Nick Szabo, one of the founding members of the cryptosphere, when he released Bitgold algorithm a decade before Bitcoin arrived on the scene, is a voice which cannot be ignored. Speaking at the recently concluded conference in Israel, the master cryptographer offered a broad range of ideas and forecasts, which could well be the roadmap for where the industry is headed in the next few years. In fact, his keynote address was a response to allegations of “inefficiency” made by Head of the National Economic Council of Israel.
One of his first hypothesis presented at the Conference was that economically ostracized countries will seek out digitized assets as a means to overcome hyperinflation. This is already happening over the past two years, with oil-asset backed nations like Venezuela, Iran, and Zimbabwe adopting nationalized cryptos in order to gain trade traction.
Szabo’s discussions centred around the topics raised by the Israeli government’s representative at the Conference. Avi Simhon, who is the policy advisor on the economic matter to the Prime Minister, also alleged that by adopting blockchain at the global scale there would be “trillions of dollars lost in terms of actual cost in energy”.
However, his most important statement remains the following: Central Banks may soon hold Bitcoin as reserves over Gold. In the future, central banks could reach a tipping point where they cannot trust foreign bank’s reserves or their bonds. Though in such situations for fiat currency, the Swiss government has been the arbitrator it cannot be a trust-minimized solution. It is possible that in the near future Swiss government itself could be exposed to different types of pressure and may have to opt for a trust-minimized solution which is what cryptocurrency is.
He also suggested that Gold has been a commodity which has had issues of vulnerability historically as well. During the World War, Nazis headed to central bank gold reserves in every nation which they conquered.
Szabo’s words may mark the future of the digital economy and ‘trust’ between countries of the world. The growing vulnerability of traditional investment vehicles around the world, because they are pegged to precious commodities such as gold may well be a thing of the past. Besides other fiat-based investment products such as stocks and equities are at different stages of volatility.
There is truth to the matter which Szabo has put forward at the Israel Conference. The growth and adoption of nationalized crypto’s such as Petro will benchmark action of beleaguered economies in times of crisis.
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