Why 'Black Swan' author Nassim Taleb calls bitcoin an 'open Ponzi scheme'

one of the things that people are doing in terms of structuring their portfolio given the amount of debt that's been taken on is people have been buying up cryptocurrencies maybe not in in the last week or two uh but clearly over the past several months i have seen you take to twitter and call this everything from a failed currency to an open ponzi scheme has characteristics of an open policy in other words everybody knows it's a ponzi basically there's no connection between inflation and bitcoin none okay i mean you can have hyperinflation and bitcoin going to zero there's no link between them it's a beautifully uh set up uh cryptographic system it's it's well made but there's no absolutely no reason it should be linked to anything economic if you want to hedge against uh inflation uh buy a piece of land uh grow i don't know olives on it uh you know you'll have olive oil if the price collapses would have something but bitcoin there's no connection and of course uh the best strategy for an investor is to own things that produce yields in the future in other words you can fall back on on real dollars coming out of the company plus with their sketch there's no other alternative and and these gimmicks of course you you have bitcoin today you may have another one tomorrow they come and go and there's you know no uh systematic link between them and and and and the claims they made i thought that bitcoin is going to be a currency in a sense that something to transact with it proved to be too volatile because and it turned into a speculative tool it's incompatible with the original aim to replace the dollar you don't replace a currency with something that's so volatile that you can't really commit to a transaction in it but what about the view that it's it's an asset um that that it's it's a commodity it's it's diverse it's a it's a digital gold i ask by the way because i've been skeptical virtually the entire time as well and yet you know i look at the screen you can look at the screen and uh we can both say at least at the moment we've been quite wrong no i i there's a difference between a currency okay currency commands price stability that's what the federal reserve's mission is it's not you know specificity not an appreciation of the dollar and something that rises in price uh you know i i was fooled by it initially i thought it was going to be a currency something that moved five percent today twenty percent in a month up or down cannot be a currency so it's something else it's like tulips everything can rise it's a good bitcoin the question is let's say it's something else let's say it's not a currency and maybe it isn't a currency but the question is does it have value i think you bought into it originally and actually sold out right yeah of course i i when i realized i mean i bought into it thinking you know not not willing to have capital appreciation so much as wanting to have an alternative to the uh to the fiat currency issued by central banks the currency without a government then i realized it was not a currency without government it was just pure speculation it's just like a game nothing i mean nothing else i mean you can create another game and call it the currency and you don't think there's ever is there ever a point though in which it could reach such mass adoption uh and could actually get to some level of stability that you think it could be used as a currency as you see the adoption of the venmos and paypals and other uh wallets and maybe a much more sort of global um usage that that dynamic would change i mean that's the argument that's made on the currency side of it okay so the the the fact that uh someone uh accepts bitcoin at formal payment is very different from from treating it as a currency you have to commit to a fixed price in bitcoin so in other words i have a contract with you i'm renting your apartment i'm paying you in bitcoin okay and you take the bitcoin risk okay and and i don't i haven't seen transactions there may be some i'm not aware of where the price is fixed in bitcoin not in dollars translated into bitcoin so and if you want to wire money there are more effective ways to do so and if you want to use a currency something use apple stock that's a currency okay you can convert it and pay with apple stock and probably be much less volatile than bitcoin shepard smith here thanks for watching cnbc on youtube

Channel: CNBC Television

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Id: kPjdg6Igr2c

Length: 4min 39sec (279 seconds)

Published: Fri Apr 23 2021