The famous author of The Black Swan, Nassim Nicholas Taleb, says investors should not buy bitcoin. To hedge against the current turbulent market, he advises buying stocks or real estate, emphasizing that bitcoin has no connection to inflation or â€œanything economic.â€
Nassim Taleb Advises Against Bitcoin Investing
Nassim Nicholas Taleb, the famed author of â€œThe Black Swan,â€ has shared his view on bitcoin and on how to hedge against the current turbulent market in an interview with CNBC Friday. Taleb is a Lebanese-American scholar, mathematical statistician, former options trader, and risk analyst.
He was asked about cryptocurrency, particularly bitcoin, given that investors have been increasingly restructuring their portfolios with this asset class. Regarding bitcoin, â€œIt has the characteristics of an open Ponzi scheme. Everyone knows itâ€™s a Ponzi,â€ he claims, adding:
Admitting that bitcoin is â€œa beautifully set up cryptographic system,â€ Taleb insisted that â€œItâ€™s well-made but there is absolutely no reason it should be linked to anything economic.â€
â€œIf you want to hedge against inflation, buy a piece of land,â€ he advised, adding that one can â€œgrow olives on it. Youâ€™ll have olive oil.â€ He continued, â€œOf course, the best strategy for investors is to own things that produce yields in the future.â€
While a number of analysts support Talebâ€™s theory that bitcoin is not an inflation hedge, some believe otherwise. Investment bank Goldman Sachs said in December last year that â€œbitcoin is the retail inflation hedge,â€ noting that it â€œis replacing gold as the inflation hedge of choice.â€ British investment management firm Ruffer wrote that bitcoin â€œacts as a hedge to some of the monetary and market risks that we see.â€ Deutsche Bank observed that there â€œseems to be an increasing demand to use bitcoin where gold used to be used to hedge dollar risk, inflation, and other things.â€
Concluding Fridayâ€™s interview on how to hedge risk in todayâ€™s market, Taleb said:
He also reiterated that investors can also â€œBuy a piece of landâ€ and grow something on it, like in his earlier olive example.
The famous author was initially a bitcoin proponent, believing that BTC can be used as a currency. However, when he saw that the price of bitcoin is very volatile and investors are using the cryptocurrency as a vehicle for speculation, he started selling off his bitcoin and began calling it a failed currency.
What do you think about Nassim Talebâ€™s advice about bitcoin? Let us know in the comments section below.
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