Lyn Alden and Nassim Taleb are two of the brightest minds I follow on Twitter. They are on opposite sides of where they believe Bitcoin is headed. How about a debate?

Here is the Tweet that triggered my proposed debate.

Bitcoin pple, there is an old saying "nobody is bigger than the market".
You may artificially prop up the price; you may paint the tape by coordinated manipulation. But in fine the market is a market, an idiot is an idiot, & youth, inexperience, & ignorance are not virtues.

— Nassim Nicholas Taleb (@nntaleb) September 11, 2023

There were some interesting replies, let’s look at a few.

Replies to Taleb

Regarding manipulation, we can easily dispense with a comparison to the US dollar.

The bigger and more liquid a market is, the harder it is to manipulate. The US dollar is therefore one of the least manipulated markets and quickest to recover when there is manipulation.

The preposterous official rate of the Venezuelan Bolívar is of course a joke. The real rate of the Bolívar is set by the black market. But is the black market rate more manipulated than Bitcoin?

Skin in the Game

I like the question by @Brubble: “Where is your skin in the game?”

I don’t believe one needs a position to comment or for such comments to be valid if there is no skin. But that has been the past take of Taleb.

Skin in the Game: Hidden Asymmetries in Daily Life is a best-selling book by Teleb.

MishTalk TV with Gary Brode on the Grayscale Bitcoin Trust

On September 3, on MishTalk TV with Gary Brode, we discussed the Grayscale Bitcoin Trust

There is an arb opportunity, but also a big risk. I am agnostic on Bitcoin.

I do not know where it is going, nor does anyone else. The massive number of people who believe they do know where its headed is amusing.

Lyn Alden is not in that camp. And she makes a very pragmatic, unemotional, hypeless case.

Twitter Discussion With Lyn Alden

There is a lot of money (bitcoin) to be earned in ensuring people understand bitcoin as slowly as possible.

— zoinky 🧙 (@coinjunky) March 3, 2023

Mish how much time have you put into the study of #Bitcoin?

How well do you understand the motivations of the vast majority of Bitcoin holders?

— The Bitcoin Bang (@BangBitcoin) March 3, 2023

It's not easy to kill bitcoin. But they can slow it down (albeit to do so admits their own failing as a centralized ledger, much like Nigeria).

Would be interesting to see the state challenge a person's ability to run benign open-source software applications on an aged laptop.

— Lyn Alden (@LynAldenContact) March 3, 2023

Don't fool yourself. That would happen if the US felt threated by it.

The question is how likely?

I do not know but the higher the price, the more likely.

I suspect, the price will not get high enough for that to happen.

— Mike "Mish" Shedlock (@MishGEA) March 3, 2023

Fundamental Flaw of Bitcoin

The fundamental flaw of Bitcoin is that other than trivial use as barter, Bitcoin requires conversion to fiat to use.

I do not believe anyone has made that point, at least as succinctly.

If the US banned bitcoin transactions, what could you do with it?

No one will physically take your Bitcoin away. So you keep it. Lovely. Try buying a house or a car with it. Heck, try buying a candy bar with it. You can’t or won’t at least in the US, if the Treasury department would ever ban transactions. No US merchant would take it. The ECB sheep would likely go along.

The Fed, Treasury, and ECB have plenty of made up excuses on deck: Money laundering, fairness, tax evasion, whatever. It doesn’t matter. Governments could tax the heck out of it, destroying any alleged wealth.

I used to think that was highly likely. Now I am unsure. If the Treasury or Fed never feels threatened by Bitcoin, it will leave it Bitcoin be.

And the longer Bitcoin goes nowhere, the less threatening Bitcoin is.

A Word About Supply

The supply of Bitcoin is constantly rising. People confuse supply with the rate of increase in supply, two vastly different things.

The supply of Bitcoin is ever Bitcoin ever mined, minus the lost keys. This is quite similar to gold. The supply of gold is every ounce mined, minus what has been lost at sea, buried and forgotten, and minus tiny amounts used in products now sitting in landfills never to be recovered.

Much hyped halving is basically irrelevant. The day before halving and one year later have this is common: Every day (second actually) someone has to decide whether to hold Bitcoin, dollars, gold, or something else.

There is no increase in demand due to halving. The next halving is expected to be in April or May of 2024. The increase in supply from mining will fall from 6.25 Bitcoins to 3.125 Bitcoins. So what?

There are roughly 19,413,325 Bitcoins in existence. That is about 92 percent of the total supply ever. The next halving is meaningless to the total supply.

With total supply nearly set, what determines the price of Bitcoin is from here on out is dependent on the desire to speculate on it, plus possibility of meaningful government action or fear of government action.

Factor in the Bitcoin Whales. Every step of the way there is increasing incentive to cash out rather than hold something that could conceivably hit $10,000, $4,000, or even zero.

Demand from Nigeria or all of Africa is meaningless vs the massive supply elsewhere.

Bitcoin is Worth Zero Says Taleb

Downloadable PDF

Lyn Alden

I have been labeled an “enemy of Bitcoin”. What a hoot.

I am agnostic. But I do point out that Bitcoin is a free market construct, and the SEC looks foolish in its battle to keep it off the exchanges. There is an arb opportunity, with risk, for those willing to take it. None of that remotely makes me an enemy.

There you have it. Three competing views.

If you want a well-presented view on the case for Bitcoin, please consider A Century of Fiscal and Monetary Policy: Inflation vs Deflation by Lyn Alden.

Now, bring on the debate. Anyone interested?