In the face of the long financial history, Bitcoin is just a newborn. It was invented 12 years ago and is neither a stock, a start-up, nor an iteration of the Internet. Therefore, it is meaningless to compare it with any previous product.
Bitcoin is highly volatile, coupled with its lack of centralized management and coordination, despite its market value of more than 200 billion US dollars, it is still easy to create stereotypes of high risk, untrustworthiness, and vulnerability.
However, Bitcoin has proven time and time again that it stands on the fragile opposite. It is precisely because of its volatility and decentralization that any shock and pressure will only make it stronger and allow it to flourish in a harsh environment. Why is it so?
01
What is anti-fragility?
The term “anti-fragility” was popularized by Nasim Nicholas Taleb, author of “Black Swan” and “Random Wandering Fools” in “Anti-fragility: Benefiting from Disorder.”
Taleb described it this way: “Anti-fragility is something that transcends the concepts of resilience and resilience… Some things will benefit from shocks when they are in turbulence, randomness, disorder, chaos and stressors , They will thrive because they like taking risks, risks and uncertainties. Having anti-fragility makes them better after experiencing shocks.”
Although Bitcoin is not mentioned in the book, Taleb is an out-and-out cryptocurrency fan, and his “anti-fragility” view brings a new perspective to Bitcoin.
“Bitcoin is actually an anti-fragile system because it becomes more resilient after being attacked.” Quantum Economics analyst Pedro gave some examples, including the inflation bug in Bitcoin in 2010 ( Someone created 184 billion bitcoins by exploiting a vulnerability in the bitcoin code) and the hard fork that year.
“After each incident, Bitcoin has become stronger in terms of network adoption and price,” Pedro also pointed out. “Because Bitcoin is an open, trustless, and decentralized network, it is fighting against The probability of successful operation after the attack is much higher than any closed system.”
So, how does Bitcoin’s open, trustless, and decentralized characteristics make it anti-fragile?
02
The foundation of Bitcoin’s anti-fragility
There is a common misunderstanding from the outside world that because Bitcoin runs on a computer system, it risks being shut down. However, no one person can control Bitcoin. This open source software runs on thousands of computers at the same time. There is no single point of failure risk. The above-mentioned situation is impossible to happen.
As more and more new computers join the network, Bitcoin’s decentralization is also increasing. This further strengthens the system, increases the level of redundancy, and better guarantees the running time; the ability to resist attacks has also been enhanced, which promotes its continuous evolution. Facts have proved that Bitcoin can resist any form of attack-it does not mean that no one has tried it.
As the most popular cryptocurrency in the world, Bitcoin has withstood a lot of intervention by hackers, hard forks and ZF. Nothing can affect the functionality of the Bitcoin network. On the contrary, these events have made Bitcoin stronger.
Bitcoin developer and evangelist Jimmy Song said in a speech in 2017: “These disorderly and chaotic events, under normal circumstances, you would think that the price of Bitcoin is going to fall. However, the opposite is true. We see The thing is that the price of Bitcoin is rising. Bitcoin is anti-fragile and it can benefit from chaos.”
For example, a few years ago, the Mentougou exchange was hacked, causing users to question whether it is wise to keep funds on the exchange. This event stimulated innovation and accelerated the development and popularization of secure hardware wallets so that people can be held accountable for their keys. The subsequent hacks, runaways, and downtime of centralized exchanges in the following years have reinforced this view: “It’s not your private key, not your Bitcoin.”
03
Bitcoin creates order in disorder
Bitcoin is a currency system based on a consensus mechanism. It is verified and executed by participants in the network instead of being executed by a centralized organization. Each participant is motivated to act for the benefit of the whole.
Parker of Unchained Capital wrote in the article: “By eliminating the need for trust in any centralized third party, all network participants can rely on and ultimately believe in monetary policy, and will not be affected by any incident.” This seems to be a paradox. Theory, but it is completely reasonable. Eventually, a spontaneous order emerges from disorder, and the system becomes stronger with every external shock.
In 2017, some influential stakeholders-bitcoin custody and transaction service providers and large miners-joined forces to change the consensus rules to allow larger block sizes to improve network transaction capabilities. But in the end, they were defeated by user consensus.
This shows that Bitcoin is sufficiently decentralized to prevent any institution from controlling the network without the consent of the vast majority of people. As a result, people’s confidence in Bitcoin has grown stronger.
04
Bitcoin is not influenced by competitors
Bitcoin has produced more than 1,000 imitators, but none of its competitors surpassed Bitcoin.
On the contrary, competitors are favorable to Bitcoin, and every time they imitate, they conduct a stress test on Bitcoin, which ultimately strengthens its superiority.
Bitcoin has gotten rid of various forks (BCH and BSV), Ethereum, stablecoins and Facebook’s Libra, and it is still the world’s number one cryptocurrency by market value.
Crucially, Bitcoin does not have a leader and cannot be brought to Congress by a CEO like Libra, and was frightened by lawmakers and delayed the project. The two most populous countries in the world have tried their best to suppress the attractiveness of Bitcoin, but it is still moving forward.
05
The biggest flaw is its biggest advantage
Volatility is often considered the biggest flaw of Bitcoin. Since 2009, the price of Bitcoin has changed astonishingly every day. The most prominent year was 2017, when the value of Bitcoin soared from $800 to nearly $20,000, and then fell back to approximately $13,000.
But Bitcoin Iron Fan believes that volatility should not be regarded as a defect, it should be regarded as a characteristic. It can ease the enthusiasm of investors, help price discovery, and enhance the immunity of the system. The volatility of Bitcoin tends to be consistent with the price trend. When the price drops, usually, the volatility also drops.
In addition, the mature Bitcoin derivatives market has also eased the volatility of encrypted assets-just like the situation with traditional assets in the past, because it increases liquidity and hedging opportunities.
Without blocking mechanisms and other interventions, Bitcoin cannot control market volatility, even if it is faltering in some cases. But over the years, its performance has increased people’s confidence in the Internet, the weak are kicked out, and new investors are willing to enter the market at the right price.
06
Bitcoin is anti-fragile
Anyone can join the Bitcoin ecosystem-whether you are Jack Dorsey or Kim Jong Un, Bitcoin doesn’t care, and the entry of every individual will further strengthen it.
It is undeniable that the development of Bitcoin benefited from the early use of the Silk Road website as a payment method, but this is not part of the design.
In the past ten years, this network has received the support of countless individuals (usually anonymous)-from users to investors to developers, cryptographers and entrepreneurs-who sometimes gave up their freedom to participate in this ecosystem. life.
In a continuous, self-reinforcing feedback loop, the Bitcoin development community and users, even those trying to take advantage of the external forces of the network-have contributed to a more reliable system. This, in turn, has led to more and more people adopting Bitcoin, making Bitcoin more resistant to future attacks.
Every time Bitcoin is declared dead, it will make a comeback and become stronger than before.
Those “volatility, randomness, disorder, and stressors” will only make Bitcoin more anti-fragile. With every new shock, Bitcoin’s disruptive and Darwinian technology will eventually only adapt, evolve and become stronger
This feature is more powerful than elasticity, not only means that some things can remain the same, and even get better and better. This is the advantage of Bitcoin’s anti-fragility.
