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Living in alignment with your values—what we might call congruence—is often idealized in theory but brutally difficult in practice. Not because we don’t know our values, or because we’re bad people, but because a congruent life usually requires choosing discomfort. And in a world soaked in dopamine and distraction, discomfort is hard to choose.

Integrity—the commitment to act in line with one’s values, even under pressure—isn’t built in ideal conditions. It’s built in moments where something valuable must be given up: approval, comfort, convenience, or even safety. These moments don’t come wrapped in glory. They come wrapped in ambiguity and pain. And that’s why a life dominated by pleasure—especially unbounded, unexamined pleasure—can slowly chip away at our ability to live with integrity.

Let’s be clear: pleasure in itself is not the problem. In fact, strategically used pleasure—moments of restoration, connection, lightness—is vital for a meaningful life. But not all pleasures serve the same function. Some pleasures refuel us. Others erode us. And the line that separates them is drawn not just by quality, but also by quantity.

The nervous system is not static. When we engage repeatedly in high-intensity pleasures—think endless scrolling, hyper-palatable foods, internet porn, or compulsive novelty—we blunt our baseline reward response. The dopamine system, faced with constant spikes, adapts downward. Over time, normal life feels dull, slow, and unfulfilling by contrast. Tasks that require sustained attention, patience, or sacrifice begin to feel disproportionately hard. Our tolerance for boredom and pain—two pillars of long-term purpose—shrinks.

And here’s where it matters: purpose typically involves discomfort. If your purpose is to create something great, you’ll have to endure creative blocks, failure, and long hours. If your purpose is to protect or serve others, you’ll face misunderstanding, criticism, or even danger. Integrity demands that we sometimes walk into pain with our eyes open. And the more our daily lives revolve around pleasure, the harder that becomes.

That discomfort isn’t always dramatic. Sometimes it looks like telling the truth when lying would be easier. Owning a mistake when your ego wants to deflect. Showing up to something you committed to, even when you’d rather cancel. These are small acts—but they are where integrity is built or lost. And each one carries friction. Each one demands effort. In those moments, honesty isn’t always fun. Keeping your word isn’t always pleasurable. But they’re how you prove—to yourself—that your values aren’t just words.

And here’s the problem with a life overloaded with pleasure: it trains you to avoid friction. It teaches your nervous system that discomfort is a threat. That any tension must be escaped. So when the moment comes to be honest, or to follow through, or to speak up—your reflex is to avoid. Not because you’re a liar, or a coward, but because you’ve conditioned yourself to serve comfort above truth.

A life of integrity asks for more than clarity—it asks for the willingness to pay the emotional cost of staying congruent. And without boundaries on pleasure, that cost starts to feel unbearable.

Consider Nelson Mandela. In 1985, while imprisoned for his role in the fight against apartheid, Mandela was offered release—on the condition that he publicly renounce the struggle. He refused. He chose five more years of confinement over an easy out that would violate his deepest principles. That decision wasn’t made in a vacuum. It was shaped by a life trained to endure. Mandela allowed small joys—books, study, letters—but avoided the seductive comforts that could make capitulation feel like a reasonable compromise. His pleasures were aligned with his values, modest in quantity, and restorative in function.

That kind of decision—the refusal to betray one’s values despite suffering—doesn’t arise out of nowhere. It’s the product of a life that has practiced saying no to the easy way. A life where pleasure is integrated, not dominant.

Of course, most of us aren’t facing jail or torture. But we are constantly facing decisions between what’s comfortable and what’s aligned. And the more our baseline life is optimized for stimulation, the less capacity we have to make those hard decisions well. The path of least resistance becomes default. Integrity and congruence becomes optional.

Even value-aligned pleasures can become problematic when unbounded. A person might find joy in deep conversation, in exercise, in good food. But when those experiences become compulsive, when they consume hours and crowd out reflection or service or rest, they stop being fuel and start becoming fog. Quality matters—but quantity determines whether quality can even be perceived. Too much of a good thing becomes its own kind of distraction.

So what’s the alternative? It’s not rigorous austerity. It’s restraint with intention. It’s treating pleasure like sunlight for a plant—essential, but fatal in excess. A few simple questions can guide the line: Does this activity help me show up better tomorrow? Would I feel proud to share it with someone who knows my values? Does it leave me clearer or cloudier?

This kind of living asks for discipline—not rigid control, but flexible boundaries. It asks us to know when to stop, not because pleasure is bad, but because we’re building something more important than momentary bliss: a life we can respect.

And here’s the quiet truth most people miss: the cost of betraying your values isn’t just external. It’s internal. Every time you trade alignment for comfort, you erode your self-respect. And without self-respect, you can’t build real self-esteem. You can’t trust yourself to stand when it matters. You don’t just tap out—you teach yourself that giving in is who you are

Congruence is costly. It means choosing what is hard when it’s right. It means withstanding criticism, holding unpopular views, and prioritizing long-term meaning over short-term ease. But a life without congruence is even costlier. It’s the quiet erosion of self-respect, the subtle accumulation of regret, the ache of knowing you betrayed yourself for comfort.

A life of purpose demands restraint. Not because pleasure is the enemy—but because when pleasure becomes the compass, we lose the strength to walk the hard path. And that path—the one lined with meaning, courage, and coherence—is the only one worth walking.

Introduction: Two Paths to Success

Success has been a topic of fascination for centuries, and different thinkers have proposed contrasting approaches to achieving it. One of the most well-known modern success philosophies comes from self-help guru, Tony Robbins, who advocates for massive action—the idea that radical, decisive, and intense effort is necessary to break through barriers and reach one’s goals. The idea, while useful in some occasions, has key flaws I will outline bellow.

This concept is at the heart of Robbins’ Ultimate Success Formula, which he has taught in his books, seminars, and coaching programs in the 80s and 90s. The formula consists of four key steps:

1. Know your outcome – Clearly define what you want.
2. Take massive action – Move aggressively toward your goal.
3. Notice what’s working and what’s not – Adjust accordingly.
4. Change your approach until you succeed – Keep adapting until you achieve your desired results.

While this formula has helped many people achieve breakthroughs, the emphasis on massive action raises concerns about its sustainability. Intense effort can generate rapid progress, but it also suggests an underlying problem—either in the environment or within the person themselves.

Historically, massive action has been associated with survival crises—war, famine, economic collapse, or scarcity. These situations demanded urgent, large-scale responses because survival was at stake. In war, entire populations were mobilized overnight. During famines, societies made drastic shifts to secure food. Hardship forced people into desperate, high-risk endeavors. In these cases, massive action wasn’t a strategy for long-term success—it was a reaction to immediate danger and extreme uncertainty.

When individuals today take massive action, they often do so from a similar mental state of perceived scarcity or inadequacy. Whether it’s a trader obsessively monitoring charts, an entrepreneur working 18-hour days, or an investor making desperate all-in bets, massive action is often fueled by fear of missing out (FOMO), self-doubt, or a deep-seated feeling that they are not enough. This leads to burnout, chronic stress, depression and an inability to feel satisfied, no matter how much is achieved.

Contrast this with Aristotle’s perspective, who famously stated: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Unlike Robbins’ high-intensity approach, Aristotle’s philosophy is built on consistency, stability, and incremental improvement. Rather than requiring extreme bursts of action, Aristotle’s model suggests that true success and excellence emerge naturally from daily, sustainable habits that shape character over time.

The Unsustainable Nature of Massive Action

Massive action, by definition, requires an extraordinary level of energy, motivation, and intensity. While it can indeed lead to quick results and radical change, it is often unsustainable in the long run. The very concept of massive action is rooted in urgency, which historically has been associated with survival scenarios—war, famine, and crisis. When people operate from this mindset, they are often signaling to their own nervous system that they are in danger and that only through extreme effort can they escape their predicament.

This is particularly relevant in the crypto world, where traders often chase short-term pumps, make all-in leveraged bets, and have a 24/7 market obsession. Many new investors fall into the trap of believing they must act massively at all times—constantly researching, trading, and seeking the next 100x coin. This approach, however, leads to high stress, poor decision-making, depression, and burnout rather than sustainable success.

Additionally, massive action can reinforce the belief that something is fundamentally wrong—either with the external environment (that there is scarcity in the world and you must get things now before doomsday arrives) or with the individual (“im not enough and only achievement can fix me”). This mindset can lead to burnout, anxiety, depression and an inability to enjoy success, as the person is constantly striving for more rather than feeling fulfilled by their achievements.

This behavior is common in high-stakes fields like Wall Street trading and investment banking, where professionals push themselves to exhaustion in pursuit of greater returns. Many end up with severe mental health struggles, unable to detach from their need for achievement. Similarly, many crypto traders, NFT investors, and DeFi degens experience the same cycle—riding high on bull market wins, only to crash emotionally when the market turns.

Tony Robbins’ Evolution: From Massive Action to Sustainable Growth

Interestingly, even Robbins himself has evolved over time. In the late 1990s, Robbins reportedly experienced a period of depression, coinciding with his efforts to take his company, DreamLife.com, public during the dot-com bubble. This was a pivotal moment that led to a shift in his approach. While his earlier works, such as Unlimited Power (1986) and Awaken the Giant Within (1991), heavily emphasized massive action, by the early 2000s, Robbins began to incorporate principles of balance and emotional mastery into his philosophy.

Programs like The Power to Shape Your Destiny (2002) and later iterations of Unleash the Power Within placed greater emphasis on momentum and consistent progress rather than just short-lived bursts of action. He started promoting the idea that true success comes not from overwhelming effort in short sprints, but from steady, disciplined action over time. Its also notable that he came up with his Ultimate Success Formula in his 20s, a period where people will often overwork themselves due achievement addiction, only to later in life, find balance.

The Illusion of Temporary Massive Action

Some people believe they can embrace massive action temporarily, achieve their financial or personal goals, and then transition into a more balanced life. However, this overlooks the reality of neuroplasticity and habit formation. The brain adapts to repeated behavior, meaning that patterns of overwork, stress, addiction, feelings of inadequacy, and urgency become ingrained. If someone trains themselves to operate in a high-stress, all-or-nothing mindset, it becomes difficult to simply switch back to a balanced approach. Not to mention, blind spots exist, and people often don’t realize they’re engaging in self-destructive behavior—especially when it feels like their survival is on the line.

As Yoda warns in Star Wars, “If once you start down the dark path, forever will it dominate your destiny.”

This applies to the mentality of massive action—engaging in it for prolonged periods reinforces habits of burnout, scarcity-driven decision-making, and emotional dependency on success. Just as traders who experience high volatility often struggle to switch to long-term investing, those who build their success through extreme hustle often find it difficult to slow down without feeling like they are falling behind or diminished emotionally. Recovery is possible(So Yoda was wrong, the brain is plastic and it can be trained both ways) but better yet is to avoid the problem in the first place.

Sustainable success is not built on temporary intensity but on enduring, intentional habits that support long-term well-being.

The Power of Consistency and Habits

Aristotle’s wisdom teaches that sustainable excellence is not built through isolated, grandiose feats but through small, repeatable actions. In his view, virtue and excellence are cultivated over time, through consistent, deliberate practice. This is reflected in his concept of habituation, where behaviors become ingrained and effortless the more they are repeated. Aristotle believed that the key to a fulfilling and successful life lies in developing habits that align with virtue, as these small, everyday actions accumulate to shape character and bring lasting satisfaction.

This principle is not only relevant to personal growth but also to how we approach goals and success. The value of small, consistent actions is clear: they require less energy and effort as they become habitual, and over time, they foster a sense of stability and well-being. When we focus on creating small positive habits—whether it’s practicing a skill, maintaining physical health, or cultivating relationships—we move away from the high-intensity, burnout-prone approach to success that is often glamorized today. Instead of trying to achieve one monumental goal through massive, exhausting efforts, we slowly but steadily work toward our ideal, which in turn creates a more grounded sense of purpose and achievement.

This concept contrasts sharply with the modern tendency to view success as the result of extreme, momentary bursts of action. In today’s fast-paced world, we are encouraged to hustle, to push ourselves to the limit, and to always strive for something greater. The allure of “massive action”—of throwing everything into a single goal, of achieving something extraordinary—can feel exhilarating, but it is also draining. It demands constant motivation, leaves little room for rest, and often leads to burnout. This approach also signals a deeper belief that we are not enough, that our success can only be achieved through immense effort. It suggests that the world is dangerous, uncertain, and that we need to fight to survive.

In contrast, the more natural way of living—one modeled by primates and native cultures—teaches us the power of consistent, daily action. Primates, for example, spend their days engaged in small but essential tasks: foraging for food, grooming, and socializing. These actions aren’t done out of urgency or crisis but are necessary for survival and well-being. Similarly, native cultures often thrive by performing small, daily rituals—hunting, farming, building, and bonding—each action serving a vital role in maintaining the community and its way of life. It’s only when faced with extraordinary circumstances, such as war, famine, or disaster, that these cultures mobilize for massive action. Until then, life is centered around consistent, manageable efforts.

When we apply this to our own lives, it becomes clear that the key to long-term success and peace is not about pushing ourselves to the limit but about cultivating habits that nurture us and allow us to thrive in the long run. Just as small, steady actions are integral to primates’ survival and native cultures’ resilience, they are just as crucial to our personal well-being. These habits signal that we are enough, that the world is safe, and that we can handle what comes our way. They bring us a sense of stability and calm, allowing us to focus on gradual improvement rather than constantly fighting against the pressures of urgency and excess.

If we examine those who embody Aristotle’s philosophy, we see a much happier picture, one that is more aligned with our evolutionary history and philosophies that have survived thousands of years. People who prioritize building good habits—like investors who stick to a disciplined, long-term strategy, teachers that take joy in helping one student at a time, painters who refine their craft daily, bakers who find happiness in their routine work, traders who manage risk responsibly and secure small steady wins, developers who keep building through bear markets, athletes who train consistently rather than chasing quick results using steroids, and writers who commit to writing every day regardless of inspiration—tend to experience less stress, greater fulfillment, and more consistent success.

Conclusion

Massive action can be powerful in the short term, but it is inherently unsustainable as a lifelong strategy. It often arises from scarcity, fear, and a need to escape rather than from true fulfillment. Good habits, on the other hand, provide stability, calm, and a path to lasting success—a philosophy that even Robbins has moved toward in recent decades.

If you want to achieve your goals without burning out, the key is to shift from massive action bursts to daily small gains and intentional habits. Because, as Aristotle wisely said, “We are what we repeatedly do.”

One of the most paradoxical truths in investing is that brilliant ideas and stupid ideas often look identical in real time. History is littered with examples of investors who passed on generational opportunities simply because the ideas sounded absurd at the time. This cognitive bias—our tendency to dismiss seemingly irrational concepts—creates one of the most powerful inefficiencies in markets. If harnessed correctly, it can be an edge that leads to asymmetric returns.

The Airbnb Case Study: The Fine Line Between Genius and Stupidity

Take Airbnb, for example. In its early days, Airbnb was rejected by over a dozen prominent investors, including Fred Wilson, one of the most respected venture capitalists in history. The concept of letting strangers sleep in your house in exchange for a few bucks seemed ridiculous—who would ever do that? It defied conventional wisdom about trust, safety, and hospitality. And yet, that ‘stupid’ idea went on to become a multi-billion dollar company, fundamentally reshaping the travel industry.

The same applies to Uber. The idea that people would willingly get into a stranger’s car instead of using a licensed taxi seemed absurd at the time. And yet, Uber has become a dominant force in global transportation.

Same thing happened with Bitcoin and a number of cryptocurrencies. The takeaway? Truly disruptive opportunities often appear foolish at first glance. But if a ‘stupid’ idea is gaining traction—if it starts acquiring early network effects—it deserves serious attention.

The Investment Formula: Stupid Idea + Early Network Effects + Huge Potential = High-Conviction Bet

The key to this strategy is identifying ideas that appear stupid but are actually brilliant when viewed through the right lens. These ideas share three main characteristics:

1. They sound completely ridiculous at first – Most people dismiss them outright because they violate conventional logic.
2. They exhibit early network effects or traction – The market is proving that despite the skepticism, people are using and engaging with the product.
3. They have huge potential (Total Addressable Market, or TAM) – If the idea works, it could reshape an industry or create a new one entirely.

This framework has been validated repeatedly in venture capital. Many of the most successful startups of the past two decades fit this pattern. The challenge is overcoming our cognitive biases and recognizing when an idea, while seemingly absurd, is actually gaining real-world momentum.

SPX6900: A Case Study in a ‘Stupid’ Idea That’s Becoming Brilliant

A contemporary example of this principle in action is SPX6900, a meme coin that, on the surface, appears completely nonsensical. Its a coin whose goal is to flip the SPX500, which trades at around $50 Trillion Dollars, nuts right? Dismissing it as a joke would be the natural reaction for 99.9% of investors. But here’s the catch: it is growing. It is acquiring network effects. It already trades for hundreds of millions of dollars in market cap and is listed in numerous exchanges. The name itself, which sounds ridiculous, is also fueling its virality.

Its often made fun of as people consider it too wild to succeed, but the more hate it gets, the more the meme spreads. Its TAM is also huge, its basically anyone on earth, while having a massive price target (measured in the trillions) it checks all the boxes in the stupid-brillant investment strategy.

The conventional investor would scoff at it, just as they did with Airbnb, Uber, or even Bitcoin (or Doge) in its early days. But the counterintuitive lesson is that when a ‘stupid’ idea starts attracting real adoption and community engagement, it is no longer stupid—it is a high-upside bet with asymmetric return potential, a highly postive EV bet. Fading it might save the investor a few pennies when the idea dies out but it will cost them a fortune when the idea explodes, just ask Fred Wilson. When running a VC style portfolio (one with assymetric bets) virtually ALL of the returns lies with the outliers. And “stupid” ideas with massive upside often can be these outliers.

I can already hear the mid-curvers say “but airbnb and uber have revenues, memecoins have nothing!”, for those paying attention, in crypto revenues or profits have never been needed by anything in order to reach huge market caps, Bitcoin, Doge, Pepe, etc. The presence of revenues is irrelevant to the success of an investment in which the main utility is just holding and being part of something! The point is that “stupid” ideas are often mispriced and underestimated by market participants, that is the point!

Cognitive Dissonance and the Illusion of Rationality

Most people believe they make purely rational investment decisions, but in reality, they are heavily influenced by emotions and social proof. As I wrote in my free private discord:

“99.9% of people would have passed on Airbnb also, because early on it sounded insane. But they will never admit that to themselves. 99% of people get affected by price action (prices up, they are bullish, prices down, they are bearish), but they will never admit that to themselves.”

This is the essence of market psychology. Investors anchor their beliefs to what is familiar and logical, often missing the nonlinear potential of ideas that at first glance seem irrational or they just react to whatever prices or the heard are doing, instead of anticipating the next big thing.

Conclusion: How to Apply This Strategy

To capitalize on the Stupid-Brilliant investment strategy, you need to:

1. Develop pattern recognition – Train yourself to spot ideas that follow the Airbnb/Uber/Bitcoin pattern.
2. Detach from conventional logic – If an idea is widely ridiculed but is showing undeniable traction, investigate deeper.
3. Watch for network effects – A ‘stupid’ idea without growth is just stupid. A ‘stupid’ idea with rapid adoption is potentially brilliant.
4. Be early but not too early – Timing matters. Entering when the idea is gaining its first wave of believers, but before mass adoption, is key.

Many of today’s best investments will initially appear insane. But history has shown that true disruption often hides behind an illusion of stupidity. If you can see through that illusion and recognize the underlying potential, you’ll find opportunities that the rest of the market is blind to.

Good investing,

-Nando

When we think about collectibles—like luxury or rare items—there’s a clear connection between status, scarcity and price. In this framework, I believe CryptoPunks, the iconic NFT project on the Ethereum blockchain, have the potential to reach $1 million or more in value (from current levels of around $70K per CryptoPunk). My thesis rests on the analogy that CryptoPunks are akin to digital watches, and they will be the “Rolex” of this new collectible market. As the most renowned and leading luxury watch brand, Rolex sets the standard for excellence and desirability, and I believe CryptoPunks will play a similar role in the NFT space.

Here’s why:

1. A Unique Origin Story

The initial distribution of CryptoPunks was almost immaculate—they were given away for free, with no royalties attached. This clean origin story is similar to the early days of Bitcoin, which adds an element of legitimacy that is hard to replicate. As Vitalik Butterin puts it Legitimacy is The Most Important Scarce Resource. In a marketplace often driven by greed and full of rugs, CryptoPunks’ free and accessible beginnings make them stand out, like a rare flower in a concrete jungle. It also has its own marketplace and does not depend on corporate plans, it runs on Ethereum, making it even more cryptonative and special.

With only 10,000 Punks ever created, their scarcity becomes increasingly attractive. Unlike luxury watches and other items that can have their supply increased, CryptoPunks will never be reproduced, making them even more desirable as a luxury item.

2. Cultural Significance as a Trailblazer in Digital Art

CryptoPunks are culturally significant as they were pioneers in establishing the profile picture (PFP) NFT genre, PFPs get lot of hate these days but they have a place in art history as its the first time art has blended with peoples identity through a collectible that can be bought and sold. This unique fusion places CryptoPunks in a great position as the innovative project, further increasing their relevance in the art market. For owners, collecting a CryptoPunk means more than just acquiring art; it signifies acquiring a digital identity that reflects their personality, values, and standing within the crypto community. Much like a luxury watch that signifies taste and sophistication, CryptoPunks act as a personal statement in the crypto world.

3. Recognized as Art

CryptoPunks have gained recognition as art pieces in various museums, elevating their status beyond simple digital assets.

This acknowledgment reinforces their value as contemporary art. The inclusion of CryptoPunks in institutional collections demonstrates that they are more than just a fad; they are historically significant. As public perception shifts toward viewing CryptoPunks as valuable art, their desirability will continue to rise, driving up market values.

4. Status Symbols in the Digital World

CryptoPunks are more than just digital collectibles or art; they serve as status symbols within the crypto community. Much like how a Rolex watch (being the leading and most popular luxury watch brand) signifies wealth and sophistication, owning a CryptoPunk shows that you’re part of a very exclusive crypto group, one where OGs and legends are also part of. People often showcase their Punks on social media and online profiles, which boosts visibility and creates a self-sustaining mechanism to expand awareness of the project.

Just as you can gauge someone’s success or importance by their choice of watch, profile pictures can give clues about a person’s background and credibility. In the real world, high-end watches act as tasteful indicators of success, suggesting that networking with the wearer could be worthwhile. This natural demand for both CryptoPunks and luxury watches positions them as desirable assets, reflecting an individual’s identity and status.

5. Imitation Builds Reputation

CryptoPunks are the most copied NFT project, virtually every blockchain where NFTs can be minted have a derivative of cryptopunks. Even in Ordinals you see a significant amount of punks or punk inspired art in the first 10,000 ordinals, and this imitation only enhances their reputation.

Other projects may attempt to replicate the success of CryptoPunks, but those imitations often serve to highlight the uniqueness of the originals. Much like how replicas can enhance the allure of luxury brands, the existence of derivatives only solidifies CryptoPunks’ standing as the gold standard in the NFT space. This ongoing validation from the market helps reinforce their status as the “Rolex” of digital collectibles. The mere attempt to compete with punks means you are paying homage to it, game set match.

Conclusion: An one of a kind bet

In summary, CryptoPunks represent a unique opportunity characterized by historical significance, cultural impact, and extreme scarcity. They function as the digital “Rolex” of the crypto world, appealing to a growing demographic that values both uniqueness and status.

After years of being involved in the NFT space, and having analyzed hundreds of projects, I believe punks are one of a kind. Of course, the project isnt perfect, but watch or luxury item brands arent perfect either. I truly believe there is nothing with a moat of uniqueness and legitimacy as wide as cryptopunks.

I believe CryptoPunks could realistically reach valuations of $1 million or more. With around 560 million crypto users globally—and possibly a billion or more in the near future—the potential audience is enormous. Just like Bitcoin took time for people to understand its value and start collecting, NFTs will also need time for mass adoption. As more people come to understand how NFTs work and appreciate their value compared to traditional art, extremely scarce digital luxury items like CryptoPunks will likely command a very large premium.

As the crypto markets continue to gain in popularity, CryptoPunks really shine as valuable digital assets, making them a great pick for investors diving into this new world.

Recently I re-read Taleb’s paper and decided to revisit some of the notes I wrote at the time it came out (roughly 2 years ago). I’m reposting and updating these notes as I find that revisiting and rethinking about these matters tends to clarify a lot of my thinking and polish my framework for analyzing cryptocurrencies. I hope the reader will enjoy.

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A crucial aspect of Taleb’s anti-BTC argument revolves around the fact that BTC displays high volatility even at higher market caps.

However, I find a fundamental flaw in his reasoning. Drawing from my experience as a short-term trader and investor, I’ve noticed that retail-driven stocks tend to exhibit more volatility and inefficiency compared to institutionally-driven stocks (think GME vs AMZN). As of now, BTC primarily operates within a retail-driven market, with estimates suggesting that only 10% of BTC is owned by institutions(according to Bridgewater and Coindesk), and retail investors have access to substantial leverage in certain CEXs and DEXs.

I predict that the volatility that Taleb is concerned about will diminish as institutions occupy a larger share of the market and daily liquidity. While the volatility may not necessarily drop to 20% (levels similar to gold), it will likely alter the relationship Taleb is worried about in his charts.

This belief is grounded in several factors:

• Institutions often engage in rebalancing, strategically selling on the way up and buying on the way down.
• Institutions, unlike retail traders, are not as emotionally driven, displaying greater discipline in their trading behaviors. While exceptions exist, in my experience this tends to be the case as a group.
• Mandates, both explicit and effective, limit the percentage of crypto that many institutions can own, preventing excessive exposure. Any normal hedge fund reporting a 30% exposure to crypto is likely to face a surge in withdraws. If a fund have a substantial profit in a crypto position, they are often forced to rebalance back down.
• Drawdown limits imposed by most hedge funds, lead to reasonably sized positions, and mitigate emotionally-driven moves common among retail traders.
• Institutions tend to rely on historical and statistical analyses, making more informed decisions and reducing the likelihood of buying at market tops and selling at bottoms.

Taleb’s impatience is evident; he wants to witness this shift within his specified timeframe. However, the market operates independently of his expectations, and change may happen over the next 5-10 years rather than conforming to Taleb’s desired timeline.

Moreover, despite increasing volatility and BTC adoption, institutional investors, who have entered the market in the past year, have not shown signs of abandoning BTC as a reserve asset.

Also the Crypto Punk NFT phenomenon challenges Taleb’s claim that BTC lacks utility, especially when compared to gold, which can be used as jewelry.

Crypto Punks serve as signals of wealth and status within the crypto community, akin to traditional status symbols like Picasso paintings or luxury cars. Similarly, BTC, limited in supply with a widely known price, holds its own status as a recognizable investment. Unlike NFTs, BTC is easily fractionalized, allowing for broader ownership. However, fractional ownership of NFTs like Punks may not confer the same level of status, if anything its a sign that the person can’t afford a full one.

With BTC, people generally prefer owning a “full” BTC (reddit is often obssesed with the idea of being a “full coiner”) to be part of the larger narrative, displaying their status on social media by endorsing bitcoin. If someone is constantly talking about bitcoin, displaying its logo, and promoting it, its implict that they have a significant amount of exposure to the asset, leading lots of people to conclude that they own a good amount of this widely reconignized asset with a well known public price, that is a display of status similar to a cryptopunk owner changing their profile picture to the image of their NFT.

Taleb argues that you can wear gold in the form of jewlery but you wouldnt be able to do so with BTC, but that is not true, the way you “wear” BTC is by talking about it, displaying your affection and admiration for it, wearing hats/shirts, posting AI created images with the logo, etc. In essence, communicating that you own this asset that everybody knows cost a lot of money. That’s how they would communicate that they own a Picasso as well (since it would be impractical to carry it around), through words and images. Ironically, Taleb tends to block these same people claiming they are idiots, this makes it challenging for him to make the connection that you “wear” bitcoin through social communication instead of jewlery use.

In essence, BTC appears more as a highly liquid and transferable rare item than a traditional currency. While Ethereum (ETH) has digital layers cementing its role as a currency, BTC seems to function more as a globally distributed, highly sought-after collectible.

BTC, with its 21 million units, can be seen as the original crypto NFT, that was fractionalized but has a small float compared to its target market. And its investors want to own and accumulate as many full units as possible to build as large a collection as possible (Gotta Catch ‘Em All) and then display their position to the world in order to flex it (think Michael Saylor, who seems to be in a new podcast every week). This is what I call the “collectible model” for analyzing cryptocurrency. Let me use the example of Bitcoin Satoshi Vision in order to show how this model is much better to explain and guide someone in this space:

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Bitcoin Satoshi Vision (a fork of Bitcoin) is intriguing because it sheds light on the apparent irrelevance of 51% attacks against a network (Bitcoin Gold, BTG, could also be included in this category). Despite numerous attacks, many exchanges still accept BSV as deposit, but demand a significant number of confirmations to credit BSV. Typically between 20-100, even though BSV is a fork of the original Bitcoin code.

Let’s explore various models to understand why Bitcoin SV maintains a market value of $1.9 billion (as of January of 2024), surpassing the value of entire companies:

1. Currency Model: In this model, a currency’s value correlates with its utility and stability. However, BSV lacks practical use as a currency due to the extensive confirmation requirements. The extended waiting period makes it less functional than many other alternatives, and there’s no development of a Lightning Network for this coin. According to this model, the $1.9 billion valuation seems nonsensical, leading some to label it as a ‘bubble.’ Yet, these so-called ‘bubbles’ keep persisting over time.
2. Technology Model: Bitcoin Satoshi Vision technology is deemed subpar, consistently facing attacks. It lacks security, permits transaction censorship, and poses the risk of miners executing double spends. There are superior technologies available, such as Bitcoin, Bitcoin Cash, and Litecoin, which have proven more resilient over time. Despite these drawbacks, the technology model fails to explain BSV market cap and lasting value, inevitably prompting the ‘bubble’ assertion, which has historically proven inaccurate.
3. Bubble Model: This model, often unreliable in predicting the future, resembles astrology more than a practical analytical tool.
4. Collectible Model: Bitcoin Satoshi vision emerges as a collectible for those who appreciate the purist concept to having Bitcoin be exactly what it was outlined in the whitepaper with no deviations allowed (so updates like Segwit wouldn’t be accepted), in addition to supposedly being run by Satoshi himself. The focus shifts from efficiency of transactions to just being in the ledger, wherein being part of the ledger implies participation in hoarding this historical collectible. 51% attacks have limited impact, as they can only undo a fraction of blocks. Individuals can buy and hoard Bitcoin Satoshi Vision, feeling connected to Satoshi’s legacy, considering themselves special contributors to history and important participants in the greater good (even if they are mistaken).

This collectible model proves more useful than previous frameworks, providing clarity on Bitcoin Satoshi Vision market dynamics. The emphasis on hoarding as a form of participation in a historical legacy aligns with its enduring value, offering a fresh perspective on its existance.

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Additionally, Taleb’s argument against BTC, emphasizing its dependency on active miners and potential future obsolescence, parallels similar challenges faced by traditional collectibles such as rare comic books, rare paintings, or other artifacts stored in museums. These collectibles demand careful preservation to maintain their value, just as Bitcoin’s decentralized network relies on miners and node operators for its security and maintanence. Its no wonder why large holders of bitcoin like Galaxy Digital own and operate mining pools, they are taking care of their collectible just like a Museum would of its pantings.

In conclusion, understanding BTC as a collectible, akin to traditional rare items, provides a more comprehensive model than the currency or technology-focused perspectives. BTC’s enduring value lies in its historical significance, scarcity, and the desire for individuals to be part of a breakthrough technology, contributing to the broader human need for recognition, admiration, and a sense of uniqueness. This perspective challenges Taleb’s criticisms and offers a more nuanced understanding of BTC’s role in the evolving landscape of digital assets.

-Nando