A Black Swan event is an event that was unpredictable because it had not happened in the past. The expression was coined by Nassim Nicholas Taleb, a financial analyst and risk manager, to describe a high-impact and unexpected event that could not be easily predicted by traditional means.
The term has been adopted in many different areas where professionals use it to describe events outside their sphere of experience. Among those are cyber security experts who employ the term to describe an unprecedented cyber-attack.
The Origin of Black Swan
The idea of the “black swan” comes from an ancient, well-known tale. For many centuries, black swans have been considered unusual and attractive birds in Europe. That led to them being frequently depicted in European paintings, particularly alongside depictions of other foreign animals.
A Bitcoin Black Swan Event
In the context of Bitcoin, what constitutes a Bitcoin Black Swan event would be an attack on the protocol. Such an attack could take two forms: from outside forces or those inside the community. None of these types of attacks would be seen as probable, but the domino effect would be far-reaching once they happen.
It happens with no warning and is very difficult to predict. It will usually influence the markets and result in them having an adverse effect. A virtual currency crackdown by governments in specific countries might send the market crashing. The Chinese government’s most recent bitcoin clampdown is one example.
Examples of Black Swan Events
An example of a black swan event is the intentional attack on 9/11. Another would be Japan’s attack on Pearl Harbor. These were shocking, unanticipated events that dramatically changed the course of history.
Additionally, an unpredictable market decline or even a terrorist attack marks black swan events. These events can be negative or positive, but in either case, they tend to have a significant impact on the industry and the people in it. The 1987 stock market crash was a perfect example of this.
Currently, the world is undergoing and recovering from one of the most stunning examples of a black swan event in history: the COVID-19.