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Which longer lasting Ponzi scheme would you choose?



Recently, the author has been thinking about the problems of the modern monetary economic system. In the first section of economics class, the teacher will tell you the basic definition of money: medium of exchange, unit of account, and store of value. The emergence of the trading medium and currency has greatly improved the efficiency of people's interaction and reduced the transaction friction cost of bartering. The unit of account, currency itself can be used as a commodity, and the value of other commodities can be measured by itself as a unit, which also forms the prices of other commodities. Value storage, this article may have been removed from today's textbooks, currency cannot be used as a store, economic growth requires healthy inflation, and currency itself has no interest-bearing function. However, the definition of money in traditional economics is gradually becoming invalid today. The value exchange medium is a tool for implementing monetary policy. Under a value consensus system endorsed by armed forces, it is the only permitted transaction medium in the controlled domain. The price of official intervention is to abandon open finance. Unit of account? The unit is elastic, the value of the unit is determined entirely by monetary policy, and the asset deviates from its intrinsic value. A store of value, the value of money is rapidly shrinking under the stimulus bill. There is no gold behind the modern monetary system, but a small ledger for its own accounting, which is basically a balance sheet drawn by the central bank itself. And under free trade, a strong currency will indirectly or directly link a weaker currency. It is very simple, and perhaps a little extreme. When I was thinking, I saw this article, and I couldn’t help nodding frequently, as if it was very similar to my thoughts, although I didn’t agree with it 100%, but I think it’s worth sharing here with everyone. This article is from Coinmonks by Alberto Guerrero. The following is the translation of the original text: Nassim Nicholas Taleb, author of Antifragile, Black Swan, Risk Sharing, and Fools Who Get Rich by Randomness, a controversial author, has recently changed his mind on Bitcoin. Chain Game Association YGG Launches New Reward Vaults: News on November 14th, chain game association Yield Guild Games (YGG) launched new Reward Vaults, and users holding guild badges can pledge YGG tokens on the new Polygon Reward Vaults And get League of Kingdoms and Thetan Arena token rewards. YGG said that the previous Reward Vaults included two projects, Aavegotchi and Crypto Unicorns, with a total of more than 3.5 million YGG tokens pledged. [2022/11/14 13:02:30] Not long ago, he also suggested that you can allocate some encrypted assets in your investment portfolio. But now he believes that the price volatility of encrypted assets is too large to be used as a reserve asset or even a hedge against inflation. In the end what happened? What made him change his mind? Should people now follow his recent views or follow his previous advice? Let's take a closer look. Bitcoin is a decentralized cryptocurrency with no government, company or institution behind it. It consists of nodes and miners in the network and is powered by the forces of supply and demand markets. This makes it anti-regulation, transparent, homogeneous and permissionless. Taleb always believes that decentralized systems are stronger than centralized systems. For example, he is bearish on Europe, the US or China, and bullish on Switzerland or Singapore. His money is going to small cities and countries, not big economies like the EU. Centralized systems are often overly bureaucratic, top-down management, inefficient and corrupt. The former Soviet Union is a good example, they couldn't even organize a system for distributing bread, and they got a notorious reputation for long queues in front of their bakeries. Centralized officials, large companies, and pyramid hierarchies are at risk of centralization and are therefore extremely vulnerable to attack. Distributed systems such as ant colonies, Linux, or guerrilla warfare have little precision against them, making them less prone to defeat. South Korea's ruling party will hold a meeting in November to collect opinions on the draft "Digital Assets Basic Law": According to news on October 25, the Korean Financial Services Commission recently reported the draft "Digital Assets Basic Law" to the National Power Party, and the ruling party plans to hold a meeting in early November. The party’s Digital Assets Special Committee meeting, to collect government and industry opinions on the bill, may introduce the bill in November. The Basic Law on Digital Assets will be proposed in the name of the Digital Assets Fair Restoration Support Act, with a focus on protecting investors, and is expected to contain information on the qualifications and obligations of digital asset operators and disclosure rules. [2022/10/25 16:38:36] Bitcoin is very decentralized. Nobody can control this game. Even Satoshi Nakamoto (the creator of Bitcoin) has disappeared, leaving the algorithm and consensus mechanism to let the system run on its own. The only way to destroy bitcoin is through a 51% attack or a quantum computer or shutting down the entire internet. But those events are highly unlikely, and even if they did, there would be defenses in place. Bitcoin is regulatory-resistant, and even if officials try to stop it, it will only make itself stronger. This is also the definition of antifragility, a concept proposed by Taleb himself. The United States and China have tried to limit the cryptocurrency ecosystem. But ironically, these two countries have the highest Bitcoin penetration rates in the world. Like the mythical Hydra, when one head is severed, two others grow back. There is another currency that is banned in some countries and that is the US dollar. How useful do you think this ban ended up being? When people need a proper currency to act as a store of value, people will always find it. Gold has traditionally been a safe haven in times of crisis. In developing countries, the dollar is still king. But now the market is accepting Bitcoin as a store of value and a hedge against inflation. Taleb argues that Bitcoin can never be a hedge against inflation because its price keeps going up. Encrypted lending company Ledn will acquire fund management company Arxnovum: Golden Finance reported that Toronto-based encrypted lending company Ledn has agreed to acquire Canadian asset management company Arxnovum for an undisclosed transaction fee, according to a press release. The deal is expected to close before the end of the year, when Arxnovum will become a subsidiary of Ledn Asset Management. Founded in 2021, Arxnovum is regulated in Canada as an investment fund manager, portfolio manager, commodity trading manager and exempt market dealer. (coindesk) [2022/10/6 18:41:09] I must admit I am very confused by this statement. Bitcoin is up 200% per year while the dollar is down 15%, one is deflationary and the other is inflationary. When the price of bread in Venezuela rises, it is not the bread that inflates, but Venezuelan silver coins. Compared with Bitcoin, the price of any asset is falling, so this also effectively acts as a hedge against inflation. According to Wittgenstein's ruler principle: If you are using a ruler to measure the length of the table, then you are also using the table to measure the length of the ruler. Measuring the value of assets in fiat currencies is deceptive because they are volatile. It's like measuring length with an elastic band. Over the past few years, stock and real estate prices have been rising, but this is not a reflection of their true value, but the dollar has been falling, which makes everything look more expensive. If you measure the prices of all assets by measuring gold or Bitcoin, you will find that the prices of all assets have been stable or even falling since the new crown. This is the more reliable ruler. According to Taleb, Bitcoin is too volatile to serve as a store of value. Once again I am confused. What is wrong with asset price volatility? One should assume that most investors would be happy with an asset with rising prices, even if asset prices sometimes pull back. Data: BTC has been continuously transferred from the exchange for the past 4 years, and the purchasing power of USDT is currently on the rise: Golden Finance News, Santiment data shows that in the past 4 years, BTC has continued to transfer from the exchange, even after 8 months of price retracement, this A trend has not stopped. At the same time, the purchasing power of USDT is currently on the rise. [2022/7/8 2:00:08] Actually, I want higher volatility, not less. If you want to keep things stable, you can deposit cash in the bank and earn a generous 0.1% annualized interest, net of commissions. That's really stable. However, if you want to make money, you have to take some measured risks and be exposed to fluctuations in asset prices. Taleb is a strong proponent of the Lindy Effect - if something has been around for 100 years, it's likely to be around for another 100. Books, movies, and artwork generally follow this guideline. The Bible has been around for two thousand years, so by 4000 AD, it might still be around. Now, Bitcoin has only been around for 12 years, which is not very long. But in this fast-paced world of technology, twelve years is an eternity. It can also be said that a technology that can exist for ten years or more, he is likely to succeed. Think Google, Apple, Facebook or Amazon. Will they still be around 20 years from now? I think so. Once a technology reaches a critical point and forms a network effect, it will be very difficult to eliminate the technology. Even if a very advanced technology appears, it must follow Metcalfe's law: the value or benefit of the network is proportional to the number of users of the network. Some people say that Bitcoin will be replaced by higher performance, lower cost or higher speed encrypted assets. I doubt it. You might be able to make a better burger than McDonald's, but can you be the next fast food tycoon? This is not necessarily the case. Data: Layer 2 locks 1.086 million ETH: According to news on November 7, L2beat data shows that among the assets locked by Layer 2 projects included in it, USD is 47.81 billion, and ETH is 1.061 million. It fell back slightly, with the former at a high of 49.43 billion and the latter at 1.086 million. [2021/11/8 6:37:34] McDonald’s, Bitcoin, Coca-Cola, the Internet, and Facebook all have network effects, the more people join, the stronger the brand and the more irreplaceable it is. The Lindy Effect is real, and it applies to technology too. Combined with network effects, it will drive technologies with first-mover advantage at an exponential rate. Taleb believes that Bitcoin is similar to a Ponzi scheme. Here, I think he's totally right. Do you know what else is a Ponzi scheme? That's right, gold, real estate, the stock market, pensions and the entire economy. All of these systems are basically pyramid-shaped. They can only survive by trust in the system and the belief that the system will continue to evolve forever. Once trust is gone, the whole system collapses like a house of cards. The dot-com bubble, the 2008 subprime mortgage crisis, and the Japanese recession in the late 90s were all examples of Ponzi schemes that collapsed. Gold, dollars, and other assets are also Ponzi schemes, but they still hold a certain value. The question now is not to determine whether Bitcoin is a Ponzi scheme, but to choose: Which Ponzi scheme is better? Will you buy dollars when they print $1.9 trillion out of thin air every other month? Or want to own Bitcoin with a total supply capped at 21 million? The entire economic system is based on bubbles, it is a Ponzi scheme, and it requires you to trust an untrustworthy system. Anyone looking for intrinsic value should return to a self-sufficient state of barter. Everything else is fiction. One of the advantages of Bitcoin is that it is trustless. There is no need to rely on a central bank, official or financial institution to back the assets within the system, everything is based on mathematics. While still subject to the supply and demand of the market, it does not rely on any inefficient and corrupt institutions. It's a Ponzi scheme, but it's going to go on for at least 1000 years. All of Taleb's fortunes were made by betting on highly volatile assets, taking extreme risk and betting against the entire system. When he saw a bubble, he shorted it and made millions from it. He got the money he needed to make him financially free without having to depend on other people. So he can say: Fuck you, stinky money. Now, he says Bitcoin is a bubble. Is he right? Of course we are in a bubble and it is bound to explode, the question is: which bubble? Is Bitcoin a bubble, or is that the needle that will burst all other bubbles? The stock market, the banking system, the multi-trillion dollar printing presses, and centralized economies are very big bubbles to me. This is a question you must ask yourself. Pick the right bubble, put your money there, make crazy money, and run away. Taleb hates bankers, economists and politicians. He despises establishments and politicians who play games with other people's money and make their clients lose everything while making a fortune themselves. He's a rebel, and he's got a lot of sympathy (including me) for being able to tell the truth. When bankers make money, they get a dividend; when they go bust, you pay for it. It's not fair. It can be said that Bitcoin players are all in this risk-sharing game. I think crypto proponents have 10% of their portfolios in crypto. Put your money where your mouth is, it will make you know what you do. Bankers and politicians are not the same. In my case, I want to live in a world where people are rewarded for making good decisions and punished for making bad ones. Like Roman engineers who were forced to live under bridges they built, we let politicians, economists and bankers take real risks. If they ruin other people's lives, their lives should be affected too. Instead, they get their bonuses as usual and enjoy a lavish retirement with money they “stolen” from other people’s wallets. Taleb used to own bitcoin, but he recently sold it. There is nothing wrong with him putting his money where his mouth is. But, after selling bitcoin, he bought dollars, an inflationary bubble propped up by a system of corrupt bankers and politicians that he highly despises. I can see a big contradiction here. But why? Taleb is a contrarian. He enjoys being pissed off. He is sometimes self-righteous, loses his temper and is even rude. One of his readers once said: "The question is not whether Taleb is an asshole. Yes, he is.


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