Antifragility according to Taleb
In his book Antifragility , published in 2013, Nassim Taleb attempted to explain the impact of random events on social life. He came to the conclusion that the opposite of fragile is not robust or stable, but antifragile. Such a system is characterized by the fact that it becomes more robust in stressful situations. A good example of a fragile system is the banking system. The last major bank rescue took place in 2009, when just one bankruptcy of an investment bank almost caused everything to collapse. The state had to intervene and save them. According to Taleb, this should never happen in a system. It is detrimental to the entire system if a single area becomes so important that the system as a whole can no longer do without it. His solution is more decentralization. If an entity were to fail in a decentralized system, the overall system would remain operational. This is exactly the case with Bitcoin.
Problems of past fragile systems
For thousands of years, rulers of great nations have been concerned with how best to protect their country. Magnificent structures have been built as a result, such as the Limes or the Great Wall of China. These works have only one purpose: to keep the enemy out and maintain order in their country. Although this resulted in architectural masterpieces, they did not achieve this goal in the long term. China was conquered by the famous Mongol leader Genghis Khan in 1215. The Great Wall of China had one major problem: it had a gatekeeper. It was enough to manipulate one gatekeeper and the entire structure of the Chinese was useless. Once the enemy reached the interior, the battle was already lost. History has shown that every system becomes fragile as soon as there is too much dependence on one person.
Difference between fragile and antifragile systems
So what distinguishes an antifragile system from an apparently very robust system like the Great Wall of China? It is the ability to adapt to its enemies. An old military adage says that the best defense is also the best offense. Adaptive strategy is a prerequisite. It is important for the defender to be able to adapt to the attacker at all times. That was the problem with the wall. It was a static construction and tied to one place. Antifragile systems can therefore adapt to the environment and become stronger as a result. A good example of another antifragile system is the body. After a viral illness, the organism forms antibodies and can fight off the illness in the future. It becomes more robust and stronger.
Antifragility of Bitcoin
Bitcoin can be described as the most antifragile system of all time. It works completely without a central authority such as a central bank or government and therefore does not need a gatekeeper. In a decentralized proof-of-work network, there can be no gatekeeper. Bitcoin is the first completely decentralized system ever invented. There has been much speculation as to why the inventor Satoshi Nakamoto disappeared. One theory is that Satoshi disappeared in order to preserve decentralization. Satoshi could be used by attackers as a gatekeeper against the Bitcoin network. A single central authority could cause Bitcoin to become fragile and collapse like the Great Wall of China.
Every participant in the network can feel Bitcoin. Should a major trading site go bankrupt or a wallet be hacked, this would lead to a severe short-term loss of confidence. The price falls and all Bitcoin users are affected. As a result, all Bitcoiners endeavor to protect their system from such events. When the largest trading site Mt. Gox filed for bankruptcy in 2014, this was only a short-term shock. New and better platforms emerged. Stock market legend Charlie Munger said: "Show me the incentive and I'll show you the result." Every Bitcoiner has an incentive for the system to continue operating. One argument that is repeatedly made against Bitcoin is the quantum computer. It's unlikely that Bitcoiners, who have a lot at stake, won't find a solution to this. To believe that is like betting against the nature of man and that he can adapt the environment as he wishes within the laws of physics. With the Great Wall of China, no one had the ability to adjust the "protocol" of the stones. It was a dead organism. Bitcoin, on the other hand, is alive. Thousands of Bitcoiners are defending their vision. This is the reason why Bitcoin only falls 80-90% after a big bull cycle and not 100%. There is a group of people for whom Bitcoin is more than just an online currency for speculation. For them, Bitcoin is their vision of making the world a better place.
Antifragility of gold vs. bitcoin
So what about gold? Gold has similar problems to all static systems. It cannot adapt to its environment and has no adaptive defense strategy. The history of money is characterized by attacks on gold by the state. The last major attack took place in 1933 when President Roosevelt banned the private ownership of gold. Gold continued to lose its monetary role until 1971, when it completely gave up its status as the world's reserve currency. But even in antiquity and the Middle Ages there were repeated incidents of this kind. Gold was unable to overcome the problem that it needed a central mechanism to process its transactions. Gold has existed in the same form as it does today for 5000 years. The infrastructure has been improved over time by issuing paper money as an equivalent to gold, improving the slow and laborious transport of gold, but this has led to more and more centralization. On the other hand, there is a decentralized open monetary network. Every time the network is attacked, it evolves. Thousands of programmers work on the Bitcoin software and update it. However, it is not only the software that is constantly changing, but also the hardware. In the beginning, a normal CPU was sufficient for Bitcoin mining, then they switched to GPUs and the current standard is the ASIC chip. How many software and hardware updates has gold had in its 5000-year history? Not a single one. Bitcoin, on the other hand, is programmable money. The possibilities are unlimited.
Comparison of the antifragility of Bitcoin and altcoins
There are three factors that need to be considered when comparing Bitcoin to other cryptocurrencies. Bitcoin is a monetary network and the hashrate is a good indicator of how secure the network is. Other cryptocurrencies cannot keep up here and that is not a bad thing. However, it is wrong to assume that Bitcoin dominance can be calculated based on market capitalization. A monetary network needs a proof-of-work mechanism for security. Comparing the Bitcoin hashrate with other proof-of-work cryptocurrencies results in a Bitcoin market share of approx. 75% and not 50%. Comparing Bitcoin with other proof-of-stake projects therefore makes little sense.
Bitcoin solves the antifragile problems of gold. This is also the comparison that should be made. Gold is also a monetary network. The energy that gold miners have to expend to mine gold can be described as a predecessor to Bitcoin's proof-of-work mechanism. However, gold is not a verifiable network. It is impossible to determine how secure the network is. A comparison with other proof-of-work cryptocurrencies only makes sense when they can compete with the network power of Bitcoin. At the moment, however, they are a long way off. Bitcoin is by far the largest decentralized computer network in the world.
The final point is that many cryptocurrencies are not decentralized. They are often backed by entire companies. This makes them susceptible to the gatekeeper problem. As the owner of the cryptocurrency, I have to trust these companies to act properly on my behalf. Unfortunately, history is full of such breaches of trust. Only by eliminating every central authority can this be 100% avoided.
Conclusion
Bitcoin fulfills all the characteristics of an antifragile system. It is decentralized and makes it possible to corrupt the system by avoiding gatekeepers. Many people work on the Bitcoin version every day. Each of them is always putting their skin on the game. Small mistakes can have a big impact on the price of Bitcoin. But even when such mistakes happen, each of them has a very strong incentive to learn from the mistake and optimize the system. Bitcoin learns from its mistakes. Bitcoin is very impressive from a historical perspective. It has the best offensive defense ever invented. Michael Saylor has given the defenders of Bitcoin the name "cyber hornets". They are many, act like a swarm and defend mercilessly when attacked. If one hornet is killed, ten more will follow. Many skeptics who see Bitcoin as an object of speculation forget this. They overlook the passion with which the hornets defend their system. If they have to, they will go down with the project. These are all the best prerequisites for creating a truly antifragile system. A foundation for a system that can exist for centuries.
