Nick Szabo shared his thoughts on the potential rise of censorship-resistant cryptocurrencies during a recent speech at the Israel Bitcoin Summit (hosted by Tel Aviv University). Szabo anticipates that these cryptocurrencies will become increasingly prevalent in countries that are facing trade sanctions or economic hardship as a result of failed monetary planning. He further added that the world’s central banks may eventually turn to cryptocurrency reserves as a complement to their gold reserves.
Cryptocurrency will serve as a refuge for distraught economies
Szabo’s popularity within the cryptocurrency world stems from his contributions to the Bitgold concept back in 1998. He has further been recognized for anticipating the future rise of smart contract technology and autonomous organizations as early as 1996.
During his speech, Szabo offered the prediction that countries facing economic trade sanctions or suffering from hyperinflation will increasingly turn to digital currencies. This prediction is supported by current trends, as countries such as Venezuela, Iran, and Zimbabwe have already recorded a steady rise in their use of cryptocurrencies.
Szabo made this statement in response to a comment by Avi Simhon, senior economic policy advisor and Israel’s head of the National Economic Council. Simhon, who had previously asserted that Bitcoin technology is “intrinsically inefficient” and will soon become obsolete, warned that utilizing blockchain technology would be a waste due to the trillions of dollars that would be spent on energy consumption.
Central banks may hoard cryptocurrencies
Szabo, on the other hand, is convinced that cryptocurrencies will one day dominate the financial space as the world’s central banks eventually turn to cryptocurrencies as a complement to their gold reserves.
He commented that “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 minimized solution. The Swiss government itself is subject to political pressures, and so a more trust minimized solution is cryptocurrency.”
He further stated that the problem with gold reserves is their physical vulnerability: “When the Nazis conquered countries in Europe, the first place they went to was a central bank’s gold reserves.”
Szabo’s predictions might not be far off. Over the past few weeks, market experts and economists have warned that the global economy is facing trying times. 2018 was a tough year marked by high volatility for traditional investment machines, such as equities and stocks.
While precious metals recently recorded some notable gains, Szabo remains optimistic about the future of cryptocurrencies and his reputation within the crypto community has encouraged many cryptocurrency enthusiasts to follow suit. According to an audience member at the Summit, Szabo summed up his confidence in the future of Bitcoin and other digital assets with one simple statement: “Bitcoin could survive a nuclear war.”