In a Squawk Box interview on CNBC, Nassim Taleb, author of Black Swan, spoke about his views on Bitcoin and how to hedge risks in the current turbulent market.
He was asked about crypto assets, with a particular focus on Bitcoin, as more and more investors restructure their portfolios with the new asset class.
Taleb criticized Bitcoin, describing it as a gimmick that is too volatile to be an effective currency and not a safe hedge against inflation.
Taleb said, “Basically there is no connection between inflation and Bitcoin. None. I mean, you can zero hyperinflation and bitcoin. There is no connection between them. “
He sees features of the Ponzi scheme in Bitcoin. He said that Bitcoin “is a beautifully set up cryptographic system that is well done, but there is absolutely no reason why it should be tied to anything economic.”
Taleb once had positive views on the leading cryptocurrency. But he told CNBC that he was initially fooled by this because he thought Bitcoin could be used as a currency. However, when he found that the price of the cryptocurrency is very volatile and investors are using the crypto as a speculative instrument, he started selling his bitcoin, calling it a failed currency.
Taleb advises investors who want to hedge against inflation to buy a piece of land and invest something in it. He said investors worried about inflation would be better off buying real estate than investing in bitcoin. He explained, “If you want to hedge against inflation, buy a piece of land. Grow, I don’t know, olives on it. You will have olive oil. When the price collapses, you have something. “
Bitcoin versus real estate
Taleb has joined the growing list of Bitcoin critics. In February, the former risk analyst and options trader announced that he was in the process of getting rid of his Bitcoin. He sees Bitcoin as a bug because the crypto asset does not store any value. He said Bitcoin had failed as a hedge against central bank policies.
Taleb shares the same sentiment with Barbara Corcoran, the Shark Tank star, who shared her views on the cryptocurrency a few days ago. Corcoran recently said that real estate is the best way for investors to get rich, not cryptocurrency.
Corcoran said she was interested in “best” methods of making money and claims that investing in real estate is the best way to make wealth.
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