goes, gold stays, at least physically. Once neglected for a short time, Bitcoin would necessarily collapse.”

Furthermore, he said, “an entry in a registry that requires active maintenance by interested and motivated people – this is how Bitcoin works – cannot be expected to maintain its physical properties, a condition for monetary value, for a period of any time. .”

When asked about the origins of the “cryptocurrency craze,” he pointed to the low interest rates of the last 15 years.

“Lowering rates creates asset bubbles without necessarily helping the economy,” he said. “Capital no longer costs anything, returns on risk-free investments become too low, even negative, driving people to speculate. We lose our sense of what a long-term investment is. It is the end of real finance”.

One result, he said, was “malignant tumors like Bitcoin.”

The “bubble of everything”

Taleb is not alone in noticing the effects of what has been dubbed the “bubble everything,” created by years of loose monetary policy by the Fed and other central banks following the Great Financial Crisis. How Fortune reported this week, the era of easy money was filled with bulls, from cryptocurrency experts to hedge fund managers, economists and investment bankers, who believed the good times would never end.

Interestingly, Taleb has been a proponent of Bitcoin from the very beginning. At that time, as he explained to The Expresshe was critical of then Fed Chairman Ben Bernanke.

Bernanke, he said, did not see the system’s structural risks before the 2008 crisis, and overreacted afterward: “Instead of fixing debt and mitigating hidden risks, he hedged them with a monetary policy that was only meant to be transient. I mistakenly thought that Bitcoin would be a bulwark against the distortions of this monetary policy.”

“Manipulators and Fraudsters”

Taleb also warned that “the cryptographic universe attracts manipulators and scammers.”

It certainly isn’t just there.

Coinbase CEO Brian Armstrong said at the a16z crypto Founder Summit in late November, “We have to contend as an industry with the fact that, I think our industry is attracting a disproportionate share of scammers and scammers. That doesn’t mean it’s representative of the whole industry.”

(Armstrong added that it was “baffling” to him why FTX founder Sam Bankman-Fried wasn’t already in custody — a few weeks later, he was.)

Taleb tweeted this week that he’s been trolled and vilified for his cryptocurrencies, but that such attacks have been offset by “many thank you messages for saving young people from Bitcoin.”

He shared a message in which a Twitter user claimed he almost bought Bitcoin, but then started following Taleb’s thinking on it, writing, “I figured out why cryptography is crap in theory. Then it failed in practice.NNT saved my father’s hard-earned money.

Meanwhile, many Bitcoin bulls remain bulls. Ark Invest CEO Cathie Wood recently reiterated her prediction that Bitcoin will hit $1 million by 2030, it’s now just under $17,000. She also argued that Bankman-Fried didn’t like “transparent and decentralized” Bitcoin “because she couldn’t control it,” saying the FTX fiasco was caused by “opaque centralized players.”

As for the Cuban, he said about Bill Maher’s Random club last month’s podcast, “I Want Bitcoin to Fall Even Further So I Can Buy More.”

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