Topic: Is Bitcoin antifragile? (Read 547 times)

Bitcoin is an adaptive and evolving system. Not only is it immune to attacks or errors, it actually becomes stronger. As Bitcoin survives the shock, and as individuals learn from its mistakes and adapt to its volatility, Bitcoin becomes more reliable; the resilience and immunity it demonstrates strengthens trust in the network, thereby increasing the rate of adoption And make Bitcoin more resistant to future attacks or personal mistakes.

Bitcoin is more durable than risk because it is an anti-fragile system. No competitor can magically surpass it; no government can shut it down. But it doesn't stop there; every attack vector and impact on the system actually causes Bitcoin to become stronger.

Bitcoin is an anti-fragile competitor to the inherently fragile traditional monetary system. On the one hand, the legacy system is paralyzed by moral hazard and relies on trust and centralized control. When faced with stress and chaos, it will accumulate imbalances and vulnerabilities, which will only further weaken its immune system. It removes the root causes of imbalance and vulnerability as a continuous process, further strengthens the entire monetary system and as a function of time.

The taste and I think bitcoin is very much alive today, and even more alive when compared to the current environment and the situation as a whole,  we don't say bitcoin is stronger than others, but at least we can say bitcoin is not antifragile

Let's continue from here


Correlation is not causation

More specifically, you can't even compare the stock market with Bitcoin in a meaningful way as soon as you try to dig a little deeper. But you can easily fall into a trap of misleading numbers which make such comparisons possible and highly appealing for their ease and seeming simplicity. Bitcoin and stocks are two entirely different classes of assets even if both classes are valued in the US dollar


I actually agree that Taleb is mostly a fountain of empty verbiage and vacuous rhetoric. You can call it bullshit and him crazy if you please, I don't really mind (or care). However, let's not throw the antifragility baby out with the bathwater of opinionated talk and mindless rant


I understand that you don't like the term

Just in case, I don't like it either. But I have already come up with another word for this phenomenon. Evolution is the right word for it since the entirety of it hinges on what Taleb calls antifragility. The takeaway is that it is definitely not like "hardly documented outside of nassim taleb's invention"

As I already pointed out in the thread, in a broader context, it encompasses all living and even some non-living matter (e.g. crystals growing and dissipative structures forming) decreasing their own entropy and increasing the entropy of the world around them in a way the second law of thermodynamics doesn't get hurt in the process

That's exactly how antifragility is supposed to come about and set in

Volatility is required for antifragility to kick in as it makes Bitcoin more robust and resilient with time. If it were rock solid, anything that would crash it would probably kill it as well. The irony is that, with more volatility Bitcoin becomes less susceptible to its negative effects as it kinda gets used to it. These effects simply wear themselves out

Some people leave, no doubt about that, but those who remain make Bitcoin stronger overall through both the sheer number, or rather ratio, of stronger hands remaining and the hands themselves becoming stronger in the process (let's call it a double antifragile impact)

This may be true, but since it happens consistently yearly for insecurity, it won't happen as they say. Nevertheless, the beneficial thing about it is that at any moment its expense decreases, it usually recovers. It never recovered at the expense of bitcoin's backdrop, it was constantly republished. At least not in the form of various currencies that have no guarantee that they will return. Among the epidemics is a great fortress of Bitcoin, its cost has not gone below a thousand dollars. May be

Gold has long been considered a last-ditch asset, so to speak, an investment of last resort, even though it hasn't been tested in this role for ages (read, it remains to be seen whether it can actually live up to these expectations nowadays). But it was BitMEX's insolent market manipulation and how quickly Bitcoin rebounded that made me think of it as an instance of antifragility revealing itself

My explanation is simple, though I'm not sure if it can be equally applied to the Mt.Gox failure. Some people probably lost millions due to the abrupt price crash (just in case, I've witnessed the whole process with my own eyes), but whichever way or angle you look at it, it was not Bitcoin's fault. It is as it has always been, while its utility is determined from within (read, it is a thing in and unto itself)

And this is what distinguishes it from, and contrasts with, stocks and the stock market

What I can relate to the feature of Bitcoin antifragile, is that I have seen more demand for the purchase of Bitcoin. Usually, I exchange a certain amount of Bitcoin to Fiat for my grocery purchases and bill payments.
Precisely in this last week, I created an order to sell Bitcoin on the Cryptoway platform and immediately sold it at a higher market price.
There is more interest in buying Bitcoin when people realize all of its benefits it will be the best time for Bitcoin.

No doubt crypto has became much more useful on every catastrophic situation locally or globally. The price is mostly decided by the market and on such situation, people would try to have as much cash in hand as possible to tackle the situation. The price decrease is not due to the nature of bitcoin. There's only one thing that could make bitcoin fragile and that is internet. The total dependence of bitcoin blockchain on the current internet may make it fragile when there are say a number of internet to choose from.

I'm pretty sure it is? Just looking at how it's progressed over the decade has been, as well as the usage and implementations of it globally, It can be described as one. Naturally, a few arguments would say it isn't one especially since it dropped just recently because of the panic, but if we were to take into account its changes from the very start, wouldn't you say that it's developed quite finely? Countries all around the globe have pretty much developed a system to account for cryptocurrencies. Wouldn't you say that it used the 10 years of the randomness it has experienced to develop? Also the argument of it not being one by just looking at the COVID 19 effect and the bubble effect, it contradicts the notion that "there is no absolute antifragility" since the argument itself is looking for one. It's kind of how even Superman has a weakness right? So wouldn't judging the development of BTC based on a few factors instead of the entire scene kind of wrong?

+1. in fact, BTC fell much harder than the stock market, and is still down much more. looks pretty damn fragile to me!

the whole concept of antifragility is rather questionable and is hardly documented outside of nassim taleb's invention. its application to bitcoin is even more questionable, although i will concede the possibility could exist if bitcoin had an exponentially larger network effect than it currently does. as it stands, the idea is laughable.

people like nassim taleb because he's ridiculously opinionated and talks never ending shit, but he's crazy.

OK, if you truly want to isolate "anti-fragility" on its performance in the market after bearish events, then obviously, your answers are, YES and YES.

Hi deisik

It's been a long time since I read Taleb's Antifragile, although the book is still sitting within my eyesight now up there on my bookshelf.  It looks like we do not disagree re BTC and gold being antifragile to the mainstream financial system.

Antifragile investments are a good diversification.  And whether the inverse correlation with other investments is very strong or less so is not important to me, they act as hedges, at least in part.  Good enough for my purposes.

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pooya87

I only mentioned ATHs as one of several indicators that can be looked at to make a rough assessment of price correlations.  BTC has not been an investible asset (suitable for the somewhat mainstream people) since +/- Jan 2017 (I got in around 2014).  So the time periods I chose reflect the longest period of time I thought proper for an initial look to see what aspects of "antifragile" price behavior I could tease out during the same period (Jan 2017 - now) for gold, BTC and stocks.  Look, I understand that is imperfect analysis, but comparing BTC to assets that have been around longer has its problems.

Looking at the ATHs does have some value, IMO.  I am not saying that there may not be better indicators, I'm sure there are.  I cannot and do not claim to any extraordinary expertise in examining asset classes.  

deisik's thread here has been useful to me to look at how these three classes have worked out in the past three years.  For me, that's value.

I don't think it has any practical relevance or importance

Bitcoin (or anything else, for that matter) is either antifragile or not in particular circumstances and under specific conditions (those which affect it). Whether it is officially in alpha, beta, or whatever has little to do with that. It is its behavior under stress that counts, whether it becomes stronger or weaker in the process and in the aftermath of a certain situation. The point is in finding and looking into things which make it more resilient and which less so

To make things somewhat simpler and easier to understand, we can narrow down the possible range of circumstances under which Bitcoin would reveal its antifragile nature, or lack thereof, to just two particular events. Did Bitcoin become stronger in the long run after the Mt.Gox collapse, and is it going to become stronger after BitMEX has pulled off their little trick with triggering massive liquidations?

OP, it's going there, but WHEN should we consider it in an "anti-fragile state"? Until its "out of beta"? I believe the only way when Bitcoin is considered "out of beta", is if mining is supported 100% by transaction fees.

I pointed that out right away

And Taleb specifically emphasizes that point as well. Antifragility is possible only within a range on a certain continuum, and it necessarily comes at the expense of something else, either from inside or outside. This is a crucial point which can be generalized to cryptocurrencies, and then looked into. More specifically, this topic is about finding out and examining the circumstances and conditions under which Bitcoin reveals its antifragile nature, i.e. when it gains and becomes stronger from the chaos and turmoil outside, or even from within (from being bitmexed and goxed)


That was a loaded question

Really, how can you constructively disagree with something if you don't even understand the whole idea as this thread clearly proves? Taleb highlights that living systems are the best examples of antifragility. However, he goes on for pages how he couldn't come up with a term to describe this phenomenon when the fittest term (pun intended) is obviously evolutionary? Living systems thrive in a volatile and chaotic environment for the simple reason it is likely the only way to increase the external entropy and decrease their own, i.e. essentially the only way to get on

comparing all time highs like this is wrong if you ask me. specially since bitcoin's ATH value that you used was a massive bubble that popped and since day traders are making profit on both rise and fall the fall always takes a very long time and goes deep. that is not true about other assets such as gold's rise.

besides if you remove the bubble and its burst and then look at the price you can see that bitcoin, unlike everything else had a massive rise!
gold started 2017 with $1,162 and it is now $1,680 ->  44%
bitcoin started 2017 with $885 and it is now $7300 -> 724%

There are powerful financial interests who want and desperately need to "prove" that bitcoin and gold should not be considered safe havens.

These financial interests are willing to spend an inordinate amount of fiat money on discrediting alternatives to the fiat banking system.

For example, these financial interests accumulate lots of borrowed and paper gold and then dump massive amounts of fake gold during a stock-market downturn to depress the gold price exactly at that point in time.

They also do that with bitcoin. Centralized exchanges are more than happy to lend out their users' bitcoins for a fee to financial manipulators. Therefore, as long a the market capitalization of fiat values is relatively large compared to bitcoin and gold, it will be possible for financial fiat interests to "prove" that bitcoin and gold are not safe havens. In fact, given the fact that the total market cap of bitcoin is still much smaller than the one for gold, it is even easier to manipulate the bitcoin price than the gold price.

Bitcoin still survives in spite of all these financial assaults.

Therefore, the flight into alternatives will be exponentially slow at the beginning. It will take a prolonged depression in fiat values along with long, robust performance of bitcoin before the flight into bitcoin will be able to commence in all earnest.

...

Charts of BTC, DJI (US stocks, Dow Jones Industrial Index) and Gold.  I like looking longer-term, but perhaps the proper period to examine would be Jan 2017 until now (as BTC prices are hard to read before then):

https://finviz.com/crypto_charts.ashx?t=BTCUSD&tf=w1

https://finviz.com/futures_charts.ashx?t=YM&p=w1

https://finviz.com/futures_charts.ashx?t=GC&p=w1


Careful examination of the charts would show substantial performance differences.


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