"Can't Rule Out $100,000" - Taleb Warns Futures Traders "No Way To 'Properly' Short Bitcoin Bubble"

Following Mike Novogratz's earlier comments about the launch of Bitcoin futures,

“The market trades like it wants to go up, not down...

 

We are in a speculative mania and my sense is we are still fairly early.”

Infamous 'Black Swan' theorist and tail-risk-hedger, Nassim Nicholas Taleb has a warning for the 'no brainer' traders hoping to use Bitcoin futures to bet against the 'bubble'...

In his tweet, Taleb said,

No, there is NO way to properly short the bitcoin “bubble”. Any strategy that doesn’t entail options is nonergodic (subjected to blow up). Just as one couldn’t rule out 5K, then 10K, one can’t rule out 100K.”

Taleb's view was reinforced by Cybersecurity pioneer John McAfee in a tweet earlier saying:

Those of you in the old school who believe this is a bubble simply have not understood the new mathematics of the blockchain, or you did not care enough to try.

 

Bubbles are mathematically impossible in this new paradigm. So are corrections and all else.”

For now prices are holding gains...

Comments

bombdog Thoresen Mon, 12/11/2017 - 12:28 Permalink

Glad somebody said it. Scarcity means nothing anyway, it's a bullshit argument but perfect for blowing a gigantic bubble.There will be huge numbers of people doing nothing but trading altcoins, giving up their everyday work to do this, just like the tulip growers did in their day.If this isn't the mother of all bubbles then what is?I'm opening an account right now, I've seen enough, getting in now fully expecting some greater fools to follow me.

In reply to by Thoresen

RAT005 YUNOSELL Mon, 12/11/2017 - 13:05 Permalink

I give Bitcoin credit for achieving a lot of things, but it is technology, not money.  For instance it can be a new better way to transfer currecy, but that does not make it money.  Its value is partially defined by the 21 million limit, but what happens when a new technology tweeks something to improve a furture yet to be defined issue?  Bitcoin becomes a second player and the future marches on.Somehow the block chain and currency power need to be backed by some real assett such as gold/silver.  When that comes, Bitcoin is finished.  Then the value is the backing by a hard assett + the technology.  The technology can change as the future develops while the backing remains sound.  It has to come, it is so obvious.  And then any number of "cryptos" can be established as long as their backing is legitimate.  Then there won't be the subjective question of which unbacked crypto is best....for now it's Bitcoin but no reason for that to last.....

In reply to by YUNOSELL

RAT005 SafelyGraze Mon, 12/11/2017 - 13:48 Permalink

Bitcoin is supposedly valuable because there are promised to only be 20 million of them from the current 16 million existing.  After that 20 million is created it gets even stranger to put a value on it because it has no replacement value.  Right now it costs around $1,000 in electricity to make a bitcoin so it's a little strange it sells for over $10,000.  But what happens when there is no value associated with replacement because it can't be replaced?  Seems the answer is either infinite or $0.Simple answer, Bitcoin is not scalable, it has no fundamental value, is easily copied, and too volatile.  Enjoy the show, the sequel will not be fun for people paying $1,000s of dollar for BTC.

In reply to by SafelyGraze

Angelo Misterioso DownWithYogaPants Mon, 12/11/2017 - 16:15 Permalink

Hey DWYP - why can't they just take the code for bitcoin and replicate it again for a bitcoin II and then again for a bitcoin III etc? There seriously can not be any reason why I can't trade bitcoin I vs bitcoin II and then versus gold and then back to Bitcoin III...  And if that is possible, then the value argument changes radically.  The purpose and use would still be the same and fiat and national governments would not be involved but the notion of limited supply and infinite demand would be shattered...I totally believe in blockchain and bitcoin but i also believe in bitcoin II and bitcoin III and so on....

In reply to by DownWithYogaPants

adr RAT005 Mon, 12/11/2017 - 13:57 Permalink

When it gets too hard or too costly to mine, the network supporting Bitcoin disappears. What is supposed to happen is that the difficulty and cost go down so that new miners can pick up the slack because it might be profitable for them to do so. IN order for the cost and difficulity to go down, the value of Bitcoin must also decline as well. SO what was $1 million per coin will need to be less. Anyone holding an asset declining in value doesn't want to hold it any longer than they need to.If there is no longer a reward for processing blocks, then there will need to have one added. This will be massive fees to process transactions.

In reply to by RAT005

Vegas_Sirk adr Mon, 12/11/2017 - 14:34 Permalink

The network will not disappear. The miners are paid the transaction fees (which currently they make money on now). Also, Miners are not currently guaranteed to get a bitcoin when mining its only the miner/ mining pool the discovers the block. It's obvious that so many people around here don't have an understanding of the fundamentals of BTC. 

In reply to by adr

Vegas_Sirk RAT005 Mon, 12/11/2017 - 14:31 Permalink

The fact there is only going to be 21 million it only one part of a multi-part equation. You are also forgetting about the "network" value which is made of up the miners, the blockchain, and the user base. Just like anyone can go out and create a new facebook its VALUE is related to its user base and the assets powering the social network. The same case can be made for BTC. Lastly, once the coins are no longer being made there will be enough transactions on the network that the miners are paid by the transaction fees. 

In reply to by RAT005

KFBR392 RAT005 Mon, 12/11/2017 - 14:43 Permalink

there is no precedent to bitc and therefore the "rules" dont apply. but lets be simple and one dimensional here...its an asset that happens to also function as a means of transferring value in a decentralized open framework. scarcity bonded with perceived intrinsic or extrinsic value produces asset price inflation. bitc meets that definition in spades. like a van gogh paintig it has value bc it is relatively scarce and finite in number and therefore it is perceived to be valuable. that it hapens to function as money is icing. and handy. people keep discussing it within the boundaries of old paradigms. this a new paradigm and nobody really knows the full potential. people are nervous on both sides as they should be. this is undiscoverd country. plenty of room for its perceived value to grow. 50k in 2018 is not at all unreasonable but 0 is barring a total worldwide central plannig crackdown. but really not evwn possible at this point.

In reply to by RAT005

Teja KFBR392 Mon, 12/11/2017 - 15:24 Permalink

Agree. When you mention its function of "transferring value in a decentralized open framework", you should add that it can do this without regards to political borders or financial controls. That is, in my opinion, the most important point, especially as the fight between states and tax havens gets hotter.

In reply to by KFBR392

KFBR392 Teja Mon, 12/11/2017 - 17:57 Permalink

yep...the benefits of cryptos in general and bitc specifically are numerous but that is a key one. its agnostic as to political influence. if us cracks down the value fuelling it simply moves outside the border. ie into another fiat and then into bitc. ultimately this is about conversion of work (or the value of) from unstable (inflationary) yet highly convertible fiat into a stable (deflationary) yet not as convertible (but increasingly so) currency that is truly immune to extant influence. this will accelerate and its a self reinforcing dynamic. do not be surprised when a single bitcoin doesnt just buy you a car next year but a modest house as well. its satoshi divisibilty is its only limitation but thats not even close to a factor yet...its an appeal as well.

In reply to by Teja

jme540 RAT005 Mon, 12/11/2017 - 15:51 Permalink

"Right now it costs around $1,000 in electricity" actually, you need very cheap electricity to mine bitcoins profitably. It costs more like 20,000$ unless you have access to subsidized electricity."But what happens when there is no value associated with replacement because it can't be replaced?" more likely to infinity"Simple answer, Bitcoin is not scalable" it can be if needed, but as it plays role of gold, everyone is so conservative that very little inovation is desired."no fundamental value" like the USDThe price of bitcoins can be zero tomorrow, but your arguments aren't valid.  

In reply to by RAT005

DownWithYogaPants SafelyGraze Mon, 12/11/2017 - 13:50 Permalink

For those of you saying you can't price Bitcoin in gold......Well deary you must not have been paying attention in 3rd grade math where division was taught.Here is the formula with both values in units of dollars:Pbtc / Pgold = how many ounces of gold a SINGLE bitcoin is worth. Please if you're going to lose your dentures at least do it in a nonridiculous fashion that defies easy analysis.

In reply to by SafelyGraze

RAT005 Saucy-Jack Mon, 12/11/2017 - 13:35 Permalink

I would agree since I'm a pretty factual person and often expect that of the rest of the world.....  But look what happened at Comex.  Basically Comex is what you propose but the gov. has hijacked pricing via naked shorting and for some reason the gold world goes along with it.So it seems necessary for more honest (lock TPTB out) storage of gold with shares (bitgold) offered against ownership of the metal.  Integrity of the vault and it shares would influence the market (premium) of that bitgold.It's as simple as you say until the keeper of the gold cheats.....then what is the fiat worth?  Also consider GLD which is very close to what you suggest but it is also fraud so it isn't Freegold.  So of the two entities in the world closest to what you suggest, they are both influenced by TPTB and they are both fraud.

In reply to by Saucy-Jack

flapdoodle RAT005 Mon, 12/11/2017 - 19:34 Permalink

 "Bitcoin is technology not money"Exactly so... people are mesmerized by the technology, and it hasn't quite dawned on them that bitcoin has value ONLY as long as the shared consensus holds.The mortal danger to this shared illusion cones from using a variant of the bitcoin blockchain technology to represent something that DOES have real value. Summed up in a very simple question: given the choice of buying a unitary amount of bitcoin (e.g. 1 bitcoin associated with one prime number!) backed by... nothing but faith, or buying a unitary amount of an OIL backed blockchain currency (e.g. 1 unit of this associated with one, perhaps even the SAME prime number) backed by a quantity of oil or a weight of gold, WHICH WOULD YOU PICK???There can be as many "value associated" currencies as there are things of value, e.g. OIL, REAL ESTATE, WATER, VIAGRA, SILVER, TRUFFLES, etc. The technology can be transfered to a WIDE swath of goods, with each tethering the currency unit to a prime number - these will make the original bitcoin somewhat quaint. At some point it will "jump the shark" and people will sheepishly realize they are buying a piece of air... or more accurately, a piece of vacuum since at least with air you can breath it which has actual of value in smoggy Beijing for example.At least with the tulip bubble, ultimately, you at least got a basket of flowers...There is absolutely no reason you can't use EXACTLY the same bitcoin blockchain technology and algorithms (all open source) to define a currency called "butcoin", or "anti-bitcoin", or "matilda", also backed up by nothing. The ONLY thing differentiating bitcoin from butcoin is the NAME and the (temporary) consensus that "bitcoin is worth $19000 per prime number". These bitcoin knockoffs are already here...

In reply to by RAT005

CCanuck RAT005 Mon, 12/11/2017 - 15:25 Permalink

Backing requires centralized control and third parties.
Thus making it shitcoin, many have tried pegging cryptos to hard assets, with little or no success. If I want hard assets in my possession I can buy PM's for insurance and store of value. If I want to invest in digital currency and platform tokens I buy btc, eth, etc.......They also offer store of value in my possession, both decentralized and out of the control of banksters and shysters. Cryptos having the advantage of free market price discovery, PM's not so much, as parasites control markets.

Both have good qualities and purposes, but trying to mix the two is very difficult. Balance is required.
I like that central banks now have competition for fiat, I will always back the decentralized option, Fuck Central Banks !

In reply to by RAT005

zebra77a RAT005 Tue, 12/12/2017 - 08:52 Permalink

Friend of mine sold a comic book in Ottawa for $3500 - and used the proceeds to have a nice vacation from it.  Wooden sticks (tally sticks) split were utilized by the crown and demanded as payment for taxes, giving them value. By splitting the stick and putting pieces of it back together  - it was a proven form of counterfeit prevention.  Thus the term 'Let me tally this up for you..'  What tally sticks tell us about how money workshttp://www.bbc.com/news/business-40189959Anything of limited value that is difficult to counterfeit can have immense value.Anything of limited value that is portable, and can represent fractional values easily, is almost impossible to counterfeit, and can escape fiat depreciation and taxation can have an almost unlimited value...  The worse the fiat depreciation is the more bitcoin will appreciate..In otherwords Bitcoin *will* increase in value until mediums of exchange fail (internet shutdown by force / global nuclear exchange).. After that Land and forms of food production, force exertives (weapons) will be the only things of value.

In reply to by RAT005