What the tendency of some things to age backwards tells us about the future of cryptoassets.
One of the trendiest follows in finance is someone who despises most financiers. Many bitcoiners are attracted to Nassim Taleb, author of The Black Swan, Fooled By Randomness, and Antifragile due in part to his anti-establishment nature, and because bitcoin fans revel in the triumph of mathematics and algorithms over fallible human institutions.
He holds most public intellectuals in contempt, and finds successful traders indistinguishable from lucky fools. At a time when tail events seem to be happening with disturbing regularity, Taleb’s influence is enormous.
Even if you are not a fan of his, he has coined some incredibly useful heuristics for trading. This post introduces one of his simplest and most effective rules: the Lindy effect.
You may have heard of this heuristic before. It is named for a New York deli where actors realized the following:
Broadway shows that lasted, say one hundred days, had a future life expectancy of a hundred more. For those that lasted two hundred days, two hundred more.
The Lindy effect is introduced and discussed in Taleb’s book Antifragile. Put into heuristic form, the Lindy effect states that, for a nonperishable asset, life expectancy is proportional to age. This means that the older something gets, the more likely it will continue to stick around. This naturally only refers to assets that do not depreciate with age. The Lindy effect does not apply to potatoes.
It does, however, apply to things like ideas, political ideologies, technologies, and systems. Since cryptoassets are all of those, they seem very suitable candidates for the Lindy effect. Additionally, the market is competitive, and cryptoassets have very short lifespans (on average), so age tells us quite a lot about the asset.
Source/More: Is Bitcoin Antifragile? – Crypto Fundamental