Black Swan & Crypto

I'm finally getting around to reading the Black Swan by Nassim Taleb. If you follow him on Twitter you'll find that he is not a fan of Bitcoin, but I get the feeling he is attacking a certain kind of devotion to Bitcoin and arrogance is blinding him to his own principles that reveal a lot of upside.

As Taleb says, history moves by jumps, not by crawling. I'm trying to discern how his now tried and true philosophy of skeptical empiricism applies to the world of cryptocurrency, and how to build those lessons into a strategy.

A few thoughts that I've had so far:

• Assume I don't know anything more about future crypto prices than what my Dad knows from watching Fox News or any less than Elon Musk himself.

• The least likely outcome is that Bitcoin/crypto just keeps growing at x%/year right now. That might happen when it's actually used as a primary currency but until then, speculation makes it entirely unpredictable.

• There will be significant disruptions that can't be predicted by any "rational" person using conventional wisdom. If they could be predicted then they probably wouldn't happen. These disruptions could include market collapse, inflation, war, famine, pandemic, etc. These may have positive or negative impacts on crypto.

  • As an example of this, the idea that the United States dollar will be worth anything in 50 years seems to be taken entirely too much for granted, especially when you consider how many nuclear weapons exist, the last decade of monetary policy, and the general whims of populist and socialist politics.

• Put myself in position to gain from positive outlier events and avoid risk of ruin from negative outlier events.

  • Make small/ medium bets on cryptos that appear to solve real problems
  • Hedge a traditional portfolio with crypto or hedge a crypto portfolio with something else.
  • Make bets on items where profit seems likely but avoid ruin. (Don't dump all available funds into a single Dapp)
  • don't over leverage
  • Don't get too emotionally attached to any currency or project. Continue to evaluate.

These are just a few thoughts, but I'd love to see discussion or other thoughts or musings from those who have read Taleb.