Bitswan Events?

The Bitswan

Response to Nassim Nicholas Taleb “Bitcoin Black Paper”

Tim Parsa
12 min readJul 21, 2021


It’s gratifying when a thinker and writer you admire publicly endorses a system or idea in which you are invested. Entrepreneurs take risks to create a better world and thereby access asymmetric upside, and it’s nice to know that others share your view of the opportunities (and risks) posed by the new technologies upon which you are betting your time, money, and reputation.

Cognitive dissonance ensues when the same admired mind attacks what they previously applauded. Were they wrong before or are they wrong now? Are you building your better mousetraps (see Uphold, Airtm, Slyk) out of sturdy stuff or old chewing gum and string?

It is essential that an entrepreneur think hard about such things; insolvency is the alternative. Faith, hope, and dogma are no replacement for understanding, logic, and empiricism. As another great mind, the physicist Richard Feynman, put it: “The first principle is that you must not fool yourself.”

And so it is with Taleb’s recent Bitcoin “Black Paper” (the author’s self-styled sobriquet to contrast with the Bitcoin “White Paper” published by bitcoin’s pseudonymous creator “Satoshi Nakamoto” in 2010) in which Taleb repudiates his previous endorsement in the forward to Saifedean Ammous’s The Bitcoin Standard.

Taleb of Two Cities: Forward to BTC Standard (L), “Black Paper” Abstract (R).

What caused Taleb to change his view on the potential of bitcoin in the three and a half years that separate his tentative thumbs up (1.5 pages) and his recent flammenwerfer (6 pages)?

I take his arguments from the “Black Paper” at face value and compare them to data from Airtm, a fintech startup I co-founded in 2015 whose service would not be possible without bitcoin, as well as publicly available data from peer-to-peer, anything-to-bitcoin exchange platforms (LocalBitcoins, Paxful).

My conclusion: Taleb’s Black Paper incorrectly postulates that bitcoin has an absorption barrier because 1. it ignores BTC’s sustained non-speculative utility (censorship-resistant capital bridge in/out of harsh currency regimes, a growing use-case in the late capitalism surveillance states as fragile top-down central banks blow up all over the world) and 2. its 12-year durability against infinite “shitcoin” competition as the dominant “sound money” network resistant to the censorship or seizure of nation states.

Nassim so fast, maestro.

Taleb’s initial assessment of bitcoin’s potential as a localism-enabling alternative to central bank wealth destruction in The Bitcoin Standard has become more defensible based on empirical evidence. The protocol has proven robust (i.e. difficulty adjustment to maintain the update time of its decentralized ledger) and its network anti-fragile (even Taleb’s “Black Paper” scorching makes it stronger).

Bitcoin’s network effects and the failure of other cryptocurrencies to displace it as preferred global capital on/off ramp of last resort, support the possibility that Bitcoin is of the class of unpredictable event that gives rise to stable second order complexity, as pre-moon/post-moon, protein/cell, unicellular/multicellular, brain/mind.

In honor of Taleb, I shall refer to such paradigm-shifting events as “Bitswans.”

So far, So Lindy.

Bitcoin Utility

Bitcoin’s dominant non-speculative use-case is as a free-market bridge between weak and strong national currencies, especially useful for moving capital in and out of harsh currency regimes. Taleb’s absorption barrier/zero-value conclusion ignores this fundamental utility and the fees derived from same that will continue to compensate miners for securing the network, even after the last bitcoin is created as a miner reward.

If’ Maestro Taleb wants to send money to his cousin in Beirut suffering from the ravages of central bank incompetence, using local banking system results in his habibi receiving a small fraction of what she’d receive if he uses BTC as a bridge.

He can buy BTC with US bank money easily, transfer the BTC to a forex trader in Leb “onchain,” and the money can be cash-delivered or picked up (as USD or LBP), or else electronically transferred via the local bank system. Most importantly, free market (vs. government-rigged) forex rates apply.

The zero-value expectation ignores BTC utility today.

Such USD-BTC-Local Currency free market exchange can be conducted via peer-to-peer forex platforms (e.g. Airtm, Localbitcoins, Paxful). It can also just as easily be done via social circle groups on messaging platforms such as Whatsapp, Keybase, or Telegram (examples here). There are also decentralized fiat/BTC exchange protocols (Bisq, HodlHodl, and soon Air Protocol BTC implementation) that remove reliance on centralized exchanges or being the friend of a friend of a fiat<=>BTC market maker. These last two decentralized, distributed, local options are how much of BTC/local money exchange happens in Cuba, Iran, and Lebanon among parties that OFAC-observant (i.e. US/EU-bank connected) platforms cannot easily support.

And should Taleb’s cousin in Beiruit decide to leave the country with his wealth, she’d be happy to hear that these permission-less funds flows are bi-directional — capital (LBP or USD) can exit Leb via BTC and be secured as digital dollars in a US bank, e-money account (e.g. Paypal, Airtm), or on a cryptocurrency exchange.

Central bankers can’t stop this free market bitcoin forex (“fiatex” is more correct) because they can’t easily detect it.

By example, every month a startup I co-founded, Cadoo, pays Mert, a Turkish developer living in Ukraine, his salary in BTC purchased with U.S. bank money via Airtm. Mert doesn’t need and can’t get a bank account in his refuge country. He turns BTC into local money at a nearby jewelry store.

This utility of BTC as a censorship-resistant global value transfer network is a direct result of its decentralized design: peer-to-peer electronic “cash” that doesn’t require intermediaries, i.e. doesn’t have chokepoints of central bank policy.

BTC’s undeniable utility today is that every fiat currency can be exchanged for BTC, directly via local bank-connected centralized exchanges or indirectly via peer-to-peer exchange groups, platforms, or protocols. This is true even in countries where BTC exchanges and miners have been banned. BTC<=> local money exchange is impracticable to stop without substantially impairing basic functions of the local money system (more on Taleb’s “Fallacy of the Omnipotent Nation State Censor” below).

BTC also empowers a jewelry store or a student or a housewife, anyone with local money and a bitcoin wallet, to generate income from BTC/local money exchange, in much the same way they can earn money from their apartment or car with Airbnb or Uber.

Airtm has more than 25,000 anything-to-dollar forex agents all over the world, a small fraction of BTC exchangers globally. This network of money changers will continue to grow because central bank policy will continue to fail and rationale people will increasingly choose to risk prosecution under currency/capital control laws versus guaranteed vaporization of their wealth via confiscation, inflation, or government-rigged exchange rates.

Tip of the Bitberg: does not include distributed exchange via messaging groups. Source:

No BTC Substitute (So Far)

Taleb’s absorption barrier/zero-value conclusion assumes that BTC is 1 of N fungible cryptoassets and therefore subject to easy substitution, essentially a fad, and therefore, because of its complex Rube Goldberg machine nature, liable to be abandoned by miners, speculators, users, and entrepreneurs in favor of other decentralized fee-generating contraptions.

This does not square with BTC’s sustained dominance, despite an endless supply of “shitcoins” produced during the “Initial Coin Offering” boom of 2018 and after, nor does it give any weight to the game theoretics and network effects of BTC hodlers.

12 years into bitcoin’s existence and despite its notorious volatility, it is the most liquid and globally accessible cryptocurrency, and the one most used as a weak-to-strong (and vice versa) capital bridge via peer-to-peer fiat/crypto exchange. Why do local market makers overwhelmingly prefer BTC to stablecoins (e.g. USDC, USDT) or other well-known cryptocurrencies for P2P exchange?

First mover advantage explains some of this preference. Other reasons ignored by Taleb logically include:

— Stablecoins risk seizure or censorship of underlying collateral, i.e. blacklists, account closing or freezes.

— Ethereum and similar projects have prominent leaders who are subject to intimidation and manipulation, foundations that are at risk of being captured, and in general are characterized by centralization that is sufficient to easily coordinate the censorship of transactions (e.g. the Ethereum Foundation’s Response to the ‘Dao Hack”).

— BTC has powerful network effects derived from its hodlers (supply constraint) who actively proselytize (demand driver) and its anti-fragility (bans, regulation, scandals, and exchange hacks have made it stronger, not killed it).

When combined with the historic appreciation of BTC compared to even the strongest fiat, far from being fungible with other cryptoassets, bitcoin appears to be something entirely new: a internet-native leaderless property rights cult that disdains centralized authority with the virulent economic incentives of a multi-level marketing scheme.

Religions are anti-fragile (persecution makes them stronger); successful online MLMs grow fast. With Bitcoin we are learning for the first time in human history what happens when you combine those two things. 12 years after the White Paper’s publication BTC remains the undisputed cryptoasset king.

So far, so Lindy.

Buy, Hodl, Proselytize, Profit.

The Money Changer’s Table

Taleb adds a nice rhetorical flourish to “The Difficulty with Inflation Hedges” section of his “Black Paper,” waving Jesus and the money changers onto the field to make the point that competition among fiat currencies is the most convenient way to achieve a monetary store of value. The word “bank” derives from the money changers’ table, which was most likely more of a portable workshop in the same style as the cobbler’s “bench,” as opposed to only a seat as implied by the modern use of “banco” in Spanish or “banc” in French.

Bitcoin: Fiat Sounding Board

The money changer’s work surface was essential as a sounding board to know how many Roman or Greek coins to exchange for the rabbi-approved shekels. Pure silver rings like a bell. Low-purity coins clank. Between the money changer and his client was the table whose surface was dispositive of value. Bitcoin can be seen as a much-improved version of the money changer’s table — a universal assay where fiat currency value is determined for exchange, a “fiat numeraire” of last resort.

Taleb’s conclusion that free market fiat competition is the most convenient way to create a monetary store of value is correct, but disregards the historical plight of those with their lives denominated in the many, many loser currencies. What of the denizens of ancient Stoopidstan forced to use coins of diminishing purity? What happened when they showed up to purchase their Temple entry? And so it is with the 100+ national currencies that continuously lose value vs. the U.S. dollar, the “Shekel-of-Tyre” of the last 60+ years.

It’s easy to exchange a physical hundred dollar bill for local money in the “cuevas” of Buenos Aires or with street level dealers, “arbolitos” (name inspired by the greenbacks sprouting from their fists). Or in Tehran, off Ferdowsi Square. Conducting such exchanges with digital dollars and the digital versions of local money via internet is way faster, easier, safer, and much more convenient. It’s why we built Airtm.

But the peer-to-peer forex agents that make Airtm’s anything-to-dollar (and vice versa) service possible would not be able to operate without bitcoin’s sounding board and bridge.

Taleb ignores the value of bitcoin as much improved version of the money-changer’s table, as well as its utility as “gettone” for a freedom-enabling value transfer network.

Is Bitcoin a Bitswan event? Answer’s in the name!

Bitswan Events

Taleb makes a cogent argument that Bitcoin is unlikely to replace gold as a store of value because gold requires nothing to maintain its ancient appeal, whereas bitcoin has many dependencies for its continued existence and for growing adoption and utility. These dependencies include the continuing function of the internet for easy transportability, miners for security, exchangers for local money liquidity, and developers to continue improving the protocol against competition from other cryptoassets.

While it’s true that path dependence generally increases the probability of failure, i.e. Taleb’s zero-value/absorption barrier conclusion, there is a category of unpredictable event that shifts paradigms resulting in higher-level complexity and stability. Path dependence becomes the status quo.

I can think of four examples of this:

— Influence of non-earth objects on the earth — millions of impacts of short-lived influence (including the dinosaur-ending chicxulub) vs. the Theia impact (4.5 billion years ago) that resulted in the moon’s enduring (albeit slowly diminishing) influence on humanity’s home-planet. The tides will continue their ebb and flow long after Taleb and I are gone, despite their path dependence on the moon’s continued gravitational dance with the earth, impossible to predict from previous impacts.

— Abiogenesis — living organisms arising from inanimate substances 3.5 billion years ago— transformed earth’s atmosphere in ways that would have been impossible to predict from observing the molecules floating in the primordial oceans. The higher order complexity of life proved stable, indeed dominant, despite the Rube Goldberg machine that is a cell, with its failure-prone membrane separating inside from out.

— Multicellular Life — for 2 billion years after abiogenesis on earth, there were only single cell organisms. Multicellularity likely arose many times in many ways, but ultimately created the new paradigm or main stage for the evolution of life and complexity in general. If you were to observe the earliest ancestors of these multi-cellular lineages you would bet against their survival, let along dominance, due to their path dependence relative to their Lindy unicellular antecedents. But a new stability was achieved, a higher level of complexity unlocked, and here we are.

— Consciousness — likewise the emergence of human consciousness from the ape brain and its impact on other organisms and the earth, impossible to predict from the neural capacity of all prior organisms and species, and entirely path dependent on the maintenance of an energy-intensive neocortex encased in a giant skull that made reproduction difficult. But a new paradigm was created, higher level complexity made stable and dominant.

I call these events Bitswan events in honor of Taleb’s similar concept of the Black Swan — unpredictable events far outside the expected variance that have severe impact. The difference between a Black Swan event and a Bitswan event is that after a Bitswan the outlying event becomes the new normal, rather than a return to the previously expected variance.

And so it may be with bitcoin. The collision of the internet with cryptography and libertarian property rights zealotry could result in a new stable, albeit complex, decentralized money network, one that is beyond the reach of centralized authority.

Freedom Isn’t Free

Fallacy of the Omnipotent Nation State Censor

See Maduro vs. Airtm.

The Problem of Localism without Capital Portability

Localism isn’t about locale, but the ability to recreate culture anywhere, especially if required by persecution or the inevitable failures and incompetence of top-down centralized systems. Without the censorship-resistant portability of wealth, localism is doomed to become a victim of repressive centralized state that values conformity and servility over quality, culture, and terroir. If you (and your community, friends and family) can move your wealth, you can recreate your localism anywhere you like, down to your favorite squid ink pasta dish.

My father did it moving from Tehran to Geneva to New York. I did it moving from New York to Mexico City to Northern California. Jews have done it all over the world. With bitcoin it’s now possible for everyone to do it — recreate your local culture anywhere, vote with your wealth against the system you are exiting, all the while extending an orange-colored middle finger to the empty suits and “nalgas planas” (h/t Ricardo Salinas) of failing nation states.

Bitcoin makes it possible for local communities to hold central bankers’ feet to the fire with regard to currency debasement. It levels the playing field for individuals who value freedom over the promised (but seldom delivered, the opposite in fact) security of the war-loving nation state.



Tim Parsa

Founder/funder of early-stage fintech/blockchain ventures. @airtm, @cadooinc, @slykhq, 20+ years building startups. U.S.-trained lawyer. Father.