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Is Bitcoin a Black Swan Event?

Is Bitcoin a Black Swan Event?


Is Bitcoin a Black Swan Event?

by MARK REES on APRIL 4, 2014 0

The term “Black Swan Event” describes certain events in history so profoundly unexpected and massive in scale, that they fundamentally changed the course of history. There are good Black Swans (the unpredicted rise of the internet), and bad Black swans (rise of Hitler).


The absurdity of a Black Swan ever existing was so outrageous during the middle ages it became a metaphor for the laughably impossible.  In today’s world we might comparably say something about snowball’s chance in Hell. For many centuries, the metaphor existed until about the year 1700 they were discovered to actually to exist in Australia.  Now it’s the symbol of the Western Australia flag.




Nassim Taleb , a Professor of Risk Engineering at New York University brought back the once familiar phrase in his 2007 best-selling book, “The Black Swan: The Impact Of The Highly Improbable”. The extremely influential book has been referenced numerous times by financial advisors, risk evaluators and CEOs attempting to divine meaning and predict the almost unpredictable. It has been called one of the most influential books since World War 2. This has made Professor Taleb a highly sought after speaker and lecturer. His theories are in stark contrast to his nemesis Paul Krugman whom he seems to delight in disparaging.




Nissan Taleb


He writes:


History, proceeds by “jumps,” controlled by “the tyranny of the singular, the accidental, the unseen and the unpredicted.” Gradual change is only mankind’s paradigm view, yet actual change is “almost always outlandish.” (emphasis added)


Why it matters


Financial experts have found themselves wiped out by Black Swan Events. The sub-prime mortgage crisis wiped out thousands of businesses and brought entire countries to their knees. Companies must have a backup plan to make their companies less fragile. Catastrophic events, no matter how unlikely, can somewhat be planned for. Not necessarily specifics but by asking the right “what if” questions.  By their very nature Black Swan Events themselves cannot be defined or predicted  by definition they haven’t happened before. However you can study the results of those organizations, people, or survivors to study and learn how they dealt with the aftermath. This study can help prepare companies to build strategies to get back on their feet the quickest and minimize damage.


The Black Swan Theory isn’t a predictive one, but Taleb’s examples in history and a philosophy about expecting the unexpected and making one resilient has garnered a large following. Taleb made a fortune by making many small bets on improbable events, but making fortunes from the ones that do happen,




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This entry was posted on April 7, 2014 by and tagged .

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