The Lindy effect is a concept that states the future life expectancy of a non-perishable item, such as technology, information, or intellectual property, grows as it ages.
Therefore, the Lindy effect suggests that the more something can endure and remain alive, the longer its remaining shelf-life is going to be.
Like fine wine gets older with age, so too does a non-perishable item that can withstand the test of time.
"Time in the market. Its valuable not only for holders, but for confidence of a protocol. Time it self is a factor of resilience. The longer it is, the longer its lasts."- WaLLrus
Its resilience to forces such as the elements, rivals, or irrelevance increases its chances of continuing to exist in the future.
On the flip side, the Lindy effect ensures that this asset’s mortality rate weakens with the passage of time.
The Lindy effect has its roots in a Manhattan diner named Lindy’s, famous for its cheesecake, where the idea was tossed around by comedians.
For them, the main idea was the career of a comedian, whose tenure was dependent not on their material but instead on the amount of exposure they were given by a platform.
Later the notion was picked up by mathematicians and statisticians, who further tested the concept.
Lebanese-American essayist and mathematician Nassim Nicholas Taleb is credited with formalizing the idea of the Lindy effect in his 2012 book entitled “Antifragile: Things That Gain From Disorder.”
“For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable, every additional day may imply a longer life expectancy….The robustness of an item is proportional to its life!”
Another area where the Lindy effect could work is in business, particularly family businesses. That could explain why family businesses tend to be around for generations. In this case, if a business has existed for 100 years, the Lindy effect states that it is only at its half-life and has another 100 years to go. This is in effect the business aging in reverse as its mortality becomes further and further away.
One of the concepts that Taleb discusses in his aforementioned book is how things like businesses grow in robustness and take on an antifragile identity the longer their doors are open, so to speak. Businesses acquire this robustness as their “skin in the game” grows with time. So the more that a business has at stake, the greater the chances for it to develop robustness and survive for the long haul. Otherwise, everything they have worked to achieve would eventually disappear.
The antifragile theme that Taleb discusses reflects its “ability to handle disorder,” or to survive. In order for a business to become antifragile and ultimately survive, it must have skin in the game. Entrepreneurs no doubt are more focused on the day-to-day activities of the business than they are the concept of the Lindy effect. Nevertheless, you can see the Lindy effect in motion in the Henokiens Association, made up of several dozen family businesses, each with an operating history of two centuries or longer.
Flagship cryptocurrency Bitcoin was first created 13 years ago, when the maiden block was added to the blockchain, and it has been around ever since. Over the years, bitcoin has survived numerous challenges, not least of which include market downturns, scams, theft, collapsing businesses, crypto winters, and more. In addition, bitcoin has been the target of threats by competitors, including legacy bank CEOs and old billionaires, who are threatened by its monetary policy and potential.
In all of these years, many forces and individuals have tried to stop bitcoin, but so far none have been successful. But does that mean that bitcoin is a product of the Lindy effect?
According to Bitcoin developer Jimmy Song, new money gets accepted and trusted by people when it stands the test of time. He says, “[This] means that survival matters more than anything else,” which is what the Lindy effect proves too.
Some of the major headwinds that bitcoin has survived so far include -
Despite these challenges, bitcoin has shown resilience. The bitcoin mining growth rate as represented by the hash rate has climbed higher over the years. (The hash rate represents the processing and commuting power that is dedicated to the network by miners.) Meanwhile, bitcoin’s network effect, where its value increases as more users join the network, is going strong as the number of bitcoin wallet addresses continues to rise.
As long as bitcoin continues to weather any future storms and grow stronger in the process, the Lindy effect suggests its chances for survival over the long-haul are better than good.
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Gerelyn is a financial journalist who has been covering Wall Street for more than 20 years. After reporting for some of the top trade publications on investment banking, infrastructure and retirement, she was drawn to decentralization and shifted her coverage to the blockchain and cryptocurrency space in mid-2017. Since then, she has contributed to several major Bitcoin, Blockchain, and DeFi news sites, and has also written a children’s book.
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