Bitcoin’s Antifragility Makes It An Attractive Investment
Bitcoin is antifragile and the more it proves this, the more attractive it becomes to investors. But what exactly does antifragile mean?
We all know what fragile means, and one might think antifragile is something that simply isn’t fragile.
And while that may be partially true, antifragility doesn’t just mean resistance against things. Antifragility means it actually improves itself throughout all the external mess.
What is Antifragility?
Antifragility is an idea popularized by Nassim Taleb, and it doesn’t just equate to ‘robust’ or ‘resilience’, but more describes systems that actually gain strength from disorder.
While the opposite of fragility means it is robust and resilient, antifragility actually benefits from ‘volatility, randomness, and disorder’ and comes out the other end blooming.
This is exactly what Bitcoin is. The decentralized nature of the Bitcoin network, which is growing rapidly, ensures that the majority of the network can withstand anything macro can throw at it.
Volatility Breeds Antifragility
In its short eleven-year history, Bitcoin has been through such volatility (normal for a new asset class), and come out the other end not just unshaken, but improved in every way.
Bitcoin’s volatility is one of the key components to its antifragility.
It’s not uncommon for Bitcoin to rise or fall 10% in a day, and longer chart cycles are much more volatile.
In 2017, we saw Bitcoin rise from around $1,000 at the start of the year up to almost $20,000 by the end of the year. And then by the end of the following year, we were back down to lows of around $3,800.
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With any other legacy asset, this kind of crash would have had catastrophic effects, and would likely have seen some of them fold, or at least never to see them rise again from the ashes.
With Bitcoin, however, new speculators to the space were frightened off for sure, but many more learned from it and adapted to Bitcoin’s volatility, and as a consequence they emboldened themselves in the long game for Bitcoin.
This antifragility alone strengthens the Bitcoin network, as the hodlers of last resort grows and sets new base value and robustness for Bitcoin as an asset.
It’s unquestionable that the network has improved, and the network effect has gotten more powerful because of such volatility, and as time goes on this will only grow.
The Narrative Is Supposed To Weaken Bitcoin’s Antifragility, But It Only Strengthens It
External factors, like narratives that help coerce traders into making bad decisions certainly have a short-term effect on the Bitcoin price.
All short-term markets are manipulated. There’s nothing anybody can do about that, but again, the aftereffect is positive for Bitcoin and more validation of its antifragility as the asset recovers from narrative manipulation.
Every attempt at manipulating the market has seen a crash, and many weak hands run for the hills.
However, this manipulation leaves more positivity in a growing number of hodlers, and more interest from bigger, experienced investors.
It’s like a conveyor belt of positivity bred by negativity. Every time these sell offs happen, the confidence of the network and the credibility of the Bitcoin protocol strengthens and not only the new hodlers are joining the network but more macro investors, attracted by the antifragility.
Macro Events Embolden Bitcoin’s Antifragility
Macro events that hit the Bitcoin value, hurt the short-term confidence, but after every bounceback, that confidence strengthens from within the network and outside it.
The Mt . Gox hack should would have killed off any other new asset, and sure Bitcoin took a hit, but as with every other supposed catastrophic event that hurts Bitcoin, the network dusts itself down and recovers impressively.
The big crash in March, when Bitcoin dropped 55% in a day is the third biggest daily drop in Bitcoin history. The world markets were in unknown territory, and everyone wanted out of assets and in search of dollars.
Sure, Bitcoin took a mighty hit, but it has more than doubled in price since, and Bitcoin isn’t supposed to be benefitting from the stimulus that all the other markets are being fed.
Every time bitcoin doesn’t die or proves that it can bounce back from catastrophic macro events that are backed by the narrative, the very event that propelled its crash, ultimately makes it stronger.
It’s not just the retail speculator that stays behind to strengthen the network. Every time Bitcoin “dies” and comes back, it generates more interest from the serious investors.
The financial system that creates every economic meltdown is fragile, because it’s manipulated to the core and needs help to overcome its fragility.
This type of thing makes macro investors look for something that doesn’t need resuscitating every time there’s economic uncertainty.
They need another option in these cases, and Bitcoin has proved many times already, that it offers something most offers cannot offer. Bitcoin offers antfragility.
Bitcoin Is Antifragile
Bitcoin is a network that nobody controls. A network that anybody can be part of, and anybody can work for and earn from.
It is a decnetralized network of speculators, workers, developers, traders, merchants, and investors. Bitcoin’s network effect is growing in strength, and as internal or external events destabilize it for a shortwhile, that network effect gets more robust.
Hackers, banks and governments try their best to manipulate or even break into the Bitcoin network, and although their narrative works for a while, the robustness of the Bitcoin network ensures that it just bounces back, every time.
This antifragility is organic, and it is what will attract the world’s biggest investors to Bitcoin.
