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Well-known cryptographer Nick Szabo says that Central banks might turn to Crypto over Gold

January 11, 2019 03:45:33 - Just the other day in Israel had taken place the Bitcoin Summit. On the Summit Nick Szabo, a scholar in computer science, cryptography and law from the United States, says that he believes countries under constant pressure of sanctions as well as countries in difficult economy situation will be using virtual assets as the solution for censoring.

Szabo is a very well-known person in the crypto space. Many believe that he might be the famous and mysterious Satoshi Nakamoto. Back in 1998 long before Nakamoto had invented Bitcoin, Szabo had designed the Bitgold concept, a privacy focused digital currency which was often reffered as a direct precursor to Bitcoin, but was never implemented afterwards. And 2 years before that, he was the one who basically developed the smart contracts technology and predicted their further usage.

At the Summit that was held in the Tel Aviv University on January 8, 2019 Szabo reasoned that in the future the central banks may turn to the digital currencies over gold reserves and proposed the following:

“There’s going to be some situations where a central bank can’t trust a foreign central bank or government with their bonds for example. One solution that’s been developed is to have the Swiss government hold it for you – that’s not a trust minimised solution. The Swiss government itself is subject to political pressures and so a more trust minimised solution is cryptocurrency.”

As his argument he reminded the situations happening in Venezuela, Iran and Ukraine.

In Venezuela due to inadequate management of fiat currency from the president Hugo Chavez and his government the country had to create their own digital currency which became the solution for their economy problem and now is actively circulating over the whole country.

After infamous decision of Trump’s administration withdrawing from Cooperative comprehensive action plan, Iran became the target of the new sanctions from United States once again. Previously we have talked about how the Iranian students had to look for alternative ways after losing the access to the banking system due to imposed sanctions. And again the solution was - paying with cryptocurrencies.

In the last year there is a huge rise in popularity in Ukraine for using cryptocurrency. The country now is in a state of proxy war with Russia, which heavily affects the economy of the country.

According to the reports, the opening speech from Avi Simhon, Israel’s Head of the National Economic Council was what started the discussion. He, apparently, completely denounced the Bitcoin technology claiming that it is completely insufficient, and insisted on its further and then complete fall. As a conclusion he told that further development of Bitcoin technology will be just a waste of huge amount of money which provoked Szabo into his big talk about the advantages of the industry and his vision for it.

Szabo is known and respected for influencing crypto industry and in his talk he explained another reason why soon governments might choose virtual currencies over physical gold. As his argument he brought up the historical precedent of the Nazis’ looting gold reserves of Europe, which proves physical gold as being vulnerable.

“The other problem with gold reserves is that they’re physically vulnerable. When the Nazis conquered countries in Europe, the first place they went to was a central bank’s gold reserves.”

Szabo continues believing in the growth of cryptocurrencies despite all the declines happening in the industry and different kind of problems appearing because the crypto space is still pretty young. All his achievements in the cryptocurrency community are the proof for his words not to be taken lightly and many people already now are looking forward for what the future for “crypto over gold” holds.

Category: News

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