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.

*   *   *

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.


(Edited)

Agreed re terrible viruses mankind has had to deal with over the millennia.

*   *   *

Re antifragile, I believe the concept of "antifragile" can be looked at as a matter of degree.  That is, something might be more antifragile (in relation to the stock market say) or less so.  In that sense, BTC is clearly antifragile, it tends to be relatively stronger as other assets are often weaker.  Not a 100% (inverse) correlation, but BTC has held up well all things considered.

There are no assets I can think of right now that is 100% inversely-correlated with other assets.

N. N. Taleb himself has written that gold is antifragile.  

Gold is some 10% - 11% below its all-time high price (US$, ATH in 2011).  Our (US) stock market would be some 19% below (ATH in February 2020).  Gold is inversely correlated with stocks, though not 100%.  BTC is down some 63% from its ATH in late 2017.  Note that all three of these asset classes reached their ATH's in completely different years.


Great thread, by the way.

This virus is nothing compared to what humanity went through (smallpox, plague, polio, to name but just a few)

Regardless, as the overall opinion seems to be mostly anti antifragile, could anyone come up with anything which would however remotely count as antifragile, whatever that might be? Just to make sure that we go a little bit beyond a simple "I do not agree with this"

I'm saying Bitcoin is still measure in USD, which means it practically has a floating dollar peg.

In order for Bitcoin to be truly anti-fragile, I would say it needs to have value in and of itself, or be the peg. e.g. USD should be pegged in Bitcoin, not vice-versa.

Unfortunately if the natural selection we are talking about will go according to a virus which can mutate anytime I do not think we will have a better chance of surviving this selection that you are taking about 😂.

But more or so Bitcoins is not antifragile but a certain degree of stability is provided by the fact that the price of Bitcoins is invariably changed by the individual people , which is not controlled by any body , so it stays in balance somehow most of the times.

But this also have certain exceptions :- like when whales decides to increase or decrease the price , it certainly makes a huge difference and creates problem for the community.

Bitcoin fell because the stock market fell, and now it recovered because it also recovered. This is the opposite of "antifragile", since it follows the stocks/global economy instead of being a hedge against it. You can't pin it all on BitMex alone, if this was the case Bitcoin would be crashing and pumping like that every week - it was clearly a correlation with the stock market that reacted to governments declaring quarantine.

Is that what you call, antifragile, if people behind decentralized network decided not to sell amidst the threat of coronavirus? I don't think it fits the bitcoin. This is the first time I encounter this term, I conclude
the OP is just too obsess with what is happening right now that he come to think of this term. Well from the meaning of it, it gains from disorder, does not count with bitcoin since it already dumped just before the virus has spread around the world. Aside, bitcoin could be left nothing if people lost their trust with bitcoin, and could just easily jump into another coin after all.

I don't know about that, it really looked like the reason for Bitcoin's crash in the first place was the panic surrounding the official announcement by the WHO of COVID-19 being a pandemic. Just when that happened, I've watched an interview with Antonopoulos who also said that Bitcoin was meant to go down when the economic crisis comes, at least at first. What happens then - well, I guess there hasn't been enough time to determine how Bitcoin will behave while everything else is going down. Bitcoin currently seems to be recovering, but it can easily change overnight. The pandemic doesn't seem to be near its end, so for now, it's hard to say if Bitcoin's actually antifragile.

As long as it is pegged to the dollar and treated like a commodity rather than currency it will not be anti fragile. The price dropped because people needed money during an uncertain time. Our goal should be that people need bitcoin in uncertain times. This requires adoption. This requires a conversation via blogs, vlogs, news stories, and good old pavement pounding by people willing to get out there and find ways to make money through spreading adoption. The speculation and resulting volatility are the biggest hurdles atm.

We can't say it is anti fragile because its complete decentralization cause the manipulation as well but its the best out of others among what we have.People will realize cryptos are far better than people thought and this covid might helped them to realize that.Maybe in future it will become one and more better than gold, yes for now gold is the safe heaven but bitcoin is profitable now than buying golds.

    I do not agree with this antifrafility of BTC. With this COVID 19 pandemic, the entire crypto market has suffered, with the prices of currencies dropping sharply. Let's not forget that the BTC had reached the price of $ 4,000. Currently Bitcoin is recovering slowly but surely, but as you can see in the coinmarketcap chart, the other currencies are recovering. So Bitcoin is not the only survivor, but the Bitcoin trend follows the general trend.

It could be real but because of its volatility that always occurred every year, This will not happen as they said. But the good thing about it, it will always recover whenever its price has fallen. never in the history of bitcoin that it stays at a low price without recovering, it always recovers. Unlike the other coins that have no assurance whether they will come back or not. Bitcoin has a strong remarkable stronghold even in the midst of a pandemic, its price hasn't been down to under a thousand dollar.

it depends on how you define terms such as "strong" versus "fragile". if the only factor you consider is the price the the answer to your question is simply no. it is because the bitcoin market is still pretty small and the order books are not yet as packed as they should (for a lot of reasons). that means the price remains very volatile and at times susceptible to manipulation.

but if the factor you consider are the factors that make bitcoin what it really is which is a decentralized currency then the answer is obviously yes. nothing can change the fact that bitcoin is completely secure, decentralized, global, censorship resistant, fast payment system without a middle man.

Bitcoin certainly has withstood this global financial turmoil caused by the novel covid-19 against predictions. The theorem about bitcoin been anti-fragile may as well be a complex academic discuss. We have seem bitcoin die may times and quickly always resurrect which is what has always give people a great confidence.

In this situation the price of bitcoin is rising but not that high. Bitcoin nowadays is essential because we can use it in making payments immediately. Through bitcoin someone doesn't need to go outside the home to pay their bills. The price of the bitcoin will possible drop down but it is not alarming, that is why you have to make investment, there are websites that are accepting bitcoin investments. Through that you just have to wait for the charts and trades and your money may grow higher. I think bitcoin is not antifragile because it may drop down but not that low. The world is really struggling but there is a God who can help us in all these struggles.

I think Bitcoin will only get tough as more people get to recognize it and start investing. Right now I wouldn’t say that it has gotten that strong, because even it was affected by the recent pandemic. Even gold that is very stable and has been around for a very long time was affected by the pandemic along the line.

So the way I see bitcoin, even if gets to the level of gold and become really stable, when situations like these arise it will still be getting affected. But one thing I’m very sure is that whatever happens, Bitcoin will always be able to recover really quickly. Just like it has been doing since and even recently; the price decreased and still got back up and currently at $7300+.

You likely meant to say they value Bitcoin in USD, right?

They most certainly do, and so what? Gold is valued in dollars too (or whatever), but can we say that it doesn't have "value in and of itself"? If we can say so (let's assume that for a moment), then how does the dollar itself have any value at all in the first place? Anyway you come to think of it, the dollar valuation is not relevant to the question

Further, and I said that in the OP, there's no all-out antifragility (Taleb says essentially the same, just in case). To be more specific, we saw BitMEX triggering massive liquidations of long positions (like 1B dollar worth liquidated). So here's the question, did this make Bitcoin stronger or weaker, and why exactly?

The features of Bitcoin is actually what makes it antifragile, in my opinion... Features such as decentralization, immutablity, deflationary currency, censorship resistant, privacy/anonymity, transparency etc... If you keep weakening or strengthening any of the feature, the antifragile strength of Bitcoin will be weakened or strengthened.

It comes down to the same discussion of whether bitcoin will be the safe haven of money if the world economies collapse. The answer is No, which might sound like a stab in the heart for the bitcoin users, but the hard truth is to be accepted.

If ever economies do collapse, like DarkDays says, like another depression, people will focus more on buying stuff for feeding their stomach and just surviving the days. The concept of investment comes when the basic necessities of life have been dealt with, not the other way around. So those who even had some bitcoins would sell those for liquid cash to use for buying stuff they need.

Then again, the acceptance of bitcoin is non-uniform if you look into the world maps. So it is out of the question of whether bitcoin is antifragile or not, It is fragile, like any other asset.

No,Bitcoin is not antifragile.The stock market went down due to the coronavirus panic,and Bitcon went down too.Now,the Bitcoin price is recovering faster than stock prices,but that doesn't mean that Bitcoin is stronger.
"Antifragile" means a business/industry or economic structure(like a marketplace) that gets stronger and grows,when all the other structures and industries are going down.The crypto industry isn't growing nowadays,there's no increasing number of newcomers,who are buying crypto for the first time.

I don't believe it is anti-fragile. At least not yet.

Although Bitcoin can definitely withstand some punishment, I don't think the network is strong enough to survive a full-blown economic collapse—similar to that seen in the great depression.

Instead, I think that people will flock towards assets with known, sustained value, rather than extremely volatile cryptocurrencies—including Bitcoin.

Once the network becomes strong enough, and the fundamentals reach a point whereby Bitcoin has value in and of itself (without being compared against other currencies) then I would say it has truly reached a state where it can be considered anti-fragile.

We're nowhere near that point yet, since people still peg Bitcoin to the USD.

Actually, the recent crash demonstrates that Bitcoin is quite antifragile

Its price as of today is the same as it was just 3 months ago, so we can't even say that Bitcoin crashed and never came up. Of course it crashed but it was an obvious and outrageous market manipulation on the part of BitMEX. Did it hurt Bitcoin? It definitely hurt Bitcoin traders (with some of them likely losing millions in the process) but did it undermine their faith in the cryptocurrency as such?

I suspect we can't say so if we take into account the latest price dynamic. These people lost their money, that's true, but it wasn't Bitcoin's fault, so they will be and probably already are buying back as fast as they can and as soon as they have spare cash on hand. The outcome of this bloodbath is that Bitcoin came off stronger out of it. And this is what antifragility is all about


It feels like Bitcoin is vigorously alive today, and even more alive if we compare it to the current environment and overall circumstances

We cannot consider bitcoin as antifragility because it is still an experimental currency and does not have enough market capacity to be safehaven and therefore it is vulnerable to sharp fluctuations but does it pass the condition of "antifragility"?
Based on Nassem Taleb's definition, which he mentioned: It is a characteristic of systems that increase the ability to thrive as a result of fluctuations, and therefore we can say that Bitcoin is going through an @antifragility" state.


Do not forget about the losses and profits that occurred due to simple things like China banning, hacking a platform, announcing a pandemic and others.

I trynna what antifragile really means out of the theory, just take it literally the word itself it might not suit the bitcoin just because we are facing a disease across the globe. Gold does not seem to be bothered these days but I haven't seen any person called it antifragile too. Take note that bitcoin significantly dropped hard last month, and in that case I can conclude that bitcoin is not as antifragile as what you are trying to say. World's struggling yet bitcoin is off until now, maybe this will give the answer to you mate.

That’s should be the best theory honestly, many says bitcoin will be the safe haven but it is not confirmed yet since we saw a big drop because of the virus and it looks like bitcoin is following the trend of stock market. The only thing I can see right now is that, the price is rising again but its not that strong compare to many predictions. If there’s a big calamity, bitcoin is expected to be become big but it looks like bitcoin is still on that way to become stronger.

If you don't know what antifragility is, as Nassem Taleb defines it, you may want to read his book on the subject matter

Put succinctly, antifragility with respect to Bitcoin refers to its becoming stronger as everything else around it tumbles and falls apart. Well, as Taleb himself points out, there's no absolute antifragility, and it necessarily comes at the expense of something else, the latter being the source of antifragility as such. For example, humanity as a whole becomes more resistant to Covid-19 specifically because some people die from it (natural selection at work)

So the question is, if Bitcoin is antifragile (which seems to be the case in certain or even most life circumstances), what does its antifragility come from? As recent events have shown (e.g. the coronavirus pandemic), Bitcoin gains where regular currencies fail, especially cash payments, or even when it itself takes a hit (e.g. BitMEX's little shenanigans). But that's definitely not the only reason which gives rise to, and more generally facilitates, its antifragile nature

I would like to look into this matter deeper and in greater detail - with your help, of course. Please share your thoughts