Black Swan author and a Mathematical Statistician Nassim Nicholas Taleb, who once admired Bitcoin, criticized the cryptocurrency saying its actual value is “worth zero”.
“In its current version, in spite of the hype, Bitcoin failed to satisfy the notion of ‘currency without government’ (it proved to not even be a currency at all), can be neither a short or long term store of value (its expected value is no higher than 0)," Taleb wrote in his paper “Bitcoin, Currencies and Bubbles”.
Bitcoin on Tuesday, dropped below $30,000 levels, to a five-month low, adding to losses sparked a day earlier when China deepened a crackdown on cryptocurrencies.
However, on Wednesday, Bitcoin recovered losses to trade nearly 8 percent higher at $34,100. The coin remains about 15 percent higher so far this year.
"Something that moves 5 percent in a day, 20 percent in a month -- up or down, cannot be a currency. It's something else," Taleb had told CNBC earlier in April.
“I bought into it ... not willing to have a capital appreciation, so much as wanting to have an alternative to the fiat currency issued by central banks: A currency without a government,” he added.
Taleb's views have taken a 180-degree turn in recent years. At India Economic Conclave in late 2019, he had said cryptocurrencies price may collapse but their use will continue.
“I am very glad that we have cryptocurrencies and diversity on cryptocurrencies. Let them compete and see who is going to win. Bitcoin is winning and the blockchain is quite an essential aspect that facilitates transactions,” said Taleb.
Back in 2017, Taleb had slated bitcoin "an excellent idea. It fulfils the needs of the complex system ... because it has no owner, no authority can decide its fate."
He had said, Bitcoin has a track record of several years now, enough to be an animal in its own right. What changed his view then?
“I realized it was not a currency without a government. It was just pure speculation. It’s just like a game ... I mean, you can create another game and call it a currency.”
While analysts over the year have looked upon Bitcoin as an alternative for gold and a hedge against inflation, Taleb said it cannot be a reliable hedge.
"[It] cannot operate as a reliable inflation hedge, and worst of all, does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes," he added.
He said precious metals such as gold are largely maintenance-free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time.
Cryptocurrencies, on the other hand, "require a sustained amount of interest in them,” he wrote.