The much-discussed author and academic Nicholas Nassim Taleb says he is impressed by the bitcoin story. According to him, people are increasingly losing confidence in governments and the banking system and he believes bitcoin can offer a better alternative.

?ǣMoney without government is great ,?ǥ said Nicholas Nassim Taleb in a recent interview at the India Economic Conclave. Maybe he knows a little bit about what he’s talking about. The Lebanese-born academic and former university professor is the best-selling author of The Black Swan , which was named one of the 12 most influential books since World War II by The Sunday Times. Taleb is known, among other things, for his progressive thinking about risk management and antifragility .

In his home country, Lebanon, things have not been going well for a while. Especially after the war in 2006, the country is struggling with economic setbacks and an uncertain economic climate. However, since last October, tensions have been running particularly high.

The Lebanese government announced tax increases and other measures in an effort to reduce government deficits. For large parts of the population, the stretch seems to be gone. It degenerated into a long series of protests that put even more pressure on the economy and it is reported that the tourism sector, one of the main pillars of the Lebanese economy, has shrunk by as much as 80% during this period. To this day, peace has not returned.

Currency controls

A shortage of hard currency drove imports down, local prices up and further fueled fears of financial collapse among the Lebanese people. In response, banks set withdrawal limits that limit the amount of money people can withdraw from their account, and transactions abroad are largely blocked. For many, access to their own (savings) money has been limited since then and many Lebanese live in financial uncertainty as a result. It is labeled by some as ‘ currency controls ‘ of which the population and their savings seem to bear the brunt. Often one is not allowed to withdraw more than a few hundred dollars per week; the rest is inaccessible. No one knows for how long, or whether it will be okay.

People are therefore increasingly losing confidence in governments and banks, thinks Taleb. According to him, this failing confidence leads to a kind of ponzi-like collapse of banks, because in such a situation everyone tries to withdraw their bank balance at the same time. And that money does not appear to be there, or is far too limited. Statements by the locals, as reported by Reuters, seem to echo this idea.

You don’t have those problems with bitcoin, says Nicholas Nassim Taleb, and he thinks that’s a good thing. Bitcoin does not have a central authority that you have to trust in order not to devalue, censor or confiscate the money. It’s a story you can’t ignore, says Taleb. According to him, it could well lead to a new situation in which central banks in some regions no longer control monetary policy, because cryptocurrencies such as bitcoin have become dominant.

“I am realizing Lebanon is in a situation where there is an implied currency control but the government cannot control bitcoin which is a good thing because people have no trust and the ability of the central bank which really causes the ponzi style collapse and the bitcoin does don’t have that,” – Nicholas Nassim Taleb

Even if the price of bitcoin were to fall, people will continue to use it for this reason, Taleb thinks. He does make the comment that several cryptocurrencies compete with each other, but that there will eventually be a winner. And for now, bitcoin seems to be the winner, according to Nicholas Nassim Taleb.

Perhaps bitcoin is now also slowly beginning to penetrate the consciousness of the rest of the population. For example, nowadays Arab news channels are openly talking about the use of bitcoin to circumvent the currency controls .

Taleb has also spoken positively about bitcoin in the past. In October, for example, he tweeted that one of the main arguments for cryptocurrencies like bitcoin is that banks are never there when you need them.

Underdeveloped economies

In other countries where the economy is not doing well, people seem to be increasingly finding their way to bitcoin. For example, similar stories have been circulating for some time about Venezuelans who are able to protect their wealth against hyperinflation with the help of bitcoin, or can flee with their wealth intact because bitcoin is difficult to confiscate.

In addition, recently statistics from UsefulTulips and Localbitcoins showed that bitcoin trading is growing faster in some countries with weaker economies than elsewhere, as appears to be the case in Colombia, Nigeria, South Africa, Kenya and Russia and the aforementioned Venezuela.

That is perhaps not so strange. When you live in a wealthy, Western country with a fairly stable currency and a relatively reliable banking system, it can be difficult to understand why an alternative currency is necessary or desirable. For people from less prosperous economies who have sometimes been struggling for years with economic malaise and currencies that are sometimes much more volatile than bitcoin, bitcoin may be interesting.

Of course there are also risks associated with bitcoin for them. But, as Nicholas Nassim Taleb points out, the risks and uncertainties surrounding the local currency and economy are perhaps even greater. And, if Plan A fails, maybe for some it’s time for Plan?.

“Of course, you are going to have frauds and ponzi schemes and all that with bitcoin and cryptos but when you see governments like in Lebanon, doing the ponzis you tell yourself what is better.” -Nicholas Nassim Taleb