'Black Swan' Author Slams Bitcoin, Calls It a 'Gimmick' and a Ponzi Scheme

In a CNBC’s Squawk Box interview, Nassim Taleb, “Black Swan” author, talked about his views on Bitcoin and how to hedge risk in the current turbulent market.

He was asked about crypto assets, with a particular focus on Bitcoin, given that an increasing number of investors have been restructuring their portfolios with the new asset class.

Taleb criticized Bitcoin, describing it as a gimmick, which is too volatile to be an effective currency and not a safe hedge against inflation.

Taleb said: “Basically, there’s no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and bitcoin going to zero. There’s no link between them.”

He sees Bitcoin as having characteristics of the Ponzi scheme. He said that Bitcoin is “a beautifully set up cryptographic system that is well-made but there is absolutely no reason it should be linked to anything economic.”

Taleb had once favourable views toward the leading cryptocurrency. But he told CNBC that he was fooled by it initially because he thought that Bitcoin could be used as a currency. But when he saw that the price of the cryptocurrency is very volatile and investors are using the crypto as a vehicle for speculation, he began selling off his Bitcoin and started calling it a failed currency.

Taleb advises investors who want to hedge against inflation to buy a piece of land and invest something in it. He said that investors who are worried about inflation would be better off buying property than investing in Bitcoin. He stated: “If you want to hedge against inflation, buy a piece of land. Grow, I don’t know, olives on it. You’ll have olive oil. If the price collapses, you’ll have something.”

Bitcoin Versus Real Estate

Taleb has joined the growing list of Bitcoin critics. In February, the former risk analyst and options trader announced that he was in the process of getting rid of his Bitcoin. He sees Bitcoin as a failure because of what he says that the crypto asset does not store value. He said that Bitcoin has failed as a hedge against central bank policies.

Taleb shares the same sentiment with Barbara Corcoran, the Shark Tank star, who a few days ago shared her views on cryptocurrency. Corcoran recently said that real estate is the best way for investors to get rich, not cryptocurrency.

Corcoran stated that she is into “tried-and-true” methods of making money and claims that investing in real estate is the best way to get riches.  

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