Black Swan author Nassim Taleb reverses stance on bitcoin, calls it one of the most 'fragile' assets

Bitcoin (Representative Image)

In a change of heart, The Black Swan author Nassim Nicholas Taleb now sees no value in holding a bitcoin. The former options trader said the world's largest cryptocurrency by market cap is worth "exactly zero" and does not satisfy notions of it as a currency without government support, as a hedge against inflation and as a safe haven investment.

"Few assets in financial history have been more fragile than bitcoin," he said in his paper, 'Bitcoin, Currencies, and Fragility,' published in late June.

Another reason for his stance reversal is that bitcoin requires a sustained amount of interest to maintain it. In contrast, "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," he said.

Making a case against its status of being a hedge, Taleb cited the flash crash of March 2020 where bitcoin dropped further than the stock market and recovered with it "upon the massive injection of liquidity." That’s "sufficient evidence that it cannot remotely be used as a tail hedge against systemic risk," he said.

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In the past, Taleb has spoken more favourably of bitcoin, particularly on its ability to circumvent capital controls in markets. He had previously called bitcoin “the first organic currency” in the introduction of his 2018 paper The 'Bitcoin Standard.'

Taleb is widely recognised for his work on randomness, probability, uncertainty and how to withstand difficult-to-predict events. He has authored popular books such as Fooled by Randomness, Antifragile, The Bed of Procrustes among others.