During a recent CNBC interview, “Black Swan” author and well-known risk analyst Nassim Nicholas Taleb criticized Bitcoin (BTC) as a “gimmick” that’s too volatile to be an effective currency. The former options trader also called the digital coin — seen by many as a store of value or even “digital gold” — a Ponzi scheme that’s right out in the open and that those who see it as a hedge against inflation are deluded.
“[Bitcoin] has characteristics of an open Ponzi, everybody knows it’s a Ponzi,” Taleb said in a “Squawk Box” interview. “Basically, there’s no connection between inflation and bitcoin. None.”, he added.
Taleb admitted that BTC is “a beautifully setup cryptographic system,” and that it is “well made,” but he stressed the point that “[t]here’s absolutely no reason why it should be linked to anything in the economy.”
To further emphasize his argument, the Lebanese-American scholar whose bestselling 2007 “Black Swan” book predicted a looming financial crisis that materialized just a year later in 2008, claimed that as the world’s largest cryptocurrency by market value bitcoin could go to zero even in case of hyperinflation because the two are not linked.
“[Y]ou can have hyperinflation and bitcoin going to zero. There’s no link between them,” Taleb said.
Taleb also argued that investors who want to offset inflation would be better off owning “things that produce yields.” As an example, he suggested buying a piece of land and growing olives on it.
“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,” Taleb said.
The price of bitcoin has spiked in recent months from $11,000 as recently as October to a new record high of nearly $65,000 last week.
At last check, the crypto was trading at $49,945 per unit.